Southwest Airlines is among the most prosperous airlines in the USA, and it is well-known for its friendly services at low costs. The company regularly conducts its SWOT analysis to maintain its competitive edge. A SWOT analysis is an approach that benefits a business by identifying the different factors, such as strengths, weaknesses, opportunities, and threats, that might affect its growth and revenue.
In this writing, you will have the SWOT analysis of Southwest Airlines that will reveal its strengths, such as its efficient point-to-point system and strong financial performance. And its weaknesses, like a lack of first-class seating options and limited partnerships with other airlines, are only a few. After reading the complete article, you will get a closer look at the company’s SWOT analysis.
So, grab your seats, get ready to dive into the article, and start exploring the whole article. It will help you to have valuable insights into the company.
Table of Contents
Overview Of Southwest Airlines
Southwest Airlines is a famous airline headquartered in Texas, US. The company is renowned for its excellent airline services at cost-effective fares.
Southwest Airlines is popularly known as Southwest, and it currently schedules its incredible benefits to 120+ destinations, including different locations in the United States and additional ten countries.
Meaning Of SWOT Analysis And Its Purpose
SWOT abbreviates as Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis refers to the methodology that assists businesses or companies in looking for the internal and external factors that might affect the business or the company. The internal factors that affect a business include its Strengths and Weaknesses. And the outer comprises Opportunities and Threats.
It helps them get clarity of their current position and also assists them in understanding and measuring the overall performance of their business. In short, it discloses whether an organization is sick or healthy.
SWOT Analysis Of Southwest Airlines
Now, let’s move further and continue the article with the SWOT analysis of Southwest Airlines company.
The first letter S in SWOT, denotes the strengths of the company. Following are the company’s several strengths:-
Company culture and values
The first strengths of the company are its values and culture. Southwest Airlines follows up its LUV culture and brings new customers into its family. Treating every customer as part of their family helps them to enhance customer loyalty.
Efficient point-to-point system
Generally, most airline companies operate on a hub model in which they consolidate their resources in significant hubs, i.e., cities. But Southwest Airlines does not do so. It schedules its flights between the downtown or the secondary airports. And these types of airports are less clogged. Thus, it leads to high utilization of assets.
Strong financial performance
The vital purpose of any business is to attain greater profits. Southwest Airlines maintains a healthy balance sheet and has a compelling financial position. As of 2022, the company’s gross profit was around $6.103 billion, which was 13.29% more than the profit of 2021, which was $5.387 billion.
Focus On Customer Service
Lastly, the company focuses primarily on its customer service. The company’s employees are beneficial and friendly and continuously try to give their customers a positive and memorable travel experience. It helps them to create a loyalty base with their customers.
W denotes the weaknesses of the company. Along with various strengths, the company has a few failings also, which are:-
Limited International Routes
The company’s primary weakness is its operation on a few international routes only. It mainly depends on its domestic market, which restricts its ability to operate and serve a broader market. It can also make it vulnerable to regional shifts in the economy.
Dependence on the Boeing 737
As the company operates on a single aircraft only, i.e., Boeing 737, it affects the efficiency of Southwest Airlines.
Additionally, the company may face several potential issues with the aircraft’s model. In 2019, the FAA issued the order to ground Boeing 737, which resulted in a company revenue loss.
Lack of first-class seating option
The company’s weakness of the lack of first-class seating options also discourages several customers. Most customers prefer flights with first-class seating facilities and amenities like seat assignments, in-flight meals, etc.
Limited partnership with other airlines
Southwest Airlines have limited or no partnership with other airlines. Also, it is not a member of any significant global airline alliance. It might limit its ability to expand its reach and attract international customers through partnerships or code-sharing agreements.
The opportunity phase reflects the opportunities the company can grab to grow its business and survive in the market. The possibilities for Southwest Airlines are:-
Expansion of international routes
One of the substantial opportunities for Southwest Airlines is to expand its network of services beyond the countries it is currently serving. The company can also develop and diversify its revenue streams by expanding its international routes.
Growth in domestic air travel
Secondly, the company can also enhance its growth in domestic air travel, i.e., offering long-distance flights instead of short hauls to make the most of the increasing demand. It is so because most individuals prefer to live and work abroad.
Acquisition of smaller airlines
The company must also take the opportunity to procure smaller airlines. It will assist the company in expanding its operations internationally and domestically. Also, the company can increase its revenue by increasing its revenue streams.
Development of new technologies
The company should cope with today’s internet era and adopt new technologies. The company’s technologies can embrace AI-driven customer service, enhancement of mobile applications, enforcement of biometric boarding, etc. It will also help to leverage the customer experience with the company.
At last, there are a few threats also from which the company needs to be aware. The threats to the company are:-
Intense competition from other airlines
Southwest Airlines is one of many players in the US airline industry. Various other airlines, such as Alaska, Jet Blue, United, Delta, and others, offer airline services. So for Southwest Airlines, there is intense competition from other airline companies.
Volatility in fuel prices
Airline industries are too dependent on fuel, and their sustainability and profitability depend on fuel prices. With the increase in fuel prices, Southwest Airlines’ operating costs will also increase, impacting the company’s profitability.
Economic downturns and recessions
With the higher rate of uncertainty in economic recessions and downturns, people will prefer to avoid airline travel. Also, It may lead to a reduction in the company’s revenue and operations.
Natural disasters and other events that disrupt travel
The growing changes in the climate give rise to natural disasters and other events. It is also a threat to Southwest Airlines as people will backslash and shift their preference of traveling from Southwest Airlines to some other. It will decrease the company’s demand and increase its operating cost eventually.
Southwest Airlines schedules its services to how many countries?
The company schedules its incredible services to 120+ destinations across the US and ten other countries.
What is the SWOT analysis of Southwest Airlines?
The SWOT analysis of Southwest Airlines refers to the technique to examine different internal and external factors that affect the company's operations. It analyzes the strengths, weaknesses, strengths, and threats of Southwest Airlines.
What are Southwest Airlines' strengths?
The company has various strengths, including its efficient point-to-point system, focus on customer service, culture, values, etc.
The article on the SWOT analysis of Southwest Airlines outlines the different strengths and weaknesses of the company. It also points out the new opportunities for the company that the company can grab and expand its growth and revenue. There are also a few threats to Southwest Airlines that the company should consider.
See Also: SWOT Analysis of Tesla