Southwest Airlines is the most flown airline in the United States with well over 100 million passengers a year and sometimes operating four thousand flights per day during peak travel seasons Southwest has become the go-to for travelers hoping to get from A to B at a low price. However, it wasn't always as popular.
This titan of the industry used to only legally be allowed to fly in the start of Texas until deregulation of the industry in 1978 allowed it to cross state lines this is a story of how an airline started offering a few flights a day became one of the most flown in the world. Southwest Airlines named air Southwest company was established in 1967 by Herbert Kelleher as a strictly intrastate airline within the borders of Texas the company would later go on to change its name to Southwest Airlines in 1971.
From the very beginning southwest was under attack by competitors due to Southwest business model of undercutting prices and gaining its reputation as low cost carrier. Southwest was able to win the lawsuits filed by their competitors due to their exemption from the regulations that national carriers had to follow thus allowing the company to grow significantly within the state of Texas. In 1978, the airline industry was deregulated by the introduction of the Airline Deregulation Act, this new legislature removed government controls over fares routes and new entrants essentially turning the industry into a free market.
This paved way for the Southwest to branch out into interstate service and to deploy its already very successful business model on a much larger scale however they did it with caution. As the new age of a deregulated airline industry settles in many low-cost carriers rushed to grow as quickly as possible but unfortunately spread themselves too thin trying to capture new market.
Due to the nature of low fare pricing in the inherently sky-high cost of running a airline eight major US carriers and over 100 smaller airlines went bankrupt from 1978 to the early 2000s American staples such as Pan Am, eastern Airlines and Trans World Airlines all suddenly vanished due to their hasty approach at conquer new markets so what at Southwest do that differentiated themselves from everyone else, they used their heads.
Southwest has always known what their business model is and they have always stuck to it, they make their money being the cost leader in the industry it is their brand and that is where they deliver value to the customer however
being a cost leader means that you also must focus on your cost due to the smaller profit margins from the lower fares.
Southwest does this in a number of ways first and foremost the company only uses one type of aircraft the Boeing 737, this diminishes the cost of maintaining their planes since they all use the same parts, another signature Southwest feature is that the company has flight staff begin cleaning the plane before it has even landed they will even let you help if you want.
Since the company only makes money when the planes are in the sky, cleaning the plane ahead of time allows for a quick turn around at the gate and to get the new passengers on as fast as possible. Southwest is also a master marketer and their secret is to use humor to sell tickets. Southwest brand is far and away the most recognizable out of any airline in United States. All this has led to Southwest Airlines being profitable for more than 45 years in a row. In 2018 the company posted revenue of almost 22 billion dollars and a net income of 3.2 billion dollars.
Southwest business model has now been replicated multiple times over across the globe by carriers like Europe's Ryan, Air Canada's West jet, Indonesia's Line Air and many others. However, Southwest still continues to thrive
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