southwest airlines case study ppt

SouthWest Airlines 2002: An Industry Under Siege

Jan 19, 2013

970 likes | 3.35k Views

SouthWest Airlines 2002: An Industry Under Siege. Jason Chou-Hong Chen , Ph.D . Visiting Professor, Mingchi University of Technology Professor of MIS Graduate School of Business, Gonzaga University Spokane, WA 99258 USA [email protected]. Case Information.

Share Presentation

• substitute products
• historic growth rate
• gonzaga university spokane
• information systems strategy triangle
• online ticketing

Presentation Transcript

SouthWest Airlines 2002:An Industry Under Siege Jason Chou-Hong Chen, Ph.D. Visiting Professor, Mingchi University of Technology Professor of MIS Graduate School of Business, Gonzaga University Spokane, WA 99258 USA [email protected]

Case Information • Discipline: Service management • Description: The company's management is faced with long-term questions regarding the rate and manner of growth in the wake of the 9/11 attacks and general industry malaise. • Learning Objective: To understand ways of achieving and maintaining both a differentiated and a low-cost service offering. • Subjects Covered: Competition, Corporate culture, Service management, Strategy, Information Technology. • Setting: United States; Airline industry; $4 billion revenues; 35,000 employees; 2002

Why Study the Case? • The case provides a vehicle for analyzing one of those rare competitive strategies that literallychange the rules of the game for an entire industry. Historic information suggests how the strategywas shaped. And detailed information in the case helps the reader to understand both howSouthwest makes money while maintaining its low-cost advantage as well as its differentiation fromits competition, the result of a well-crafted strategic value vision. • The importance of effective leadership and a strong culture capable of adapting in the face ofmajor competitive threats as well as external disasters, such as 9/11, is highlighted in the case. Itprovides the basis for assessing the conclusion of one major piece of research described in the next Exhibit, that Southwest Airlines has been able to preserve its competitive advantage primarilythrough its superior relationship management practices.

IS/IT Strategy Triangle • Each group: • Complete the case using “Strategy Triangle” model

Business Strategy Organizational Strategy IS/IT Strategy Draw and explain how can the Information Systems Strategy Triangle be employed in this case? Business Strategy: Low cost Differentiation/ Innovation Organizational Strategy: Sustainable growth “Teams” Fun/Friendly Culture Frequent flights Rapid rewards Point-to-Point IS/IT Strategy: SABRE Kiosks Website, online ticketing. Online boarding passes

Executive Summary • Southwest Airlines in 2002 faced a serious of important management decisions after the 9/11 tragedy in order to continue the record breaking company growth that Southwest had experienced since the 1970’s. Southwest Airlines revolutionized the airline industry with what is known as the Southwest Effect: low cost fares, point-to-point service, “10 minute turnaround” and an enjoyable friendly atmosphere (all are with differentiation). • After the Airline Deregulation Act of 1978, Southwest adopted a policy that regardless of the profitability of expansion opportunities, the company wanted to commit to a manageable annual growth rate of about 10-15%. The following questions and discussion will address the historical challenges of Southwest airlines, the direction the company contemplated in 2002, and a brief look at the challenges of today.

What other Model can be Employed?

NEW MARKET ENTRANTS SUBSTITUTE PRODUCTS & SERVICES • Switching cost • Access to distribution channels • Economies of scale • Redefine products and services • Improve price/performance Other Airllines (USA routes only) S.W. Airline • Cost-effectiveness • Market access • Differentiation of product or service • Buyer selection • Switching costs • Differentiation • Selection of suppler • Threat of backward integration SUPPLIERS CUSTOMERS What strategy and/or model was used or implemented in this case? Threats Bargaining power N

The Southwest airlines case can be analyzed with Porter’s five competitive forces model. Southwest airlines benefited after the airline deregulation in 1971, and were able to lay the groundwork for a successful airline. • Throughout their growth, Southwest differentiated from the competition by taking a friendly, warm and welcoming approach to flying. Their low cost flights undercut the competition, which would fit under the threat of substitutes. Also, their reliability (differentiation) was the best in the industry until September 11th, which helped to prevent the threat of substitutes.

Suggested Study Questions 1). How does this company make money even when other airlines do not? What are the most important contributors to its financial success? • Southwest Airlines has built its reputation on low cost reliable service. Over their tenure of 30 years in the airline industry, they have demonstrated 30 years of sustainable growth. The reason Southwest has remained financially viable is their commitment through point-to-point service with a quick turn around time. The more planes in the air and the less time on the ground is a profitably business model. Also, Southwest has tailored to the business traveler who is looking for reliability and less hassles. Also, Southwest has a generous rapid rewards system that is easy to comprehend and helps retain customer loyalty. In addition, Southwest hires the best people and rewards them accordingly, in a fun, enjoyable atmosphere. Finally, Southwest negotiates fuel prices for their airlines years in advance allowing the company to keep their pricing consistent.

2). How should management respond to the fact that Southwest Airlines has fallen to next-to-last place among major airlines in on-time performance as of September, 2002? • Management faced many challenges due to the increase in security regulations post-9/11. Southwest was fortune that it was a strong performer prior September 11th, but many of the security regulations that soon after would be implemented, directly contrast with Southwest primary core competencies. For instance, Southwest initially had the colored boarding cards, which were generic without passenger names. Due to highest security risk, passenger names had to be cross checked at the gate, causing delays. • Also, Southwest’s motto, “You are now free to move about the Country” was directly targeting travelers who could walk onto the plane a few minutes before takeoff because Southwest would keep the doors open to allow for passengers to keep filing in. Again, this was against new security measures. Also, since many of Southwest passengers did not generally arrive as early as other airlines, more often than not, Southwest passengers would be subject to security searches. Also, random security searches were being conducted at the gates as well which Southwest actually stepped up to help mitigate delays by hiring more security personnel.

3). Once operations are fully stabilized, would you recommend to the management of the airline that it resume its historic growth rate of from 10? To 15? Per year? Why? • I would recommend that Southwest continue to grow at 10 to 15 percent per year but no more. Companies such as Wal Mart and McDonalds, if their growth is too large, too quickly, their presence can be filled with resentment from customers because they have pushed out other competition. • At 10-15 percent growth, airports and cities will still ask for Southwest to expand into their areas, and it will be a slow, calculated and sustainable growth, as opposed to one that moves the company away from its core competencies.

5) • N/A since, a 10-15 % increased is recommended.

6). What are the implications for Southwest of the actual or threatened bankruptcies of other major U.S. airlines? • Southwest is in a precarious position because they are profitable. Through 30 years of diligence, determination and strategic efforts, Southwest is a very popular and profitable airline. The trouble is that in the event of a government bailout of other airlines due to bankruptcy, then Southwest is almost hindered because the other airlines will be handed large government checks. • The benefit here though to Southwest is the ability they have to continue to be profitable, continue to build investor relations and continue to reward their hard working employees. Since 9/11, many airlines have eliminated pensions, terminated employees and taken very drastic measures to stay afloat. Southwest has been fortunate, and although a bailout of other airlines may not seem fair, Southwest still is in the black and has the ability to continue to push forward to gain more market share and continue its excellent track record of profitability.

7). What is IS/IT role played in the case? • The IS/IT role played in this case was one that kept Southwest competitive in a challenging industry. Southwest used a reservation system, website and check in kiosks (was the first airline used ticketless system), Southwest was able to help counter the challenges posed after September 11th. • Southwest was revolutionary in the airline industry in many of their IT developments and were quick to move to the online e-commerce model as far as a reservation system and ticketing.

8) Why have profits for Southwest Airlines dropped recently? • Upon further review of Southwest Airlines website and other sites, I have been unable to find evidence that profits have dropped. Looking at their traffic and revenue numbers throughout 2006, it appears that traffic counts and revenue is up for Southwest however, Southwest has always negotiated their oil hedge prices years ahead. • Perhaps due to drastic increases in oil prices, this could be hurting Southwest’s bottom line. Also, Jet Blue has gained popularity as a low cost alternative which may be threatening Southwest’s market share.

Southwest today • Fleet consists of 547 Boeing 737’s • Employees nearly 35,000 people • Serves 72 cities in 37 states • Just experienced it’s 38th consecutive year of profitability

Further Lessons Learned:SWA Case and Strategic Resource Model • One of the differentiation from SWA is its • “corporate culture” • What characteristics in Strategic Resource Model that are related to the “corporate culture” of SWA that improves/creates its competitive advantage • Non-imitable • Non-transferable • Rare • Exploitable

• More by User

Airlines Industry Yield Management

Airlines Industry Yield Management. Ken Homa. Airlines Industry Challenging Environment. Complex, interconnected network Thousands of dynamic prices 90% discount prices 20% pay less than half of average 2/3’s big companies get 35-45% off 50% cancellations 15% ‘no shows’.

728 views • 26 slides

It’s So Simple But Not Always Easy How Southwest Airlines Keeps its Employees Flying High

It’s So Simple But Not Always Easy How Southwest Airlines Keeps its Employees Flying High. Our History Founded in 1971 Profitable for 34 consecutive years Serve 63 cities nationwide More than 32,000 Employees 2007 36 th Anniversary Largest airline in U.S. in terms of Customers carried.

517 views • 40 slides

Southwest Airlines

Southwest Airlines. Professor William Wan. Market Capitalization. (2002). Current Market Cap- Southwest vs. Combined. 2002. Net Operating Income (millions of dollars). Other Accolades (examples). Airlines Triple Crown Awards Fortune Magazine Best Employer

251 views • 6 slides

Module 12 Regional Airlines – JetBlue

Module 12 Regional Airlines – JetBlue. Michelle Kelly. Background. 15 mainline carriers and 70 regional carriers Industry Revenue: $138.3 billion Profit: $6.9 billion (5%) Largest Competitors Delta – 18.1% United – 16.1% Southwest – 12.4% American – 10.3% US Air– 7.7%.

617 views • 41 slides

Airline Productivity and Cost Analysis for South West Airlines

Airline Productivity and Cost Analysis for South West Airlines . Student: Karym Z. Zabara . SouthWest Airlines (LCC). SouthWest Airlines serves as a Low Cost Carrier, incorporated in Texas and commenced service on June 18, 1971

401 views • 18 slides

Southwest Airlines Culture

Southwest Airlines Culture. PEOPLE make the CULTURE . FORTUNE Top Ten Companies to Work for in America. Pay/ Benefits Opportunities Job Security Pride in Work and Company Openness / Fairness Camaraderie and Friendliness. Commitment to Our CUSTOMERS.

627 views • 23 slides

GM and Southwest Airlines on Twitter

GM and Southwest Airlines on Twitter. What they are saying. Comparison. Gm’s last few tweets have pushed message of a profitable 1 st quarter. Their push for a cleaner car and environment were evident in many posts.

149 views • 4 slides

Southwest Airlines AMDAR Participation and Benefits

Southwest Airlines AMDAR Participation and Benefits. Rick Curtis Chief Meteorologist r [email protected]. SWA/AirTran Cities. SWA/AirTran Cities - International. SWA/AirTran Aircraft. SWA/AirTran Facts and Figures.

303 views • 18 slides

Proactive Leadership in a Self-Service World

Proactive Leadership in a Self-Service World. NACCM 2011 Fred Taylor, Jr. Southwest Airlines, Inc. Proactive Leadership in a Self-Service World. Agenda:. Fred’s Leadership Background (at Southwest Airlines) Leadership Drivers Proactive Thinking Real Example (at Southwest Airlines)

369 views • 20 slides

Airlines Industry Group Presentation

Airlines Industry Group Presentation . Group member: Kargan Taylor Zhihao Wang Kenneth Wu Meng Wu Ruoyi Zhao. Part 1: Overview. Part 1: Overview. Market Sector: Services Industry Sector: Regional airlines. Airlines in General. 5.

489 views • 31 slides

Southwest Airlines. Communications. Group 7:. Ryan Taylor, Todd Rosenhagen, Dan Norton, & Wes Messing. “God gave us two ears and one mouth,” CEO Gary Kelly said, noting that communication is largely about listening. “Leaders need to know when to listen and respond.”. Presentation Matters….

402 views • 11 slides

GLOBAL AIRLINES

ADNAN BRKIC KAREN GUAN BHUPINDER KAUR CANDICE ZHOU. GLOBAL AIRLINES. AGENDA. INDUSTRY OVERVIEW SOUTHWEST AIRLINES SINGAPORE AIRLINES. AIRLINE INDUSTRY OVERVIEW.

1.35k views • 86 slides

Alderney Airlines

Dr. Clive Vlieland-Boddy FCA FCCA MBA PhD. Alderney Airlines. Alderney Airlines. Group Review: As a board member, how would you evaluate the proposals and why? What is the difference between payback and NPV evaluation?. Key Issues. What is the Company? What is the Industry?

379 views • 25 slides

Siege of Leningrad

Siege of Leningrad. Authors : Yastrebova Lena Kukushkina Nastya School № 18, Form 8a Teacher : Mihkeeva S.V. SIEGE OF LENINGRAD. At the moment of a siege establishment in a city was 2 million 544 thousands people.

661 views • 15 slides

302 views • 18 slides

BYOD (Bring Your Own Device) : Implications

BYOD (Bring Your Own Device) : Implications. Marci Powell, Polycom James Lee, Southwest Airlines Leeann Watkins, Southwest Airlines. Standard texting rates only (worst case US $0.20 ) We have no access to your phone number Capitalization doesn’t matter, but spaces and spelling do. TIPS.

205 views • 6 slides

The Hub-and-Spoke Routing for Airlines Costs and Competitiveness

The Hub-and-Spoke Routing for Airlines Costs and Competitiveness. Background. Airline industry during regulation Entry into the airline industry was limited Between 1950 and 1974 CAB rejected applications from 79 possible new airlines

309 views • 16 slides

Southwest Airlines Manage Booking | 1-888-701-8929 | Reservations

For Southwest airlines manage booking call 1-888-701-8929 and get amazing customer service for reservations by making a call at our Southwest reservations phone number.

105 views • 6 slides

Southwest Airline Change Flight

Southwest Airlines is legendary for charging no amendment or cancellation fees (southwest airline has cheap flights changing fee), though naturally, you’ll get to frame for any distinction in fare.

77 views • 4 slides

Southwest Airlines Customer Service Phone Number

southwest Airlines Customer Service Phone Number provides online Southwest Airlines customer Service for southwest airlines reservation, Southwest Airlines flights, Southwest Airlines flights Status, cancellation, confirmation, cheap flight and much more. Contact our Southwest Airlines Phone number and complete solution about your current and future flight . for more info visit https://www.emailcustomersupportnumber.com/southwest-airlines.php

134 views • 5 slides

• Preferences

SouthWest Airlines 2002: An Industry Under Siege - PowerPoint PPT Presentation

SouthWest Airlines 2002: An Industry Under Siege

Data from the southwest airlines case: flights per day = 2,800 ... average southwest advantage) aircraft saved by faster turnaround than other airlines: ... – powerpoint ppt presentation.

• Discipline Service management
• Description The company's management is faced with long-term questions regarding the rate and manner of growth in the wake of the 9/11 attacks and general industry malaise.
• Learning Objective To understand ways of achieving and maintaining both a differentiated and a low-cost service offering.
• Subjects Covered Competition, Corporate culture, Service management.
• Setting United States Airline industry 4 billion revenues 35,000 employees 2002
• The case provides a vehicle for analyzing one of those rare competitive strategies that literally change the rules of the game for an entire industry. Historic information suggests how the strategy was shaped. And detailed information in the case helps the reader to understand both how Southwest makes money while maintaining its low-cost advantage as well as its differentiation from its competition, the result of a well-crafted strategic value vision.
• The importance of effective leadership and a strong culture capable of adapting in the face of major competitive threats as well as external disasters, such as 9/11, is highlighted in the case. It provides the basis for assessing the conclusion of one major piece of research described in the next Exhibit, that Southwest Airlines has been able to preserve its competitive advantage primarily through its superior relationship management practices.
• Following the 9/11 terrorist attacks in the United States, the senior management of Southwest Airlines is faced with both short- and longer-term challenges. In the short-run questions have arisen about what, if anything, should be done to raise Southwests reported on-time performance in the airline industry.
• Although it was a somewhat artificial measure based in part on scheduling decisions, the airlines usually stellar on-time operating performance had fallen to the next-to-lowest among the eight largest airlines by September 2002. This was felt to be a result of the disproportionate effects of post-9/11 government security directives on Southwests operating practices.
• But if it continued, it could have the effect of tarnishing the airlines image among its customers. Longer-term, as Southwest emerged successfully from the post-9/11 setbacks to the airline industry, questions once again surfaced about whether and how the airline should resume its 10 to 15 annual growth rate prior to 9/11.
• In particular, to what degree should flights of over three hours connecting Southwests more distant terminals supplement the strategy of focusing on flights of 60 to 90 minutes on which the airlines success had been built?
• Southwest Airlines in 2002 faced a serious of important management decisions after the 9/11 tragedy in order to continue the record breaking company growth that Southwest had experienced since the 1970s. Southwest Airlines revolutionized the airline industry with what is known as the Southwest Effect low cost fares, point-to-point service, 10 minute turnaround and an enjoyable friendly atmosphere.
• After the Airline Deregulation Act of 1978, Southwest adopted a polity that irregardless of the profitability of expansion opportunities, the company wanted to commit to a manageable annual growth rate of about 10-15. The following questions and discussion will address the historical challenges of Southwest airlines, the direction the company contemplated in 2002, and a brief look at the challenges of today.
• The airline industry has always been competitive. In an analysis of the most profitably investments as per our class discussion, surprisingly, airlines come in at the lowest return on each dollar invested at around 2.5.
• Southwest Airlines experienced 30 consecutive years of profit a mere two years after its founding in 1971. Many airports began requesting Southwest service for their passengers, but throughout Southwests expansion, the company aimed to maintain a manageable growth rate and focus on their core competencies of low price fares that would compete with the cost of driving to the destination.
• In the mid 1990s, the major carriers entered into price wars to undercut competition. Although, these dealings did affect Southwests bottom line, Southwest still manage to continue to turn a profit and expand due to their expansion into a reservation system and their commitment to a culture and experience that passengers were drawn to.
• Southwest Airlines competitive advantages are their point-to-point services which are generally targeting the frequent business traveler. With several regular flights per day, if a passenger happens to miss their flight, they will be automatically booked onto another flight.
• Secondly, Southwest strategically secured routes through secondary airports which generally had lower fixed costs for the airlines and less congestions for passengers ease. Finally, Southwest focused on quick, reliable turnaround time using only one version of aircraft, allowing for familiarity among staff and greater efficiency in turnaround. Passengers were not assigned seats, simply boarding sections, which allowed for passenger loading to be conducted more efficiently.
• The traditional airline model is the Hub and Spoke model, which in essence takes most passengers from the origination, through the hub, and then transfers them to their destination. Southwests point to point system was more reliable because it did not depend on the on time arrival of an earlier flight for departure.
• Southwest also implemented the first and most simplistic frequent-flier program purchase eight flights and get one free. Southwests initially connected with four computer reservation and ticketing systems and also the powerful SABRE system. This allowed travel agents to view flight information and even print tickets. In 1994, Southwest was only connected through the SABRE systems which pushed Southwest to develop the ticketless travel program as well as Southwest.com.
• The Southwest airlines case can be analyzed with Porters five competitive forces model. Southwest airlines benefited after the airline deregulation in 1971, and were able to lay the groundwork for a successful airline.
• Throughout their growth, Southwest differentiated from the competition by taking a friendly, warm and welcoming approach to flying. Their low cost flights undercut the competition, which would fit under the threat of substitutes. Also, their reliability was the best in the industry until September 11th, which helped to prevent the threat of substitutes.
• Southwest airlines remained competitive in the 1990s during competitors price wars by joining 4 computer reservation systems and also the SABRE system. This presence allowed for travel agents to make reservations, and even print tickets for passengers. Also, well see after this case was written that Southwest will implement electronic kiosks that allow for passengers to check in without having to check with an agent.
• Also, Southwest will implement a website with reservation capacity and most recently, the ability to check into a flight 24 hours ahead of time. These solutions assisted Southwest in their core competencies that the company instilled back in the 1970s of a quick turn around time and flexibility in travel. Unfortunately, after the tragedy of September 11th, safety regulations began to hinder Southwests passengers and the company quickly responded with these new technologies to help during the trying travel times with heightened security regulations.
• Looking at Southwest airlines today four years after this case study was released, it is challenging to say what other solutions should be implemented because I am aware of the solutions that have been presented to date. Looking at Keens six stage competitive advantage model though, if I didnt know where Southwest moves after this case study,
• I would recommend that Southwest adopt this model because their stimulus for action would be the delays in security and the fact that the company has dropped to second worst as far as on time departures. Southwest could take the first major move to implement electronic kiosks for self check in, saving passengers time. These kiosks will slowly build customer acceptance and other airlines will scramble to compete. Finally, check in kiosks are now a commodity among all major airlines.
• 1). How does this company make money even when other airlines do not? What are the most important contributors to its financial success?
• Southwest Airlines has built its reputation on low cost reliable service. Over their tenure of 30 years in the airline industry, they have demonstrated 30 years of sustainable growth. The reason Southwest has remained financially viable is their commitment through point-to-point service with a quick turn around time. The more planes in the air and the less time on the ground is a profitably business model. Also, Southwest has tailored to the business traveler who is looking for reliability and less hassles. Also, Southwest has a generous rapid rewards system that is easy to comprehend and helps retain customer loyalty. In addition, Southwest hires the best people and rewards them accordingly, in a fun, enjoyable atmosphere. Finally, Southwest negotiates fuel prices for their airlines years in advance allowing the company to keep their pricing consistent.
• Management faced many challenges due to the increase in security regulations post-9/11. Southwest was fortune that it was a strong performer prior September 11th, but many of the security regulations that soon after would be implemented, directly contrast with Southwest primary core competencies. For instance, Southwest initially had the colored boarding cards, which were generic without passenger names. Due to highest security risk, passenger names had to be cross checked at the gate, causing delays.
• Also, Southwests motto, You are now free to move about the Country was directly targeting travelers who could walk onto the plane a few minutes before takeoff because Southwest would keep the doors open to allow for passengers to keep filing in. Again, this was against new security measures. Also, since many of Southwest passengers did not generally arrive as early as other airlines, more often than not, Southwest passengers would be subject to security searches. Also, random security searches were being conducted at the gates as well which Southwest actually stepped up to help mitigate delays by hiring more security personnel.
• Managers at Southwest should move to inform passengers of new safety restrictions and potential delays and encourage them to arrive earlier for their flights. Southwest responded immediately after 9/11 with a patriotic message, and it would be again appropriate to clarify to their passengers that the delays are for their safety. In the meantime, Southwest should pay for additional personnel to help during security procedures, and perhaps add an extra incentive in the Southwest Terminal such as free coffee or chocolate chip cookies to help add value to the passengers who have to wait longer for flights.
• Also, looking back at the companys history from their website, in 2002, facing these delays, Southwest created check in kiosks. These computerized databases can process customer information allowing for greater efficiency for passengers without check in baggage. In addition, Southwest shortly thereafter implemented the 24 hour check in procedure. By going online to Southwest.com, passengers can check in up to 24 hours ahead of their flight, reducing their airport time and confirming their seat ahead of time.
• I would recommend that Southwest continue to grow at 10 to 15 percent per year but no more. Companies such as Wal Mart and McDonalds, if their growth is too large, too quickly, their presence can be filled with resentment from customers because they have pushed out other competition.
• At 10-15 percent growth, airports and cities will still ask for Southwest to expand into their areas, and it will be a slow, calculated and sustainable growth, as opposed to one that moves the company away from its core competencies.
• N/A since, a 10-15 increased is recommended.
• Southwest is in a precarious position because they are profitable. Through 30 years of diligence, determination and strategic efforts, Southwest is a very popular and profitable airline. The trouble is that in the event of a government bailout of other airlines due to bankruptcy, then Southwest is almost hindered because the other airlines will be handed large government checks.
• The benefit here though to Southwest is the ability they have to continue to be profitable, continue to build investor relations and continue to reward their hard working employees. Since 9/11, many airlines have eliminated pensions, terminated employees and taken very drastic measures to stay afloat. Southwest has been fortunate, and although a bailout of other airlines may not seem fair, Southwest still is in the black and has the ability to continue to push forward to gain more market share and continue its excellent track record of profitability.
• The IS/IT role played in this case was one that kept Southwest competitive in a challenging industry. Southwest used a reservation system, website and check in kiosks, Southwest was able to help counter the challenges posed after September 11th.
• Southwest was revolutionary in the airline industry in many of their IT developments and were quick to move to the online e-commerce model as far as a reservation system and ticketing.
• Upon further review of Southwest Airlines website and other sites, I have been unable to find evidence that profits have dropped. Looking at their traffic and revenue numbers throughout 2006, it appears that traffic counts and revenue is up for Southwest however, Southwest has always negotiated their oil hedge prices years ahead.
• Perhaps due to drastic increases in oil prices, this could be hurting Southwests bottom line. Also, Jet Blue has gained popularity as a low cost alternative which may be threatening Southwests market share.

PowerShow.com is a leading presentation sharing website. It has millions of presentations already uploaded and available with 1,000s more being uploaded by its users every day. Whatever your area of interest, here you’ll be able to find and view presentations you’ll love and possibly download. And, best of all, it is completely free and easy to use.

You might even have a presentation you’d like to share with others. If so, just upload it to PowerShow.com. We’ll convert it to an HTML5 slideshow that includes all the media types you’ve already added: audio, video, music, pictures, animations and transition effects. Then you can share it with your target audience as well as PowerShow.com’s millions of monthly visitors. And, again, it’s all free.

About the Developers

PowerShow.com is brought to you by  CrystalGraphics , the award-winning developer and market-leading publisher of rich-media enhancement products for presentations. Our product offerings include millions of PowerPoint templates, diagrams, animated 3D characters and more.

A unique take on Southwest Airlines Strategy

Anyone who has studied business management either as a degree or as an elective would have definitely studied Michael Porter’s 5 Forces framework. This framework was first published in  Harvard Business Review  in 1979. The model is very much relevant in 21st-century business as well due to its deep 360-degree view of a business.

One of the 5 forces is called “Barriers to Entry” and more often than not either Oil & Gas or Airline industry would serve as an apt example of an industry with very high barriers to entry due to its high Capex and Opex requirements.

But wait, then with so many barriers to entry, why do airlines still bleed red? There are many reasons for this, but one of them is stiff competition with low-cost carriers, the 5th, and the framework’s central force (competition among the players).

Before we move on, the below is an interesting tweet response from Anand Mahindra, on being asked to buy the ailing “ Jet Airways ”.

Remember the quote: “If you want to be a millionaire, start with a Billion dollars and then start (buy) an airline!” https://t.co/dYRdwup3kK — anand mahindra (@anandmahindra) June 29, 2019

The US Airline Industry

Following the 9/11 attacks, the US airline industry has been through rough weather. 20+ airlines have filed for bankruptcy protection under Chapter 7. 60+ airlines have filed for bankruptcy protection under Chapter 11.  This list also includes the top 3 out of 4 airlines namely, American Airlines, United & Delta Air Lines, however they were able to exit the bankruptcy within a few years.

The landscape has been constantly changing with a high volume of mergers and acquisitions, resulting in changing market share statistics.

The graph above covering the period January to December 2020 showcases that the top 4 airlines constitute approx. 65% of the market share.

In this story, we are focusing on Southwest Airlines that was founded on the notions of the low-cost carrier but with its unique strategy has been profitable for the last 45 years in a row. 

The takeoff strategy of Southwest Airlines

Southwest Airlines Co. , typically referred to as Southwest, is one of the United States’ major airlines and the world’s largest low-cost carrier airline. The airline was established on March 15, 1967, by  Herb Kelleher  as Air Southwest Co. and adopted its current name, Southwest Airlines Co., in 1971, when it began operating as an intrastate airline wholly within the state of Texas first flying between Dallas, Houston and San Antonio. 

Most airlines back in the 1960s followed the most popular “Hub and Spoke” model for their operations.

Hub and Spoke model – As the name suggests, there is a defined hub from where the flights originate, and the destinations are the spokes.

The benefit of a hub and spoke model is that it has fewer routes, but the major drawback of this model is its rigidity, and if there is a slight change in the airline routing due to weather, etc., it can have cascading consequences to the other planned flights.

Point to Point model – Southwest, being a low-cost carrier, focused more on the point to point model and bought significant process improvements, in a way mastered it to achieve very high operational efficiency.

In the point-to-point model, each flight is a single journey. The origin and destination are connected via a single non-stop flight. The point-to-point model offers more travel options and flexibility as compared to the hub and spoke model.

For passengers undertaking further journeys, they will have to collect the baggage and recheck them for leg 2 of their journey. This model has considerably led to saved travel hours and done away with the necessity for connecting flights.

Key Differentiating Factors in Southwest Airlines Strategy

Southwest airlines is the third largest airline in the United States of America and arguably the biggest in the low-cost carrier segment across the globe.

So, was the operational efficiency gained due to the change in the flight operations model the only reason why Southwest airlines is the #1 low-cost carrier in the world?

NO, let’s understand what differentiated Southwest airlines strategy from its counterparts.

Customer Eccentricity

For Southwest, they keep the customers at the center of their business operations. They offer certain benefits to flyers which are not offered by other airlines, like

• Southwest allows two checked-in bags, free of cost, unlike many of its competitors.
• Flight change thirty minutes prior to the departure is allowed by Southwest.
• Southwest offers free in-flight entertainment like Live TV, Movies, use of whatsapp and imessage. It offers Wi-Fi services at very nominal rates.

All these have resulted in Southwest being the airline with the least number of complaints, according to the Department of Transportation of the United States of America.

Only one type of aircraft

Many airlines have different types of aircraft in their fleet, but not Southwest. Southwest operates by using only Boeing 737 aircraft. It saves a lot of money by:

• Training cabin crews and support staff on only one type of aircraft.
• Maintenance of inventory of spare parts for one aircraft type.
• In case of breakdown, alternate aircraft can be arranged immediately.
• Its policy of not assigning seats helps tremendously as customers can take any available seat when boarding the aircraft, thereby reducing the boarding time. In the case of alternate aircraft also, this policy hugely benefits the airline reducing the turnaround time.

Right recruitment policies

Southwest stresses a lot on the customer experience and hence it is very imperative for the airline to hire the right kind of people. Southwest focusses on hiring people who have an attitude for serving customers.

Employees undergo various pieces of training which also includes cross-training. Training is heavily centered around team building and collaboration.

The Southwest Airlines case study is a lesson in cultural strategy. An organization built on the fundamentals of customer eccentricity, effective processes, and a dedicated team is meant to achieve success and overcome challenges. This model of exceptional customer service can help a business earn an impeccable reputation in the industry. That’s what makes the Southwest model uniquely priced, yet one profitable in this cruel airline industry.

Southwest’s ability to be different and not follow the herd—not to mention becoming America’s largest airline—can be traced in large part to the Airline Deregulation Act. Thanks to this act, Herb and Rollin realized their Vision and the traveling public benefits on every flight, every day. Gary Kelly, Chairman & CEO, Southwest Airlines

Vinit Joshi is Corporate Planning & Strategy professional with 15+ years of experience across renowned & diversified business groups. When not working or spending time with family, Vinit loves listening to a variety of music

Related Posts

The AI Revolution in Manufacturing: Proactive Solutions for Modern Challenges

AI is Shattering the Chains of Traditional Procurement

Revolutionizing Supply Chain Planning with AI: The Future Unleashed

Is AI the death knell for traditional supply chain management?

Merchant-focused Business & Growth Strategy of Shopify

Business, Growth & Acquisition Strategy of Salesforce

Hybrid Business Strategy of IBM

Strategy Ingredients that make Natural Ice Cream a King

Investing in Consumer Staples: Profiting from Caution

Storytelling: The best strategy for brands

How Acquisitions Drive the Business Strategy of New York Times

Rely on Annual Planning at Your Peril

How does Vinted make money by selling Pre-Owned clothes?

N26 Business Model: Changing banking for the better

Sprinklr Business Model: Managing Unified Customer Experience

How does OpenTable make money | Business model

Write a comment cancel reply.

Save my name, email, and website in this browser for the next time I comment.

• Advanced Strategies
• Brand Marketing
• Digital Marketing
• Luxury Business
• Startup Strategies
• 1 Minute Strategy Stories
• Business Or Revenue Model
• Forward Thinking Strategies
• Infographics
• Publish & Promote Your Article
• Write Article
• Testimonials
• TSS Programs
• Fight Against Covid
• Privacy Policy
• Terms and condition
• Refund/Cancellation Policy
• Master Sessions
• Live Courses
• Playbook & Guides

Type above and press Enter to search. Press Esc to cancel.

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

• We're Hiring!
• Help Center

Download Free PDF

Solved Case Study of Southwest Airlines from “STRATEGIC MANAGEMENT: AN INTEGRATED APPROACH” 9TH EDITION BY HILL & JONES (CENGAGE LEARNING)

Related papers

This article analyzes the sources of Southwest Airlines' competitive aduantage using an integrative approach, employing economic analysis tools to illustrate the roles of commitment and organizational capabilities in delivering competitive advantage at Southwest. A framework is presented illustrating that much of the value Southwest generates is (1) created through employee needs satisfaction, (2) converted to customer and shareholder value via organizational capabilities, and (3) captured by the firm as a result of its cost advantage and superior service. This three-part framework may be applicable to other labor-dependent service organizations.

Master Thesis

Google Earth image. "A 100 km ridge on the sea shelf, at depths ranging from 50 to 300 meters, aligns with the probable course of the mighty Saraswati River. It is believed that the Saraswati River flowed for about 15,000 years before becoming extinct. For approximately 3,000 of those years, it may have flowed through the ridge now submerged 140 meters below today's sea level."

International Journal of Applied Linguistics , 2024

The current study investigates the effect of three Foreign Language learner emotions on the amount of gain in oral proficiency over one school year of 159 eleven-year-old pupils starting English Foreign Language classes in France. Previous cross-sectional studies have shown positive relationships between Foreign Language Enjoyment (FLE) and various performance and achievement measures, as well as negative relationships between Foreign Language Classroom Anxiety (FLCA), Foreign Language Classroom Boredom (FLCB) and FL performance and achievement measures. A common finding is that negative emotions explain more variance in FL performance and achievement measures at a single point in time than positive emotions. Correlation analyses revealed that the amount of gain was positively linked to FLE and negatively linked FLCA and FLCB. A first multiple regression analysis showed that-surprisingly-FLE was the only (positive) predictor of gain in oral proficiency. A second multiple regression analysis revealed that the FLE Teacher dimension was the only predictor of gain in oral proficiency. This suggests that positive emotions, and especially the ability of teachers to meet the psychological needs of their students, have a stronger longterm effect while negative emotions are more likely to disrupt performance in the moment. Pedagogical implications are presented. KEYWORDS Foreign Language Enjoyment, Foreign Language Classroom Anxiety, Foreign Language Classroom Boredom, oral proficiency gain Résumé La présente étude examine l'effet de trois émotions de 159 élèves de onze ans commençant des cours d'anglais langue étrangère en France sur le degré de gain en compétence orale au cours d'une année scolaire. Des études transversales antérieures ont montré des relations positives entre le plaisir (enjoyment) des langues étrangères (FLE) et diverses mesures de performance et de réussite, ainsi que des relations négatives entre l'anxiété en classe de langue étrangère (FLCA), l'ennui en classe de langue étrangère (FLCB) et les mesures de performance et de réussite en langue étrangère. La littérature suggère que les émotions négatives expliquent plus de variance dans les mesures de performance et de réussite en langue étrangère à un moment donné que les émotions positives. Les analyses de corrélation ont révélé que le gain était positivement lié au FLE et négativement lié au FLCA et au FLCB. Une première analyse de régression multiple a montré que le FLE était le seul prédicteur (positif) du gain en compétence orale. Une deuxième analyse de régression multiple a révélé que la dimension FLE-Enseignant était le seul prédicteur de gain en compétence orale. Cela suggère que les émotions positives, et notamment la capacité des enseignants à répondre aux 1

El concepto con el que más fácilmente se suele relacionar la educación artística es el de las manualidades. En este libro se vincula la educación artística con los procesos intelectuales que generan conocimiento a través del lenguaje visual, sin hacer desaparecer por ello los procesos manuales, pero descentrándolos, situándolos en un lugar no medular. Para lograr este objetivo, la autora analiza la importancia que lo visual tiene en nuestra sociedad en relación con pedagogías aparentemente invisibles y altamente tóxicas, expone los modelos generales que se han desarrollado recientemente desde esta área de estudio y presenta una propuesta concreta a partir de la cual sea posible ejecutar una educación de las artes y de la cultura visual desde una perspectiva innovadora, en consonancia con el mundo que nos rodea: el currículum-placenta. Términos como pedagogía tóxica, currículum oculto visual, educación bulímica, pasión por la ignorancia o cuestiones como la de si educar es o no posible son las que establecen el recorrido de este texto, que será de gran ayuda para todos aquellos que trabajen con la educación artística en los contextos no formales (museos, espacios relacionados con la salud y colectivos de exclusión social, contextos extraescolares, domésticos, de ocio y virtuales) y formales (educación infantil, primaria, secundaria y educación superior), así como a todas aquellas personas preocupadas por la educación y por las imágenes, o por las dos cosas a la vez.

The Proceedings of the Annual Convention of the Japanese Psychological Association, 2018

OSAIN OZAIN OSANYIN OZANYIN OSSANYIN, 2012

Reiternomaden in Europa. Hunnen, Awaren, Ungarn, 2022

Archeologia Żywa 2023/4

International Journal of Urban and Regional Research, 2024

Magic, Ritual, and Witchcraft, 2008

Introduzione a T. Ingold, "Corrispondenze", 2021

Constructions and Frames, 2024

Latin American Literature Today Vol. I (3), 2017

PAYESH, 2009

Tahdis: Jurnal Kajian Ilmu Al-Hadis, 2020

IJECA (International Journal of Education and Curriculum Application), 2018

Physical Review D, 1986

REPRODUCTION, 2014

Related topics

•   We're Hiring!
•   Help Center
• Find new research papers in:
• Health Sciences
• Earth Sciences
• Cognitive Science
• Mathematics
• Computer Science
• Academia ©2024