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Discount Airlines Compete with Legacy Airlines, but the Differences Are Beginning to Blur, Business and Industry Trends Analysis

Since its first flight in 1971, Southwest Airlines and its no-frills business model enjoyed tremendous success, wooing customers based on price, not perks. For most of its history, Southwest’s single-plane platform strategy (Boeing’s 737) kept maintenance costs low, while its point-to-point flying system has helped to give it a solid reputation in on-time performance. (Southwest picked up some Boeing 717s when it acquired AirTran, adding a second type of aircraft for the first time in its history.)

Despite the fact that Southwest started out as a discount airline, it has grown to be one of the U.S.’ largest carriers with operating expenses commensurate with its size. Some might argue that Southwest is no longer a discount airline—that its decades of operations, massive size, ticket prices and business strategy make it more of a legacy airline, albeit one without significant overseas routes.

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