Environmental Analysis: Southwest Airlines Essay

1438 Words Jul 23rd, 2008 6 Pages
Southwest Airlines Southwest Airlines is one of the most successful airlines in the United States. There has never been layoffs or strikes in the history of the company, although there were several times when layoffs could have been justified, including the months following the September 11, 2001 terrorist attacks. However, Southwest's Mission statement says “Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.” (Southwest, 1988). The Airline has always believed that their corporate culture is one of the keys to their success. The culture recognizes that employees have emotional intelligence and that their …show more content…
The Air Transportation Industry contributes an average of 0.4 percent to the GDP. However, has GDP has increased, the Air Figure 2: Growth of Air Transportation Industry and the Gross Domestic Product. (Bureau of Labor, 2008) Transportation Industry has not done the same. Rising oil prices has had a profound impact in the aviation sector. Inflation from May 2007 to May 2008 has been 4.2% (Crawford, 2008). However, almost half of the inflation is caused by rising food and oil prices. According to Reuters, “... core prices are up a tamer 2.3 percent over the past 12 months, the same as in April.” (Felsenthal, 2008). Fuel expenses in the airline industry have previously ranged from10 to 15 percent of an airlines operating costs; however, with rising oil prices, fuel costs are between 35 and 50 percent. (Air, 2008). Unable to raise ticket prices twenty percent without drastically lowering demand, the airlines must take a cut in profits causing a flat growth curve even as the number of passengers goes up. As the airline industry heads into a new era of high oil prices and lower consumer spending, Southwest Airlines has the opportunity to expand. In June 2008, Southwest has planed to cut over 31 of its routes but add 40 others causing a net expansion.

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