When it started operation from the Love Field In Dallas Texas, Southwest Airlines stands out as a company willing to do things differently and wanting to be the best Lorene In America, and last year It was rated Americas best airline, both In the quality of Its flights and the being the most profitable.
With such admirable past and what seemed like a future cast in success, one would not expect Southwest to be confronted with problems which could tangentially derail it from its destination as the premier carrier in the US Airline industries. The twin problem of bleak economic outlook and looming labor union negotiation makes the future a challenge that must be negotiated carefully. This case study examines these issues and tries to proffer solutions to them. Key Issues: Southwest faces a challenging future despite several years of success as America’s only profitable Airline.
The very basis of those successes is about to be tested with a looming negotiations with its ‘best-paid’ Pilot union and the coming end of fuel hedging contract. There Is also the problem of the record rate of unemployment and the general economic outlook that is gloomy to say the least. These indeed are challenging times that the organization is faced with. But behind these challenges are opportunities that it can exploit to remain indeed a profitable Airline. Define the Problem ; the Opportunity. Many of the problems faced by Southwest Airlines are Indeed out of Its control.
The global economic situation and the attending employment crawls are some of those. With the wall street Journal reports of “investors fretting over a sluggish economy and early evidence of accelerating revenue growth ahead of the busy holiday weekend” while recently analyzing the Airline industry as a whole. But within the reach or Immediate control of Southwest Is Its looming negotiation with Its Pilots union. While the relationship between the Pilot… History More than 37 years ago, Rolling King and Herb Keller got together and decided to start a different kind of airline.
They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing It, people will fly airline has grown to become one of the largest airlines in America. Today, Southwest Airlines flies over 104 million passengers a year to 64 great cities all across the country, and we do it more than 3,400 times a day. With over 500 aircraft, Southwest Airlines has one of the youngest fleets in the nation, with an average age of approximately nine years.
Included in the fleet are three flying killer whales, the “Shams” aircraft; “Lone Star One,” painted like the Texas flag, to celebrate Southwest Airlines’ 20th Anniversary in a style and manner second to none; “Arizona One,” a humbly of the importance of the state of Arizona to Southwest Airlines; “California One,” a high-flying tribute to the state of California; “Silver One,” our 25th Anniversary plane; “Triple Crown One,” dedicated to the Employees of Southwest Airlines for their marvelous achievement of five consecutive annual Triple Crown awards; “Nevada One,” a high-flying tribute to the state of Nevada; “New Mexico One,” also known as Aziza, painted in the bright yellow of the New Mexico flag; “Maryland One,” emblazoned with an artist’s rendering of the Maryland flag; and the newest addition, “Slam Dunk One,” symbolizing Southwest’s special partnership with the National Basketball Association.
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… Latest history About Southwest Airlines After nearly 40 years of service, Southwest Airlines (NYSE:LUVS – News) continues to differentiate itself from other low fare carriers–offering a reliable product with exemplary Customer Service. Southwest Airlines is the nation’s largest carrier in terms of originating domestic passengers boarded, now serving 69 cities in 35 states. Southwest also is one of the most honored airlines in the world known for its commitment to the triple bottom line of Performance, People, and Planet.
To read more about how Southwest is doing its part to be a good citizen, visit southwest. Com/ cares to read the Southwest Airlines One Report(TM). Based in Dallas, Southwest currently operates more than 3,100 flights a day and has nearly 35,000 Employees systemic. Problem As a fledgling operation, how does a startup company compete within an established market in terms of price, performance and promotion Issues On February 1, 1973 Barbarian airlines announced a half-price “Get Acquainted Sale” on all flights between Dallas and Houston. This was Southwest Airlines most profitable route. Southwest had to decide how to respond to Barbarian Airlines move.
Southwest Airlines is a startup business * They faced barriers to entry; lack of capital, equipment, manpower, airplane berthing spaces, no consumer identity There are would be 3 players in a competitive ND price sensitive market; Southwest Airlines, Barbarian Airlines, and Texas International Airlines (T’) Airlines are competing to serve customers who fly in and out of airports in three cities; Dallas/Fort Worth, Houston, and San Antonio. * The who are traveling intra-sate and not inter-state * The three routes involved are Dallas-Houston, Dallas – San Antonio, and San Antonio – Houston Southwest was facing legal challenges regarding it’s right to exist. * Barbarian and Texas international alleged that they already served these routes and that their was insufficient demand to support another carrier Market Analysis Competition Prior to Southwest launch, these cities were serviced, intra-state, by Barbarian and T’. These airlines’ service represented legs of longer interstate flights. Barbarian operated a fleet of 69 planes serving the US, Mexico, and South America. Had revenue of $mom and carried $5. Mm passengers * TTL was a regional carrier serving southwest states and Mexico. They had revenue of $mom and served 1. Mm passengers. Their fleet consisted of 45 planes. * Local travel between Dallas and Houston averaged 483 passengers/daily. This was the most important route * Barbarian serviced 86% of these customers… EXECUTIVE SUMMARY Southwest Airlines provides short haul, high frequency, point-to-point, low-fare services to and from 58 cities across the United States. The company is known for its low-cost fares and superior customer service in the airline industry.
The company was started in 1971 with a motto still lived by today, “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. ” This motto has been effective for the company because they recently reported their 58th outright quarterly profit. SOOT Analysts The SOOT analysis describes the internal strengths and weaknesses, opportunities and threats oaf company. The strengths of Southwest include its market leadership, its low-cost business model, and its strong financial performance. Weaknesses are the poor short-term liquidity situation, having only one established alliance, and the declining passenger revenue yields.
Opportunities for the company include its new services, the new code-sharing agreement with ATA Airlines, and the overall positive outlook for the airline industry. Threats to Southwest include the increasing Jet fuel sots, uncertainty in demand, and an increase in competition. Corporate and Business-level Strategies Southwest’s corporate level is to focus on obtaining more of the low-fare market of the airline industry rather than to enter into other aspects of the airline industry. The business level strategy is to continue focusing on the current customer market, reasonable price. Southwest is only looking to improve its services to make each customer’s experience the best it can be.
Recommendation Over the last thirty years, Southwest Airlines has been very successful and continues to grow and develop. Southwest has managed to stay ahead of its… Southwest Airline’s Strategies: Southwest Airline’s successful strategy consists of three complementary qualities which are focus, divergence and compelling tagging. This short-haul airline believes that by focusing on friendly service, speed and frequent point-to-point departures, its low pricing is able to compete against car transportation. While other competitors try to delight customers by investing in meals, airport lounges and seating selections, Southwest chooses to eliminate or reduces investments in these industry competitive factors.
As a result, Southwest’s low prices are unbeatable making them the preferred airline in the industry. With a divergence element in Southwest’s strategy, it is able to innovate and stand apart from its competitors. Instead of competing in the existing hub-and-spoke systems, Southwest created a new competitive factor by pioneering point-to-point travel between midsized cities. This niche strategy turns out to be a huge success as by avoiding congested Major airports in big cities, travelers are able to reach their destinations on time and closer to downtown areas compared to major airports faraway from cities. A compelling eagling is another crucial element for effective strategy.
Southwest’s tagging which goes “The speed of the plane at the price of the car- whenever you need it” is memorable enough to stay in the minds of travelers. It delivers a clear message and promotes exactly what Southwest Airline has to offer. Southwest’s strategy is still well-matched to current industry and market conditions but it has to be aware that their successful business model maybe imitated by competitors. Therefore, change is inevitable in a few aspects for this airline to remain competitive. For instance, Southwest can expand its operations to a larger market by sing its low pricing strategy to eliminate competitors out of business. One of the current strategies that should remain is the implementations of cost saving technology…
Southwest Airlines Case Analysis 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 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 necessary 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.