Creating a sustainable competitive advantage is important for all companies, but maybe even more important for the actors in the airline industry. A number of major events, e.g. the Gulf war, 9/11 attacks, SARS-epidemic, down turn in the economy, and recently the Iraq war, have put a heavy burden on all airline carriers. The industry has experienced a change from business travellers that did not care about the fare price to a demanding and price sensitive customer base including both business and leisure travellers. Southwest Airlines is the only major airline that has been able to uphold their profitability during these harsh years. The purpose with this thesis is to analyse Southwest Airlines set of competitive advantages and determine the key factors in creating them. Further more we will test if their competitive advantages are sustainable or not. To carry out our purpose we have used a qualitative approach in form of a modified case study. Our data consist of mainly secondary sources but also a supplementary interview with a representative from Southwest Airlines. Our analysis of the empirical material has been applied to our theoretical framework, which consists of two well-known major theories; the resource based view and the value chain. By applying the empirical data to the theoretical framework we came up with six variables that are vital to create a competitive advantage for a low-cost carrier in the airline industry. Three of these variables, Communication, Atmosphere, and People are sustainable because they are highly intangible and therefore almost impossible for the competitors to duplicate. The remaining three variables, Procedure, Infrastructure, and Edge are more tangible and therefore easier for the competitors to duplicate. Southwest Airlines has built up their three intangible variables under its 37 years of business and has during that time managed to gain a competitive advantage through them. The remaining three variables a more important role until a few years ago. Today, the increased competition has led to competitors catching up on Southwest lead within these areas. Our findings are summarized in a model that identifies and highlight the key success factors in creating a competitive advantage within the low-cost segment of the airline industry.