What is Southwest Airlines Key problem? Expansion .
If there is a problem that faces this airline it would have to be expansion. In 2001 they are only adding one new city, West Palm Beach, because demand for aircraft throughout their existing system is at an all time high.
What are the Symptoms? .
To meet the demands of the coming years, Southwest has placed an order for 290 new Boeing 737-700's. These purchases bring their fleet to over 450 aircraft. At present there are over 100 cities that have petitioned for Southwest service at their local airport. Before any of these cities can be added to the route sheet the company must ensure they have the available seat miles, personnel and infrastructure to support and maintain the route.
External factors in the Competitive Arena.
Many factors would have to be examined prior to adding a new service point. Would the existing facilities at the new airport provide adequate gate space? With company philosophy on providing minimal turn around time, they would not provide service to a facility were they might have to wait on another carrier to clear a gate. .
Another factor that may influence selection of an expansion area is weather. Southwest is very proud of their reliability and leads the industry in the category. In 2000 they canceled the least number of flights among the major airlines. This is partially because they operate a point-to-point service so if one flight is late it does not affect the follow-on leg. But when looking at the cities they serve it is quite noticeable that they serve very few area were weather, especially in the winter, is a frequent problem.
The most critical factor would be load factor. Would the new airport be capable of providing enough passengers to keep the load factors high enough? The management has kept this number up by only entering into new markets that support lots of flights. Historically demand has increased once service becomes available but proper research is critical.