The Reasons Behind the Business Success of Southwest Airlines

The combination of a low-cost strategy and distinctive culture has allowed Southwest Airlines to position itself as an industry leader while remaining a very popular place to work.Southwest Airlines is truly unique among the major carriers in America. Started in 1966 by founder Rollin King, the company has moved from being a small shuttle between three cities in Texas to one of Fortune magazines’ most admired airlines in the world. The story of its evolution, from a rocky and difficult beginning fraught with litigation to today’s industry leader in the low-cost, no-frills segment leader is fascinating.The issues relevant to understanding the company and its success are many, but only two will be explored for the purposes of this paper. The first is Southwest’s entrance in, and leadership of, the market segment known as low-cost, no-frills. In the years immediately after the company was formed and developing its strategy, the concept of a budget airline was foreign to the industry. While all airlines are focused upon the safety of their passengers first, the primary carriers of that day targeted passenger services through a hub-and-spoke delivery system as their key secondary goal. After airline deregulation, budget airlines began to emerge. These have a different product and market strategy from the charter carriers…namely to offer low-price services. This business model was successfully developed for domestic services…most notably by Southwest Airlines (Doganis, 2002). The second major issue contributing to the success of Southwest Airlines is that of the corporate culture. Each company has a unique set of values and traditions, as reflected by the dress, conduct, and methods of communication within the organization. hence, its culture. As explored further herein, there could hardly be a more distinctive corporate culture than that of Southwest Airlines.