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The Airline Industry: Trends, Challenges and Strategies ByJohn G. Wensveen
Strengths and weaknesses of southwest airlines
Strengths and weaknesses of southwest airlines
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Southwest Airlines: A Case Analysis
ORGANIZATIONAL ANALYSIS
It is evident that the greatest strength that Southwest Airlines has is its financial stability. As known in the US airline industry, Southwest is one of those airlines who are consistently earning profits despite the problems the industry is facing. With such stability, the corporation is able to make decisions and adjust policies, which other heavily burdened airlines may not be able to imitate.
Having a low amount of cost in their operations is one of the contributing factors in Southwest Airlines’ financial success. Such low cost model of the corporation is brought about by an effective strategy. Southwest uses only one type of aircraft – the fuel-efficient Boeing 737. This tactic keeps training and maintenance costs down. Moreover, the no-frills approach to customer service contributed to the low cost of operations for Southwest. The airline does not serve meals on board, and there are no luxurious or first class seats offered. Services like these have been seen by the airline as unnecessary for an airline that provides a short-haul trip from city to city. By these, Southwest were able to offer low price tickets to customers, which was good for the company because most people would prefer to fly without those services mentioned if it meant for cheaper ticket price.
Even though Southwest offers no-frills, there is still a high degree of customer satisfaction that continuously builds customer loyalty for the company. As mentioned, Southwest offers low prices on their airplane tickets. Also, Southwest is renowned in the airline industry for its short turnaround time on arrivals and departures. And since people's biggest concern nowadays is money and time, having low price airline tickets to cater their traveling needs in a shorter period of time will surely satisfy them. Moreover, aside from the low prices offered, what attracts to customers is Southwest’s way in dealing with them. The employees of the airline treat their customers well and really listen to their needs.
Southwest Airlines is also well-known for having a very productive and loyal workforce. Such loyalty and productivity among the employees were brought by the way Southwest’s management treats them. As they say, the employees are willing to work hard for the company because they feel appreciated by the top management. Southwest maintains good employee relations because what they believe in is that if employees are happy, satisfied, dedicated, and energetic, they'll take real good care of the customers.
Southwest Airlines is an Equal Opportunity Employer, therefore, has diversity in their employees from all over the world. They have employees from different cultures and experiences. Southwest Airlines invites military personell, active and retired veterans to apply. They also offer positions to qualified disabled individuals and disabled veterans. According to Forbes, “The icing on the cake is an elaborate recognition program for all employees who are recognized by customers. They are lauded in newsletter features, on the intranet, by the CEO in videos that are played at staff meetings, and dinners honoring them. Voluntary turnover is only two percent, and many of Southwest’s original employees are still there. The company receives 43,000 commendations a year, from both inside and outside the company.”
Another internal challenge for Southwest Airlines is the conflicting management style and business operation with AirTran. On top of that, the external challenges such as the increase of competitions and gas prices are some of issues f...
Despite its growing domestic network, the company didn’t offer international flights until July 2014, and even then, it only offered limited destinations (“Southwest Corporate Fact Sheet,” n.d.). Furthermore, the company’s reliance on a single aircraft is cause for concern. Southwest Airlines was also weak with technology utilization initially but has since turned this into an asset, as described later. Finally, the company has a limitation with providing customer perks due to its low-cost operations (Ross & Beath,
In conclusion, I feel that Southwest has taken advantage of its inexpensive flights and family oriented atmosphere to prevail despite the September 11th tragedy. Southwest has been a profitable business for 26 consecutive years and has twice the profits of United Airlines. They have been doing a great job providing customer service and will continue to be successful as long as they continue with their current plan.
Southwest Airlines strategy of focusing on short haul passenger and providing rates as low as one third of their competitors, they have seen tremendous growth in the last decade. Market share for top city pairs on Southwest's schedule has reached 80% to 85%. Maintaining the largest fleet of 737's in the world and utilizing point-to-point versus the hub-and-spoke method of connection philosophy allowed Southwest to provide their service to more people at a lower cost. By putting the employee first, Southwest has found the key to success in the airline business. A happy worker is a more productive one as well as a better service provider. Southwest will continue to reserve their growth in the future by entering select markets only after careful market research.
Since 1987, when the Department of Transportation began tracking Customer Satisfaction statistics, Southwest has consistently led the entire airline industry with the lowest ratio of complaints per passengers boarded. Many airlines have tried to copy Southwest’s business model, and the Culture of Southwest is admired and emulated by corporations and organizations in all walks of life. Always the innovator, Southwest pioneered Senior Fares, a same-day air freight delivery service, and Ticketless Travel. Southwest led the way with the first airline web page—southwest.com, DING, the first-ever direct link to Customer’s computer desktops that delivers live updates on the hottest deals, and the first airline corporate blog, Nuts About Southwest. Our Share the Spirit community programs make Southwest the hometown airline of every city we serve.
To break this trend Southwest Airlines may need to slow its rate increases below the competitions in upcoming years. Another possibility for Southwest is to change its bags fly free slogan to one bag fly’s free to cash in on some additional profit. A few additional charges could help Southwest lower rates
Advertising: As one of the largest domestic airlines, Southwest Airlines has an enormous advertising budget to sustain its presence and increase its market share through focusing on the benefits of flying Southwest over its competitors. Southwest recognizes that flying is no longer a pleasurable experience for many customers, even on Southwest, historically a budget airline. Even though Southwest is often regarded as a no-frills airline, it still attempts to build goodwill from its customers based on its advertising. Of the $249 million it spent on advertising in 2011, Southwest Airlines is unique in that it does not sell additional ad space on the exterior of its aircraft. Many domestic airlines have begun selling aircraft exterior space as a way to increase revenue, but Southwest Airlines insists that it wants to keep its product and advertisi...
Southwest has comprehensive strategy and they work with harmony. They are low cost airlines which make the customer feel like royalty. Southwest have a winning strategy is proven by their profit year after year even thought they had economy crisis. Since 1973 Southwest reported a profit each year even when they lost billions of dollars from the year 1980 to 2009 because of the low operating cost strategy, low fares and customer service. Since the start of Southwest they have stay faithful of keeping low cost across the industry. Their value in corporate culture reflected through their prices and customer service.
This concept was challenged by Southwest Airlines by marketing itself as a cost leader. Their entire growth curve in the industry has been attributed to its cost effective strategies which has made it more efficient and successful than traditional airlines.
The mission of Southwest Airlines is a dedication to the highest quality of service delivered with warmth, friendliness, individual pride, and company spirit (Mission…, 2007). The company also provides opportunities for learning and personal growth to each employee. Creativity and innovation is very important and highly encouraged, for the purposes of improving effectiveness. Employees are to be provided the same concern, respect, and caring attitude within the organization that the employees are expected to share with the customer. Southwest Airlines was initially created to be a low-cost alternative to high price of intra-Texas air carriers (Freiberg, 1996). Southwest’s fares were originally supposed to compete with car and bus transportation. It was a little airline, and it would withstand the test of time. As a discount, no-frills airline, it would provide stiff competition for larger airlines. Their strategy was to operate at low cost, offering no food, no movies, no first class, and no reserved seats. They created their own market and provided increased turnaround times at the gate, by avoiding hub-and-spoke airports and opting for short-haul, direct flights. Through this market approach, Southwest has a majority of market share in the markets they serve.
Southwest Airlines was established in 1967 as a low-cost airline operating in the state of Texas. Today, Southwest Airlines is the largest domestic carrier in the United States, employing more than 46,000 employees and operating 3,600 flights per day (Southwest, 2014). Southwest is also the largest operator of Boeing 737 aircraft in the world with over 680 in service operating an average of six flights per day each (Southwest, 2014). Under its original name, Air Southwest Company, Southwest Airlines was founded by a group of Texas investors that put together $560,000, to form a small airline to serve the cities of Dallas, Houston, and San Antonio. By the summer of 1971, operating under Southwest Air, the airline owned three aircraft and was operating hourly flights between Dallas and Houston, later completing the “triangle route” to San Antonio (Southwest, 2014).
Southwest Airline’s commitment to service and friendliness has continued to evolve and expand through the decades. Their mission statement plays a large role in their continued advancement. According to their website, “The mission of Southwest
Moreover, they began this venture with one clear and simple idea/belief: If you get the passengers to the place they want to go, when they want to get there, in a timely manner, with the lowest feasible fares, and ensure they have a fun time doing it, people will want to fly their airline. They were right because Southwest Airlines is one of the biggest domestic air carriers and reputable airline business in the United States. Moreover, it is the only one that is, and has been, endlessly profitable for a number of good years. The key objective of this paper is to highlight Southwest Airlines ability to work and manage people well around
Southwest has an organizational culture that is obsessed with putting people first. Dave Ridley, Senior Advisor to the CEO, states that “the only way to consistently deliver remarkable service on the front line is if your people are being treated in a manner that reflects how you want them to treat the external customer. Southwest considers its employees as internal Customers - and their wellbeing is valued equally or even more than the external customer” (Peel, n.d., para. 3). Therefore, Southwest places much effort into recruiting and hiring the right people.