Case 3 Southwest Airlines business-level strategy was cost leadership. They have employed numerous ways to reduce cost while still providing great service for their loyal customers. The best evidence of this strategy was the decision to use one type of aircraft which cut out expenses such as maintenance, tools, and parts to name a few. The implementation of blended winglets and the use of EcoPower engine wash, which saved the company millions, were also good indicators of a cost leadership strategy. Southwest Airlines has the capability to operate at a high profit margin. The company’s high profit margin of 4% is a direct result of the business-level strategy. Southwest Airlines was able to successfully lower costs in all the right places, and as a result, had the highest profit margin of all the airlines. Not only did they have the highest profit margin, but they also had the highest ROA of 1.2%, nearly double the closest competitor. Southwest Airlines competitive advantage is their ability to make a profit and successfully lower costs which is directly related to their cost leadership strategy. Southwest’s net income has increased each year from $484 million in 2005 to $499 million in 2006 and $645 million in 2007, they are also the only company besides JetBlue with a positive profit margin in 2008. Southwest is able to provide a low price flights, while maintaining low costs, and exceptional customer service in a presence of strong competitive forces. These advantages are directly related to the cost leadership strategy used by Southwest Airlines.