Southwest's Competitive Advantage

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Discuss the basis of Southwest’s competitive advantage and the potential challenges to its strategy
Southwest airline has fought many battles primarily engineered by the major airlines for over four years before it got its first fight off the ground in 1971. Later on, the company had to work around regulation intended to penalize SWA’s decision to operate out of “Dallas Love Field” instead of moving to the new Dallas-Fort Worth (DFW) airport (Case 27, 1). With Kelleher’s brilliant legal expertise and extensive lobbying of the House of Representatives, the issue was settled and SWA was allowed to operate out of the Love Field in 1979. Southwest Airline, also known as discount airline, is the largest airline compared to the others in the United States. It was founded by Rollin King and Herb Kelleher on June 18, 1971. It focused on passengers reaching their destinations in time and paying low transport costs. Moreover, it was the first airline to offer ticketless system of travel and also the first one to fly a single aircraft. It was also the first to offer a program of sharing profits to its workers. Its mission is to give employees a stable working environment and an equal learning and personal development opportunity (Case 17, 1).
Basically, Southwest Airline has various strategies that it applies in order to come out successful operation in the transport industry. First, has few operational costs and it is efficient. It is able to lower its operational costs by opting for secondary airports, using electronic ticketing, carrying consistent airlines, using point-to-point flying routes and also ensuring high airline operations.
As a tool for providing competitive advantage, SWA attracted many customers in that it offered airfares that were so low. Most of the operations were going on well, with everything increasing steadily with time. The CEO Mr. Herb Kelleher’s secret was to satisfy his employees, which resulted to satisfaction of the customers. By first using himself as an example to his customers, he was always himself and encouraged his employees to do the same and have fun while working regardless of their salary. In hiring people, he considered their attitude more than their skills (Case 27, 4). The culture of the company was laughter and fun. In May 1988, the Southwest became the first airline to win the highly coveted Triple Crown for a month.
Either, its labor costs are low. The low fare it offers helps in achieving more labor productivity. It has a union of employees which expresses the grievances of the employees and more than 80% of the employees are members of this union. Their salaries are the highest compared to the other airlines (Case 17, 3). There is cross-utilization among the employees and this translates to low labor costs. Studies have shown that in 2001, the southwest employees’ productivity was more than 45% higher than at America and united.
Additionally, its fuel costs account for 18% of its operational costs. Airlines can be able to estimate budgets and predict ...