Southwest Airlines was founded in 1967 to take advantage of deregulation in the airline industry by utilizing point-to-point routes with low fares rather than traditional hub-and-spoke systems. Over several decades, Southwest expanded its fleet from four to over 400 planes serving over 50 cities. It developed a low-cost business strategy focused on efficiency and passing savings to customers. Looking to the future, Southwest will aim to strengthen its brand, pursue vertical and horizontal integration opportunities, and continue optimizing its low-cost business model to remain competitive in the dynamic airline industry.

1. Southwest Airlines
9 July 2005

2. History of Southwest Airlines
1967 กF Herb Kelleher Gary Kelly
1971 Texas F 3
1973 Fก Fก ก F F ก ก
1977 F F F Down Jones (LUV)

3. History of Southwest Airlines
1979 F ก ก ก Texas
1990 ก F กก F $1 F
1994 ก ก ก Morris Air F ก Ticketless Travel
1996 ก F www.southwest.com
2000 ก ก F F 5
2005 ก 31,000 Boeing 429 60 31

4. Airlines Industry’s Fact
with Southwest Airlines
F ก “The lowest cost
provider in the industry”
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F ก F ก ก
Express way
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5. Southwest Strategies
1. ก ก F F F F
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4. ก F FF F
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6. Low Cost Airlines in Industry
Domestics Airlines
Jet Blue Airways
Travelocity
Air Tran Airways
International Airlines
Ryanair - Ireland
Easy Jet - UK
Virgin Blue Australia
Air Asia Malaysia
Nok Air - Thailand

7. Overall US Airlines
Performance in 2004
Domestic Passengers Carried
Millions
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50
40
30
20
10
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8. Southwest 34-Year
Comparison
1971 1999 2004
Size of Fleet 4 306 417
Number of Employees 195 29,005 31,000
Number of passengers carried 108,554 52,600,000 70,900,000
Number of cities served 3 55 59
Number of trips flown 6,051 602,578 1,022,000
Total Operating Revenues 2,133,000 4.2 billion 6.5 billion
Net Income (Losses) (3,753,000) 433,400,000 313,000,000

9. Question 1
At the beginning, what forces in the
environment most affected Southwest Airlines,
and what opportunity was Southwest founded
to take advantage of?
ก ก กF ก Southwest
F ก F ก ก F
F ก F 3 Fก F
ก F

10. Question 1(continue)
Opportunity which Southwest founded to take
advantage of
– Southwest F F ก ก
ก F ก F ก
ก F ก
– Southwest F F F ก
ก F ก ก ก ก
– Southwest Boeing 737-200 F
ก ก Boeing Fก F

11. Question 2
How would you chart the development of
Southwest’s business-level strategy over time?
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F
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12. Question 2 (Continue)
Business-level strategy over time
ก F Boeing F 737
Fก Fก
F ก ก F ก ก
ก F ก ก ก F Hub-and-Spoke
ก F Point-to-Point
F ก F ก
F ก F ก F
F F ก กก ก F ก
ก F ก F

13. Question 3
What kinds of dynamics characterize
competition in the airline industry
ก (Security)
F (Ticket price)
F (Customer satisfaction)
F ก (Aircraft Maintenance)
F (Air-Traffic Delays)

14. Question 4 & Question 5
What do you think the future holds for
Southwest?
If you were the CEO of Southwest Airlines.
What would be your action plan in the future?
ก Brand Southwest Airlines
F ก ก F
Vertical Integration
Horizontal Integration

15. Question 4 & Question 5
(continue)
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ก F ก F F
ก ก ก
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16. Thank you very much.