Southwest Airlines is a major passenger airline that provides scheduled air transportation in the United States and near international markets. Similar operations requirements for the fleet ensures operating an efficient point-to-point route structure, ongoing work, reduced fuel consumption, and highly productive employees as there is no variation in the maintenance of the fleet. The low-cost structure is one of the competitive advantages, as it has enabled southwest to offer low fares, drive traffic volume, and grow market share year on and also lead the industry in the segment. On the other hand, technology has also provided airline industry with the opportunity to expand their outreach directly to consumers through e-commerce sites. Then it should decide on how much price should be lowered in order to maintain profitability in the long run. Market Development The new Boeing 737-800s planes will allow Southwest Airlines to fly longer distances. Recently, new legislation has been passed to repeal the Wright Amendment.
Goold and Luchs, 1993; Lasserre, 2003 Coinciding with this dominant business view, the aforementioned strategic directions for Southwest Airlines are deemed suitable and viable for its corporate growth. Additionally, many other full service airlines are considering adopting a low cost model for shorter routes with no frills, thus increasing choices for customers Mouawad, 2010. It deals with the competitive environment faced by an organization through an inside-out approach. Much was the future leadership of the company was directly mentored by Kelleher himself. Social Factors Unlike other low-fare and no-frill airlines in the Europe, Southwest Airline has a strong commitment towards customer service. A robust network and highest domestic market share: Southwest executes the model of point-to-point network of connecting destinations as compared to the hub and spoke network of other airlines. Therefore, he contended that the employees- not the customers- came first.
Though the airline industry was continuously going down and most of the airlines in the industry went bankrupt yet Southwest Airline is still generating profits in this alarming situation and will continue to generate in the next couple of years. Example tickets cannot be transferred to other airlines. This brand equity could be used by the company to expand into related diversification such as, catering and hospitality business. Southwest has also been the first airline to introduce ticketless travel. Delta Air Lines, which acquired Northwest Airlines in 2008 and recently merged with United Airlines and Continental, have become formidable rivals. Fuel prices had made fuel expenses rise from 16.
Further, the airline has great relationship with its employees, having the lowest employee turnover in the industry. Substitutes: Although customers can switch to travel through train, coaches and cars, such travel modes are considered as uncomfortable and the cost advantage is neither too substantial. Does it work or not? Human Resource Management Herb Kelleher was a strong believer in the principle that if a company keeps its employees happy, its employees will in return keep its customer happy. Figures clearly indicate industry leading financial position of the company. It has a reputation of being a major carrier that has been profitable for 43 consecutive years. For instance, Southwest Airlines was able to introduce ticketless travel through the use of technology Thompson and Gamble, 2012. Regulations by the Government and respective changes: The company is subject to various federal laws and regulations relating to the protection of the environment, including the Clean Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act, and the Comprehensive Environmental Response, Compensation and Liability Act, as well as state and local laws and regulations.
It would also help the airline know the trend of the industry. South West Airlines in 2010: Culture, Values, and Operating Practices. Other full services airlines achieving economies of scale with increased mergers and acquisitions. In conjunction with the price wars and low profit margins, it has become difficult to make profit in this industry. Do not merely cut and paste from what you find in the documents you locate. Its customer services personnel are widely encouraged upon going a step forward in appeasing customers through unusual tactics.
New Reservation System Likely To Come On Board Next Year Not only is Southwest focused at expanding its operations, but it also plans to enhance its operational performance through various initiatives. Their bargaining power is further enhanced due to the absence of any viable fuel alternative. Yearly to 58 different cities, it carries around 64 million passengers all over the United States. She expects the new system to enable the airline to make faster code-sharing agreements with other airlines and result in revenue enhancement of hundreds of millions of dollars. Overall, the airline is pleased with its revenue trends and estimates a decline of only 1% in its unit revenue for the third quarter as opposed to a. Surveys, focus groups, one to one interviews and similar tools could be used to evaluate the implementation results.
Quantitative analysis of the company Operating Costs spotlight on fuel cost 2013 2014 2015 Total operating costs in cents per available seat per mile 12. It is one of the major airlines who pioneered ticketless travelling and the only airlines in the United States to offer bags-fly-free service first 2 checked pieces of luggage with size and weight limits applicable to everyone, no change fess, although differences in fares might be applicable. Considering this strategic clock, Southwest Airlines is positioned between number one and two, wherein it maintains lowest costs for its operations through its no-frill strategy. Southwest Airlines hires people with a great attitude and trains them on expectations of the company. Furthermore, the airline industry is faced with increased competition and is no longer as lucrative as before in conjunction with the price wars, thus making survival difficult for new entrants. This also lowers the chances of unnecessary risks and accidents.
It no longer has the underdog image it used to have a decade ago. We are dedicated to doing the right thing, we take great strides to ensure your safety, and fostering trusting relationships between our Employees, our Customer, our Suppliers, and our Planet. It would come in effect in 2014 Thompson and Gamble, 2012. This implies that the air travel demand in Dallas is strong and airline has been able to attract more passengers for its newer flights. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines.