Competitive Strategy Southwest Airlines

The domestic US airline industry has been intensely competitive since it was deregulated in 1978. In a regulated environment, most of the cost increases were passed along to consumers under a fixed rate-of-return based pricing scheme. This allowed labor unions to acquire a lot of power and workers at the major incumbent carriers were overpaid. After deregulation, the incumbent carriers felt the most pain, and the floodgates had opened for newer more nimble carriers with lower …

…competencies, reinforce its core values and must continue to align the incentives of its employees with those of the company. In an industry with cut-throat competition and limited profit-making potential, Southwest has successfully pursued a resource based approach to creating sustainable competitive advantages. To continue to succeed and grow, Southwest must focus on identifying and filling resource gaps and continue to offer a differentiated product by exploiting its past organizational learning and its unique characteristics.