Southwest Airlines Case Analysis

1272 words 6 pages
Southwest Airlines Case Analysis
Problem
As a fledgling operation, how does a startup company compete within an established market in terms of price, performance and promotion
Issues
On February 1, 1973 Braniff airlines announced a half-price “Get Acquainted Sale” on all flights between Dallas and Houston. This was Southwest Airlines most profitable route. Southwest had to decide how to respond to Braniff Airlines move.
Southwest Airlines is a startup business * They faced barriers to entry; lack of capital, equipment, manpower, airplane berthing spaces, no consumer identity
There are would be 3 players in a competitive and price sensitive market; Southwest Airlines, Braniff Airlines, and Texas International Airlines (TI)
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They also positioned themselves against Braniff as an obviously fun organization. * Partnered with the Bloom Agency to handle publicity and Wells, Rich, and Greene to handle advertising * Positioned the airline as young, fun, and hip which cast them against Braniff and TI * Also stressed reliability of their service, attractive hostesses, fast ticketing, and low fares * Erected prominent billboards which repeated themes near all airports

Data
Information from Income Statement | 1971 | 1972 | | Q1 | Q2 | Q1 | Q2 | Q3 | Q4 | Transportation Revenue | 887 | 1138 | 1273 | 1401 | 1493 | 1745 | | 1211 | 1280 | 1192 | 1145 | 1153 | 1156 | | | | | | | | Operations as % of revenue | 1.365276 | 1.12478 | 0.936371 | 0.817273 | 0.772271 | 0.662464 |

Southwest: Discount vs Regular Fare Flights | All Routes | | Price Change | | | | | Regular Flights | | Discount Flights | | | | | | | | Passengers | Flights | | Passengers | Flights | | | | | | | | | | average passengers/flight | | | average passengers/flight | | | | | | 1971 Total | 113814 | 6467 | 17.5991959 | 271 | 8 | 33.875 | $10 fares some eves& weekends | | | | Jan-72 | 20694 | 899 | 23.0189099 | 170 | 4 | 42.5 | | | | | | Apr-72 | 24077 | 916 | 26.2849345 | 573 | 8 | 71.625 | | | | | | May-72 | 23112 | 869 | 26.5960875 | 2189 | 51 | 42.92156863 | $10 all flights after 9pm | | | Jul-72

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