Marketing for Hospitality and Tourism - Case Study Example

Summary

This case study "Marketing for Hospitality and Tourism" discusses Southwest Airlines that uses a low-cost pricing system that is based on the lowest operational costs, lowest ticket prices, and the highest profit margins. For example, its cost per average seat mile in 2004 was 8.09 cents…

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Subject: Tourism
Type: Case Study
Level: Ph.D.
Pages: 1 (250 words)
Downloads: 3
Author: cummingslitzy

Extract of sample "Marketing for Hospitality and Tourism"

This, compared to major carriers’ figures of between 9.42 and 11.18 cents, was quite a competitive price (Kotler and Bowen 20).

The company has also locked out travel agents (Kotler and Bowen 21) and encourages its passengers to buy tickets directly from it. This has allowed it to eliminate the need to pay commissions, something that fits in with its cost-cutting strategy.

Southwest tends to avoid big airports that are riddled with bureaucracy and delays that reduce its overall efficiency (Kotler and Bowen 21). This was one of its dilemmas when it decided to go head-to-head with US Airways in Philadelphia, which embodies the red tape nature of America’s largest airports. Any form of delay lowers efficiency and this is closely related to the company’s cost-cutting mantra. Despite everything, rivals have started to catch up with Southwest’s cost leadership strategy (Kotler and Bowen 21). The company is no longer the only budget airline in the US, and some rivals like JetBlue and AirTran are offering even lower prices. Southwest has now started experiencing the problems faced by large carriers; the same ones it exploited to take over their strongholds.

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