ORGANIZATION
Southwest Airlines
Kim and Mauborgne's blue ocean case demonstrating how eliminating hub-and-spoke routing, assigned seats, and meals while creating point-to-point service made the car — not other airlines — the reference competitor, opening uncontested market space.
Southwest Airlines is Kim and Mauborgne's paradigmatic case of a company that created a blue ocean not by outcompeting rivals in the existing airline industry but by making the airline industry's competitive factors irrelevant. Founded in 1971, Southwest entered an airline industry that competed on hub-and-spoke routing, multiple cabin classes, assigned seating, airport lounges, in-flight meals, and baggage connections — a set of factors that delivered convenience at high cost. Southwest eliminated most of these factors: no assigned seats, no meals, no lounges, no hub-and-spoke complexity. It created new factors: point-to-point routes, rapid turnarounds (planes on the ground for fifteen minutes instead of an hour), and a
culture of informality and humor. The result was a cost structure low
enough to compete not with United or American Airlines but with driving — making the automobile Southwest's reference competitor. The blue ocean was not the airline market. It was the short-haul travel market, where millions of people chose cars over planes because flying was