Southwest Airlines PESTEL Analysis

Introduction

Southwest Airlines carried the most passengers in the United States in 2018, with the total number of passengers being 163.6 million. Delta, American, and United Airlines are among Southwest's biggest competitors in the first three quarters of 2019. The airline industry is one of the world's most volatile industries, facing many economic, political, and technological challenges. 

On the one hand, it is a very competitive industry, but on the other, it is also highly regulated and heavily taxed. The US airline industry is also under continuous pressure from compliance and profitability. Price, operating costs, high competition, and regulation are among the challenges that limit faster growth. Stay tuned to the Southwest Airlines PESTEL analysis in this article.

Background of Southwest Airlines

Southwest Airlines Co., also known as Southwest, is one of the largest airlines in the United States and the world's largest low-cost carrier. It has scheduled service to 121 cities in the United States and 10 additional countries. Southwest Airlines Co., founded in 1967 by Herb Kelleher and Rollin King, began operations as an intrastate airline entirely within Texas in 1971 and currently flies between Dallas, Houston, and San Antonio. It began regional interstate service in 1979 and expanded nationally over the next few decades. Southwest currently operates at airports in 45 states and several Central American destinations. Southwest's business model is different from other US airlines in that it relies on a rolling hub and a point-to-point network and offers free checked baggage. Its fleet has only Boeing 737 jets.

Southwest Airlines PESTEL Analysis

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To assess Southwest Airlines' external environment analysis, we will use PESTEL analysis. By evaluating the PESTEL analysis example using the Political, Economic, Social, Technological, Environmental, and Legal factors, you can identify the threats and opportunities that a company can face. Also, you can identify future requirements and changes based on these trends by using this analytical tool.

Political Factors

Southwest Airlines' domestic operations got significantly impacted by government agencies, including the Federal Aviation Administration. For example, the 1979 Wright Amendment stopped the airline from flying non-stop or offering through-plane services from Dallas Love Field to other than seven cities. A law to repeal the Wright Amendment that goes into effect in 2014 was recently passed. Southwest Airlines has won court battles against rivals in the United States.

Economic Factors

Fuel costs have a severe impact on the airline industry. A rise in oil prices significantly impacts Southwest Airlines' profitability. Since the economic recession, customers' demand for air travel has decreased due to changes in personal and business spending across the US. But, consumer demand for low-cost, no-frills air travel has remained unaffected and, in fact, has increased.

Social Factors

Southwest Airlines is very committed to customer service. The general ethos of Southwest Airlines is that the company is in the customer service business, and it just happens to fly planes. The company hires a customer service aspirant regardless of experience and only based on attitude for employment. Within the company, there is a post of Vice President of Customers.

Technological Factors

Southwest Airlines has faced both new opportunities and threats due to technological advances. Information and communication technologies have allowed for robust communication and provided frequent travelers with an alternative. Through technology, Southwest Airlines has also used e-commerce to expand its reach directly to consumers. E.g. through technology, it was able to introduce ticketless travel. Southwest Airlines' reservation system is considered outdated. It must be updated to allow the company to sell international tickets, provide passport information to federal authorities, and improve customer relations, among other services.

Environmental Factors

The environment is impacted more severely by aircraft emissions because they travel several kilometers above the earth's surface. Aircraft emissions cause major damage to the atmosphere. Community noise is another primary environmental concern. Air traffic noise is not only a cause of irritation and an unsettling experience, but it can also pose serious health risks.

Legal Factors

The American airline industry is subject to a vast and complex web of laws, which have been in place since deregulation in 1978. The central regulatory bodies for airline operations and related regulations are the Department of Transportation and the Federal Aviation Administration. Passenger safety is one of the most critical legal issues in the airline industry in the United States. However, the Airline Council has not yet determined a statewide "Code of Conduct" for commercial airline operations, labor, customer service, and the environment.

Southwest Airlines PESTEL Analysis PDF 

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Key Takeaways

So, that was about Southwest Airlines' external environment analysis. We also recommend PDF agile as an excellent tool for creating, editing, and converting your report in a different format. This article is also a PESTEL analysis example that you can use as a reference when creating your own PESTEL analysis.

References

Phdessay is available at: https://phdessay.com/southwest-airlines-swot-Pestel-and-five-forces-analysis/

Notesmatic is available at: https://notesmatic.com/southwest-airlines-Pestel-analysis/

Embapro available at: https://embapro.com/frontpage/Pestelcase/17797-southwest-s-southwest