Wednesday, December 08, 2010
Southwest Expands and Slips
Are we seeing the first signs of slippage in the Southwest model given its aggressive expansion of late? As readers of this blog now, I'm always concerned when firms begin to violate their tradeoffs, which made them unique, in an effort to drive growth. In the past few years, Southwest has moved into congested airports such as LaGuardia and Boston's Logan Airport. Now, we read from Business Week that Southwest has slipped to eighth in on-time arrivals, after being first or second for many years. Moreover, turnaround time has increased from twenty minutes to thirty minutes. Can Southwest stop the slide? How will the AirTran deal affect this decline in performance? Southwest bears close watching in the next year or so.