1. Southwest has successfully adopted a cost leadership strategy.
• Southwest maintains operating expenses per available seat mile at 15-20% below average.
• The company has no baggage handling, no meals, no central reservations, and no assigned seats.
• Because all of its planes are Boeing 737s, maintenance, turnaround, and training costs are contained.
• The company has embraced technology that will reduce costs (e.g., ticketless travel).