The airline business is a tough, unglamorous business to be in, that much seems clear.  Oil prices you can't control, the lingering threat of terrorism, ornery unions to wrangle with, and aging fleets that require huge outlays to modernize.  There are better businesses to be in.

But that said, I really like Southwest.  I travel a fair bit and Southwest is really head and shoulders above the competition.  There are a couple of smart ways that they differentiate themselves:

1. No bag fees.  People hate bag fees.  You think you might save $100 on an another airline like LCC (US Airways), but then you remember you're going to get charged $25/bag each way when you get to the airport. What an awful model those others have.  Just build it into the price!  And not only does Southwest beat the others on this issue, they aggressively market this fact with their Bag Police ads.  Which are a little dumb, but they do get the point across.

2. You have to go on their website to get their prices.  You can't use expedia or orbitz.  While this is certainly not good for consumers, it's good for them.  Because you're forced to search with their branding and without competitors right next to their fares.  They encourage you through this, and with RapidRewards, to fly only Southwest.  This was a risky move when they decided to delist from Expedia and Orbitz, but I think it's paying off.

3. That RapidRewards program, with no blackout dates, is ranked right at the top of frequent flyer programs, encouraging more brand loyalty.  A study found their program was the most likely to actually award the flight, 99.3% of the time, versus the worst, LCC, 25.7%.  So there really is a difference there.  http://www.bizjournals.com/philadelphia/news/2011/05/26/southwest-ranked-be...

Their brand is so strong that they actually are #4 on Fortune's Top 50 Most Admired Companies for 2011. http://money.cnn.com/magazines/fortune/mostadmired/2011/full_list/

These are my reasons for believing that Southwest will increase their market share over the next year, with the stock to follow. 

If you don't believe me, check out this Trefis analysis for LUV on SeekingAlpha:

http://seekingalpha.com/article/270840-with-low-cost-business-model-southwe...

Clearly, it's not the glory days of airline travel, when every stewardess was a 9 and there were free cookies and scotch for all.  You can't take your kid up to meet the pilot and there's no free blankets, just a tiny pack of pretzels.  But in this world of diminished expectations, Southwest is the best out there right now.