Southwest Airlines is a super successful company that is one of the most loved and most own domestic airlines airlines in the United States. The company was established in 1967 by ollin !in" and #erb !elleher !elleher with the strate"y of bein" the best low$cost airline in the United States. Southwest be"an i"hts in 1971 with low fares and on$time travel between %allas& San Antonio& and #ouston. Southwest& as of '(1)& has a eet of *79 *79 airplanes and ies between 9+ destinations. Southwest,s success is the result of usin" the latest innovations to ma-e the airline industry customer centered. This research research paper will hi"hli"ht some of the important strate"ies that Southwest has enacted to brin" about their outstandin" success.
S/T Analysis
An evaluation of the internal stren"ths and wea-nesses& and the e0ternal e0ternal opportunities and threats$$based on the case study and additional references$$is references$$is as follows
Stren"ths$2nternal
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Southwest had a 13.34 mar-et mar-et share in 5anuary '(1* based on domestic available seat miles& miles & per the entre for Aviation
8ore departures than any other US airline
ery well run business& fantastic upper mana"ement
The best low$cost carrier in recent years
:ew un;lled seats on i"hts
Stron"hold on the short haul se"ment of the airline industry /ne of the most pro;table airlines& while many other airlines are
stru""lin"
2t,s fun to y on Southwest$ulture
•
=mbraces technolo"y
•
Superior ustomer service
•
>oyal employee base that is willin" to wor- hard to achieve the company?s "oals
•
2mplemented pro"rams to retain employees& includin" the ;rst pro;t sharin" plan in the industry and a )(1- plan that matches contributions dollar for dollar
ea-nesses$2nternal
:ew mornin" i"hts o@ered
o i"hts to international destinations
%ependent on a sin"le type of aircraft $ the Boein" 7+7
8ost employees belon" to a union
/nly one class of seatin" is o@ered $ coach
Boo-in" i"hts is only available directly throu"h SA
2t does not o@er frills such as airport loun"es or on board movies
an only carry a small amount of car"o and frei"ht
/pportunities$=0ternal
%iverse population and the "rowin" elderly "eneration C potential
mar-ets
Air travel is predicted to increase rapidly this decade
2nternational mar-ets that are not yet served by Southwest and lon"er
i"hts
ew technolo"y $ opportunities for new services and products
Better use of the 2nternet for mar-etin"& tic-etin"& etc.
Threats$=0ternal •
ost trends can increase with risin" fuel prices
:uel price increases could reduce air travel
%ecline of leisure travel due to terrorism andDor a depressed economy
ew "overnment re"ulations could ma-e air travel costlier
#i"h$speed rail could someday hurt short and medium len"th air travel
2ncreased competition would li-ely hurt industry pro;tability
/ne of the most impressive features of Southwest is their continued e@orts to -eep fares low. Also& the fun company culture amon" the Southwest employees is impressive. Southwest,s employees are truly committed and en"a"ed in doin" their part to deliver "reat customer service and to ma-e the company successful. Southwest,s mana"ement has done a
"reat Eob with employee selection& trainin"& and on"oin" motivation& thus ma-in" the wor-place e0tremely attractive to Eob applicants. Southwest has created a competitively powerful strate"y that has been thou"ht throu"h down to the last detail& producin" a low$cost competitive advanta"e. The mana"ement team at Southwest runs an e0tremely well$mana"ed company with #erb !elleher,s leadership e0tremely instrumental in the company,s success. 2t is easy to "ive Southwest,s mana"ement a superior ratin" in their company strate"y. ith their commitment of low$costs and low$fares& they truly appeal to cost$conscious yers. Southwest has "rown over the years to become the number one airline in terms of passen"ers carried& a true testament to the mar-et e@ectiveness of Southwest,s strate"y. Southwest has put a lot of thou"ht into its desire to be a low$cost airline& havin" come up with a host of strate"ic plans to create and sustain a low$cost advanta"e. These include maintenance& "eneral administration& and other cost savin" operatin" e0penses includin" fuel hed"in". Southwest has been able to "ain pro;ts with these strate"ies even when rival airlines have lost revenue. Southwest has been able to prosper with its low$cost provider strate"y and appears to be able to sustain that even durin" poor economic times. The company has enEoyed steady "rowth& ma-in" a pro;t every year since 197+& su""estin" that Southwest,s strate"y is producin" a company that is built to last.
The evidence presented in the case con;rms that Southwest does have a winnin" strate"y. The strate"y is ri"ht for the mar-etplace and has delivered a competitive advanta"e. Southwest,s ;nancial performance has been the best in the U.S. airline industry over the lon"$term and short$term. The followin" policies& procedures& operatin" practices& and core values that stand out the most are Southwest,s stron" conviction that their employees come ;rst and the customer comes second& this policy has been a stron" factor in the achievement of hi"h customer satisfaction and hi"h employee productivity. #appy employees ma-e happy customersF The commitment to deliver hi"h$Guality customer service is another "ood policy& as stated in Southwest,s mission statementH The mission of Southwest Airlines is dedication to the hi"hest Guality of ustomer Service delivered with a sense of warmth& friendliness& individual pride& and ompany SpiritH. Southwest mana"ement,s policy to pursue low operatin" costs& led to several cost savin" practices. The company operated only one type of aircraft& Boein" 7+7s& to minimiIe the siIe of spare parts inventories& simplify the trainin" of maintenance wor-ers and repair personnel& and improve the pro;ciency and speed of maintenance schedules. The policy of tic-etless travel and the ability for customers to purchase on the company website were cost savin" policies. Southwest also purposefully chose to avoid i"hts to con"ested airports& only servin" medium siIed cities near the lar"er cities. This policy helped produce better$than$avera"e on$time performance and
helped reduce the fuel costs. Southwest has& thou"h& in recent years& be"un servin" more lar"e city airports to help brin" about lar"er company "rowth. A few more impressive Southwest policies and procedures that were real cost savers include their no ;rst$class section in any of its planes& re"ularly up"radin" their technolo"y to speed data ows& improvin" operatin" eJciency& and on"oin" strives to improve their customer service. Southwest was also one of the ;rst amon" maEor U.S. airlines to employ fuel hed"in" to counteract risin" prices for crude oil and Eet fuel. Southwest,s compensation policies and practices are as well impressive& their pay scales are often above the industry avera"e and bene;t pac-a"es compare well with other airlines. Southwest also has an attractive pro;t$sharin" plan& and the company relies heavily upon the empowerment of their employees. Southwest,s corporate culture is de;ned by their KSpirit of SouthwestH that has several important elements A fun atmosphere and worenvironment with a Kcan doH attitudeF The company has done a super Eob with usin" >U to create a supportive culture and to sustain achievement of the company,s customer satisfaction obEectives. They have a cost$savin" approach to operatin"& both mana"ement and employees are attentive to -eepin" costs down and to operatin" in a lean fashion. This is a maEor reason for Southwest,s success in implementin" and e0ecutin" its strate"y. Southwest formed a ulture ommittee in 199( to promote KLositively /utra"eous ServiceH and devise tributes& contests& and other celebrations
intended to perpetuate the Southwest Spirit and >ivin" the Southwest ay. /ver the years& the committee has sponsored hundreds of ways to promote the behaviors embedded in >ivin" the Southwest ay. The important role of the ulture ommittee at Southwest was indicated by #erb !elleher,s statement that Ke,re not bi" on ommittees at Southwest& but of the committees we do have& the ulture ommittee is the most important.H Southwest also came up with a wide variety of ways to promote its core values and continue its uniGue culture. There was an annual K#eroes of the #eart Award&H a o#earts mentorin" pro"ram& a %ay in the :ield pro"ram where employees spent time wor-in" in another area of the company,s operations& a #elpin" #ands pro"ram where volunteers from around the system traveled to wor- two wee-end shifts at other Southwest facilities that were temporarily shorthanded or e0periencin" heavy wor-loads& and periodic ulture =0chan"e meetin"s to celebrate the Southwest Spirit and company milestones. Almost every event at Southwest was videotaped& which provided foota"e for creatin" such multipurpose videos as !eepin, the Spirit Alive that could be shown at company events all over the system and used in trainin" courses. The concepts of >U and fun were spotli"hted in all the company,s trainin" manuals and videos. Southwest,s monthly newsletter& >U >ines& often spotli"hted the e0periences and deeds of employees& reprinted letters of praise from customers& and reported company celebrations of milestones. A Guarterly news video& As the Llane Turns& was sent to all facilities to -eep employees
up to date on company happenin"s& provide clips of special events& and share messa"es from customers& employees& and e0ecutives. The company also published a boo- for employees describin" Koutra"eousH acts of service. Southwest,s mana"ement deserves a "rade of AM& it is hard to see what Southwest could have done much better. The best e0amples bein" the company,s array of mana"ement practices and their stron" commitment to identifyin" and implementin" ways to -eep its costs low. Southwest is a company with no "larin" wea-nesses or critical operatin" problems& but there are some areas of concern. Southwest has lost some of its cost advanta"es in recent years& rival airlines have been slashin" costs to survive& particularly in the areas of pilot and employee salaries. Southwest has also been movin" into airports with hi"her landin" fees and more con"estion. The acGuisition of AirTran is a "reat choice for Southwest. Air Tran is also pursuin" a low$cost strate"y& so this is a "ood ;t for Southwest from the standpoint of their competitive approaches. AirTran has i"hts to several attractive "eo"raphic areas and airports not served by Southwest& o@erin" a "ood "rowth opportunity for Southwest. Southwest,s reputation and "ood customer service should help it win added customer traJc in most of the locations that AirTrans serves li-e Atlanta #arts;eld& an e0ample where a siIable mar-et share may be won. AirTran ies mostly Boein" 7+7s Nit also has 36 Boein" 717s in its aircraft eetO which matches Southwest,s strate"y of yin" only 7+7s to help contain maintenance costs.
The strate"ic issues
and problems
e0ecutives should be very visible at AirTran facilities followin" the closin" of the acGuisition& meetin" with all AirTran employees to tal- about the opportunities and bene;ts of mer"ed operations& hi"hli"htin" the Southwest way of doin" thin"s. All AirTran employees should "o throu"h the ulture Trainin" classes and be trained in the Southwest policies& procedures& and operatin" practices. A "ood idea would be to transfer AirTran employees to ;ll new Southwest Eob openin"s rather than hirin" new Southwest employees. Southwest employees should be encoura"ed to help mentor AirTran employees in the transition. 2n conclusion& Southwest?s current strate"y is to continue its position as a low$cost leader with a focused strate"y. The company,s mana"ement and employees aim to y lar"e numbers of customers cost$e@ectively and reliably on short& non$stop i"hts and to have fun doin" it. Southwest has been very successful implementin" their strate"y& e0periencin" stron" "rowth and pro;tability. Southwest is one of the lar"est carriers in the U.S. in
total customers& operatin" pro;tably for +' consecutive years in a competitive industry that has not always been pro;table. The main strate"ic issue facin" Southwest now is to continue to evaluate this strate"y and determine its future course of action.
eferences
othman& >. Adam. PAnalyIin" Southwest Airlines? 8ar-et Share N>UO.P Investopedia. .p.& 1' :eb. '(16. eb. 1 8ar. '(17. Southwest Airlines Q Airline Tic-ets& :li"hts& and Airfares. Nn.d.O. etrieved 8arch ('& '(17& from httpsDDwww.southwest.comD
Southwest Airlines o. Nn.d.O. etrieved 8arch ('& '(17& from httpDDwww.encyclopedia.comDsocial$sciences$and$lawDeconomics$ business$and$laborDbusinesses$and$occupationsDsouthwest
Southwest Airlines o Success Story. Nn.d.O. etrieved 8arch (*& '(17& from httpsDDsuccessstory.comDcompaniesDsouthwest$airlines$co
PSouthwest Airlines S/T Analysis $ Business AssessmentsP. Businesstuneups.com. .p.& '(17. eb. 1 8ar. '(17.
Thompson& A. A. Nn.d.O. Crafting and executing strategy: the quest for competitive advantage: concepts and cases& 13th ed. ew Ror-& R 8c
