The Archetypical Low-Cost Air Carrier: Southwest Airlines :: Aviation Southwest Airlines Flying Essays

AbstractThe seventh largest major domestic airline in the United States (US), Southwest Airlines, is commonly cognise or referred to as a low-cost carrier. Southwest Airlines is the only major airline that provides short-haul, point-to-point service in the United States. In fact it was the first airline of its type ever started it has become the archetypical low-cost airline. The idea has proven itself so well, that other start-up airlines allow based their company strategies upon the basics of Southwest. Today, there are two other low-cost air carriers (the other two airlines are considered national airlines and not major airlines) that are actively and aggressively competing with Southwest Airlines for disdain and profit turning. The three American low-cost air carriers are currently posting profits even in light of the US economys current state of affairs, with Southwest Airlines first, JetBlue second, and Air Tran third, in profits. How is this possible when the major six air lines are reporting losses of millions and millions of dollars separately quarter? The answer to this perplexity begins about 30 years ago. The Archetypical Low-Cost Air Carrier Southwest AirlinesThe product one airline can offer is the same precise product the next airline can offer, a single available seat mile (ASM) for sale. The difference between the airlines lies in the marketing, routing, pricing, executive decision-making, and the operating strategies that each airline chooses to espouse regarding that one product. It is through these strategies that an airline must find productivity in total revenue passenger miles (RPM) flown to be profitable. When the ASM is filled with a fare-paying passenger, sales or income is recognized, and it converts to an RPM. The relationship between the ASM and RPM are directly related and is expressed in percentages known as Load Factors (LF). This LF is a counseling tool used to determine the efficiency and health of the airline. It is nec essary to keep these two variables in balance of each other. Southwest Airlines load factors are be in Figure 1 and 2. RPMLF = ASMMany airlines choose to use the hub network, which induces costly effects in all areas of the airline. It is the point-to-point short haul airline that is heart-to-heart of keeping costs low and turn profits, Southwest Airlines has proven just that. Southwest Airlines survived the initial years of deregulation, years of cyclical business cycles that may have led to recessionary and or inflationary periods, and its 25-year