Miscellaneous

Southwest Is Doing What No One Thought It Would. It’s a Master Class in Market Expansion

Southwest has seen tremendous growth over 2021, with expansion into 18 new markets and turning a profit for Q4. Despite the hard-hitting impact of the pandemic on the travel industry, staff shortages, events going virtual, and the rise of staycations, the airline carried on and did what no one thought an airline could: it grew. 

And now Southwest is beginning to do what no one thought the budget airline would: attract corporate travelers. 

For anyone that is familiar with the low-cost carrier, the idea of Southwest looking to attract corporate travelers sounds laughable. After all, while the airline has some great perks for the average economy-class passenger, none pertain to business-class travelers whose ticket already comes with free checked bags and the flexibility to cancel or change flights. And let’s not forget the little fact that its planes lack one pretty big thing: business class cabins. 

But in an oddly genius move, Southwest is making the so-called pipe dream a reality by making route map expansion a core recovery strategy. And though the airline may be seen as tone-deaf for using this time to expand its routes and reach new markets-that’s only to those who are blind to its long-term plan: market expansion. 

What Southwest is doing is expanding into smaller, more vacation-friendly destinations that people want to go to, such as Telluride, Palm Springs, and Southern Maine. But it’s not just holiday seekers heading off to hit the slopes or relax on a warm beach that is attracting Southwest passengers. 

As more businesses shift to fully remote work and the Great Resignation (or better yet, the Great Reshuffle) continues, where we work isn’t the only thing that’s changing. But where we live is changing too. 

The pandemic created the perfect mix for booming real estate prices. Homes became more important than ever as more people were working from home all week and couped up inside all weekend with nowhere to go. Rising rent and historically low-interest rates made home-buying more appealing than ever. And thanks to remote work trending permanent, people aren’t buying homes based on the proximity to their employer. But rather moving to “vacation-friendly” destinations in the vicinity of their favorite pastimes.

What this means for the airline industry is that people are becoming more dispersed and business travelers are no longer tethered to cities like New York, Chicago, or San Francisco. Now, as more people are moving out of big cities, business travelers are everywhere-like Southwest. 

Southwest has a history of resilience that is born out of a holistic approach to strategy and a deep understanding of human psychology. It knows that corporate travelers do not simply choose airlines by which offers the best buffet in the airport lounge, the most points, or the biggest first-class cabins, but by its value. 

And when people value their time, they also value the convenience of an airport in their local area and the time it affords them back with their families, their friends-their lives. Because no matter how many bells and whistles an airline comes up with to dampen air travel, people don’t fly for fun. They fly to get to where they are going. And to get them there, Southwest is strategically positioning itself to meet people where they are. 

The airline industry is fiercely competitive and notoriously difficult-but it’s not unlike a number of other industries. And like other industries and the businesses starting and operating within them, those that manage to succeed-and even weather the storm, are those that truly know their consumer and their value. It’s with this knowledge that businesses can meet people where they are and get them to where they want to be.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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