ABSTRACT
Southwest Airlines (SWA) was established in 1967 in Dallas, Texas, but unable to enter revenue service before June 14, 1971 due to a protracted legal battle with its incumbent competitors. While most other start-ups on the deregulated US market failed to survive even their first few years in the business, SWA's revolutionary formula turned the company into the most consistently profitable airline ever. Adopting a SWA-style business model per se is no guarantee for long-term success, as shown by the mixed fortunes of various other low-cost carriers. The lessons from SWA's rise – most of which challenge conventional wisdom about what corporate strategy would be appropriate in a deregulated business environment – therefore offer invaluable insights into the nature of competition in the airline industry. SWA's specific business model safeguards the carrier far better than its more vulnerable competitors from the recurrent crises of the airline industry and lets it emerge ever stronger after each downturn.
