Question

what are the differences in pricing strategies utilized by Southwest versus most of its competitors?

Answer 1

Southwest Airlines is a low-cost carrier in the US. Due to their different business model, they enjoy cost advantage over other mega carriers in the industry.

As compared to its competitors, Southwest is bundling checked bags into its base fare, which no other airlines gives. Thus by bundling the checked bag fares with the base fares, they are acting more customer friendly, and thus try to attract more customers.

Thus Soutwest aims to crush its competitors with their low fares, and thus take lead in the market.

When Southwest enters the market, it enters with low cost low fare airlines. Thus the travel customers explodes, forcing other market players to cut their cost by over 29% in order to match with Southwest, and still they couldnt match Southwest without incurring Losses. Southwest cuts down the fares by almost 50% than the prevailing fares, hence it crushes its competitors.