Southwest Airlines and Ryanair: How the Low-Cost Leader Lost its Way

Abstract

Southwest Airlines (SWA) started in 1971 and was the original low-cost airline. Southwest Airlines focused on reducing costs to reduce prices. The strategy resulted in attracting loyal customers and the airline became the low-cost leader. The success of Southwest Airlines attracted Michael O’Leary from struggling Ryanair. O’Leary came to the US to study Southwest Airlines operations. O’Leary returned to Ireland and implemented the Southwest Airlines low-cost business model for Ryanair. Currently Ryanair under O’Leary’s ruthless implementation of low-cost is the global discount airline leader. Southwest Airlines had lost its way and began to look like legacy carriers. Southwest Airlines was under pressure from active investor Elliot Management to make changes. What will Southwest Airlines management do?