Southwest Airlines Co., is a major domestic airline that provides predominantly
shorthaul, high-frequency, point-to-point, low-fare service. Southwest was incorporated
in Texas in 1967 and commenced Customer Service on June 18, 1971 serving three
Texas cities - Dallas, Houston, and San Antonio.
One of Southwest’s competitive strengths is its low operating costs. Southwest
has the lowest costs, adjusted for stage length, on a per mile basis, of all
of the major airlines. Among the factors that contribute to its low cost structure
are a single aircraft type, an efficient, high-utilization, point-to-point route
structure, and hardworking, innovative, and highly productive Employees.
Marketing and Competition
Southwest focuses principally on point-to-point, rather than hub-and-spoke,
service in markets with frequent, conveniently timed flights and low fares.
At year-end, Southwest served 337 nonstop city pairs. Southwest’s average aircraft
trip stage length in 2003 was 558 miles with an average duration of approximately
1.5 hours. Examples of markets offering frequent daily flights are: Dallas to
Houston, 35 weekday roundtrips; Phoenix to Las Vegas, 19 weekday roundtrips;
and Los Angeles International to Oakland, 22 weekday roundtrips. Southwest complements
these high-frequency shorthaul routes with longhaul nonstop service between
markets such as Baltimore and Los Angeles, Phoenix and Tampa Bay, Seattle and
Nashville, and Houston and Oakland.
Southwest’s point-to-point route system, as compared to hub-and-spoke, provides
for more direct nonstop routings for Customers and, therefore, minimizes connections,
delays, and total trip time. Southwest focuses on nonstop, not connecting, traffic.
As a result, approximately 79 percent of the Company’s Customers fly nonstop.
In addition, Southwest serves many conveniently located satellite or downtown
airports such as Dallas Love Field, Houston Hobby, Chicago Midway, Baltimore-Washington
International, Burbank, Manchester, Oakland, San Jose, Providence, Ft. Lauderdale/Hollywood
and Long Island Islip airports, which are typically less congested than other
airlines’ hub airports and enhance the Company’s ability to sustain high Employee
productivity and reliable ontime performance. This operating strategy also permits
the Company to achieve high asset utilization. Aircraft are scheduled to minimize
the amount of time the aircraft are at the gate, currently approximately 25
minutes, thereby reducing the number of aircraft and gate facilities that would
otherwise be required. The Company operates only one aircraft type, the Boeing
737, which simplifies scheduling, maintenance, flight operations, and training
activities. Southwest does not interline or offer joint fares with other airlines,
nor have any commuter feeder relationships.
Southwest employs a relatively simple fare structure, featuring low, unrestricted,
unlimited, everyday coach fares, as well as even lower fares available on a
restricted basis.
Southwest was the first major airline to introduce a Ticketless travel option,
eliminating the need to print and then process a paper ticket altogether, and
the first to offer Ticketless travel through the Company’s home page on the
Internet.
4.4% 
