Southwest Airlines (LUV) investor relations material

American Low-cost Carrier

Southwest Airlines is an American low-cost airline operating primarily in the United States and neighboring countries. It is one of the largest domestic carriers in the US based on passengers flown, and one of the largest in North America. Unlike other major carriers, it operates on a point-to-point network combined with a rolling hub system. Additionally, the airline differentiates itself by offering passengers the option of free checked baggage, a benefit not commonly provided by its competitors. The company is headquartered in Dallas, Texas, and its shares are listed on the NYSE.

Texas Made

The company was founded in 1967, by Herb Kelleher and Rollin King as Air Southwest (the current name was adopted in 1971). Initially, it functioned as an intrastate airline exclusively within Texas, connecting Dallas, Houston, and San Antonio. The airline's operations expanded beyond Texas in 1979, eventually growing into a nationwide service over the subsequent years. Southwest Airlines has established itself in the highly competitive U.S. airline industry with its emphasis on short-haul, high-frequency, point-to-point flights. This strategy differentiated it from other airlines during its early days but also established Southwest as a popular choice for domestic air travel in the United States. Some of the company’s closest competitors are JetBlue and Spirit.

The Passenger Experience

Southwest Airlines offers a passenger experience characterized by a unique boarding process and customer service approach. Unlike many airlines, Southwest does not assign specific seats; instead, passengers choose their seats upon boarding, based on a numbered boarding group system. This approach aims to streamline the boarding process. The airline is also known for its customer-friendly policies, including free checked baggage for the first two bags, and no fees for flight changes, which are relatively uncommon in the industry. As is standard in the industry, Southwest provides in-flight services such as snacks and beverages, with WiFi and entertainment options available on most flights.

The Fleet

Unlike many other airlines, Southwest operates a fleet exclusively consisting of Boeing 737’s. This is something that brings with it several advantages and is a strategy that has been employed by the airline throughout its entire history. This uniformity allows for streamlined maintenance, training, and scheduling processes, thereby reducing costs.