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Strengths and weaknesses of southwest airlines
Strengths and weakness of southwest airlines
Strengths and weakness of southwest airlines
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Abstract The seventh largest major domestic airline in the United States (US), Southwest Airlines, is commonly known or referred to as a low-cost carrier. Southwest Airlines is the only major airline that provides short-haul, point-to-point service in the United States. In fact it was the first airline of its type ever started; it has become the archetypical low-cost airline. The idea has proven itself so well, that other start-up airlines have based their company strategies upon the basics of Southwest. Today, there are two other low-cost air carriers (the other two airlines are considered national airlines and not major airlines) that are actively and aggressively competing with Southwest Airlines for business and profit turning. The three American low-cost air carriers are currently posting profits even in light of the US economy’s current state of affairs, with Southwest Airlines first, JetBlue second, and Air Tran third, in profits. How is this possible when the major six airlines are reporting losses of millions and millions of dollars each quarter? The answer to this question begins about 30 years ago. The Archetypical Low-Cost Air Carrier: Southwest Airlines The product one airline can offer is the same exact product the next airline can offer, a single available seat mile (ASM) for sale. The difference between the airlines lies in the marketing, routing, pricing, executive decision-making, and the operating strategies that each airline chooses to espouse regarding that one product. It is through these strategies that an airline must find productivity in total revenue passenger miles (RPM) flown to be profitable. When the ASM is filled with a fare-paying passenger, sales or income is recognized, and it converts to an RPM. The relationship between the ASM and RPM are directly related and is expressed in percentages known as Load Factors (LF). This LF is a management tool used to determine the efficiency and health of the airline. It is necessary to keep these two variables in balance of each other. Southwest Airlines load factors are represented in Figure 1 and 2. RPM LF = ASM Many airlines choose to use the hub network, which induces costly effects in all areas of the airline. It is the point-to-point; short haul airline that is capable of keeping costs low and turn profits, Southwest Airlines has proven just that. Southwest Airlines survived the initial years of deregulation, years of cyclical business cycles that may have led to recessionary and or inflationary periods, and its 25-year
Not all of the external factors affecting Southwest Airlines are helpful, however. In terms of threats, Southwest Airlines faces several challenges. The airline industry is a highly competitive market and costs are continuing to rise (e.g. rapidly increasing fuel costs and labor costs). Unfortunately, these factors greatly increase the risk of another company emulating the strategies and core competencies of Southwest Airlines (Ross & Beath, 2007). Ross & Beath (2007) mention this threat in regards to JetBlue rapidly approaching innovative, low-cost operations. There is also not a clear sense of customer loyalty in this market, outside of frequent flyers seeking loyalty card perks. Overall, the biggest threat to Southwest is its competition.
Firstly, throughout the novel, Atwood utilizes a great deal of symbolism to explore the lack of individualism and restriction of emotion present in the republic. Red is generally associated
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.
The average year over year Load Factor growth from 2010 to 2014 was only .8%. This mainly can be contributed to the acquisition of AirTran into the Southwest Airlines fleet. For 2012 and 2013 Southwest was integrating the existing AirTran Boeing 737 into Southwest livery, which required down time (Trefis Team, 2014). Due to this, the Load Factors were in the negative percentile for both years. In 2014 as the integration of AirTran came to an end, Southwest saw their load factors increase to 2.4% (Southwest Airlines, 2015b). Figure 2, Southwest Operational Figures 2010 through 2014, shows that for years 2010 through 2014 Southwest had increases in both Revenue Passenger Miles and Available Seat Miles but the Load Factor remained relatively flat across all
Southwest Airlines is competing with "Shuttle by United" head to head in about 9 routes. United has just announced that it is discontinuing its Oakland - Ontario route and hiking the fares in all the 14 routes by $10, which calculated to be 14.5% increase in the fare. Southwest has to respond effectively to these unexpected developments and has to act accordingly while maintaining their current low fare image and increasing their daily operating profits. We have considered the elasticity of the market to be 1.15.
Before to select the proper alternative, three alternatives were analysed and evaluated under four decisions criteria: customer experience, cost, growth rate / market penetration and ease to implementation (See Exhibit 2: Factor Analysis). Between all the alternatives, it was suggested that Southwest Airlines enters to New York City by bidding the slots and gates at the LGA (See Exhibit 3: Alternatives Analysis). This alternative sustains the challenge of changing the customer experience which means adding more flights from and to the East; furthermore, entering to new markets will reinforce “the power of the network” through LGA. At the same time, this decision will allow signing more code-sharing agreements with other airlines flying to international destinations and offer new products and services to LUV customers as loyalty rewards, in-flight internet, onboard duty-free purchases, etc.; as a result of this, it will increase passenger’s insights and experiences by flying with Southwest Airlines. Nevertheless, there is potential risk by selecting this alternative, in the recent years the energy prices has had a huge increase affecting costs, fares and even capacity needed, however Southwest Airlines has been able to hedge fuel for decad...
Among dystopian literature, The Handmaids Tale by Margaret Atwood is one of the most abstract. In a world where individualism is eliminated, this book is a terrifying attempt and failure of creating a utopia. Various characters in the novel portray both orthodox and unorthodox characteristics, but the more dangerous of the two is unorthodoxy. In Margaret Atwood’s, The Handmaids Tale, the most unorthodox characters are Offred, Moira, and Serena Joy.
Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).
Colors have a significant role in the book, especially the color red. Color dress codes have been used as a way to identify which social class one
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.
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 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.
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...
It all started in 1971, when Rolling King and Herb Kelleher decided to challenge the existing rut of charging high prices for air travels. They considered the railways and roadways their competitors and decided to offer cheaper travel for smaller routes. The company was incorporated in 1967, apart from initial entry troubles, Southwest has been the only US airline to have earned profits since 1973. The eccentric company’s outlandish way of conducting themselves has been the sole reason for Southwest Airlines to succeed in a highly competitive and packed industry.
There are other ways in which airlines customers are segmented. The airline services are divid...