After 18 months of operations, deficit Southwest Airlines is on the verge of profitability. Selective application of reduced rates has contributed to a rapid growth in market share. Then, in February 1973 halved its major competitor prices on all major route Southwest. Management must decide how to respond. Exhibits detail Southwest cost structure as well as passenger and aircraft statistics for Southwest and competitors.

After 18 months of operations, deficit Southwest Airlines is on the verge of profitability. Selective application of reduced rates has contributed to a rapid growth in market share. Then, in February 1973 halved its major competitor prices on all major route Southwest. Management must decide how to respond. Exhibits detail Southwest cost structure as well as passenger and aircraft statistics for Southwest and competitors.
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Christopher H. Lovelock
Source: Harvard Business School
15 pages.
Release date: 01 September 1975. Prod #: 575135-PDF-ENG
Southwest Airlines (A) HBR case solution