Case 27 Southwest Airlines

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1.0Summary of Southwest Airlines: Does “LUV” Last?*

First time in history, Southwest Airlines had its “LUV” for customers questioned. The Federal Aviation Administration (FAA) levied a record $10.2 million fine on Southwest Airlines. They accuse them after missing mandatory safety checks of flying 117 planes on nearly 60,000 flights between June 18, 2006, and March 14, 2007.

Both the FAA and Southwest testified. FAA officials were blamed for being “too close” to the airline and being careless in their regulatory duties. Safety was not compromised by the missed inspections; a tiny section of the plane’s skin had missed being inspected. The cracks in that section would not have led to any terrible accident. The planes should have been taken out of service when it was known that they missed inspection said Southwest Chairman, Herb Kelleher and Chief Executive, Gary Kelly. A “black eye” on the airline’s safety record, according to Gary Kelley.

1.1Background and Growth
Southwest Airlines traces its roots on March 16, 1967 incorporation of Air Southwest Co. by Rollin King and Herb Kelleher to provide service within the state of Texas. The idea of opportunity for an intrastate airline was suggested by Rollin King, a San Antonio entrepreneur who owned a small commuter air service when his banker complained about the issue. While Herb Kelleher is a New Jersey born, Ney York University Law School graduate who moved to San Antonio in 1967 to practice law.

1.2The SWA Leadership and Culture
Kelleher truly believed that business could and should be fun as at Southwest Airlines they have this culture where they won’t hire people who humorless, self-centered or snobbish. In Southwest, they choose to have people department instead of human resource department there. Recruitment guidelines are based on “Hire for attitude and train for skills,” which to Kelleher believed was the most important principle. Mostly, the workers enjoyed working in Southwest environmental as their CEO, Herb Kelleher always encourage them to have fun while working in order to give the best result in their work task. In addition, humor helped them out of a difficult situation. All employees are treated fairly with dignity and respect, and Kelleher didn’t believe in hierarchical barriers. Employees came first compared to the higher managerial rank in Southwest and that orientation was embodied in the airline’s mission statement. The cultures were put into operation through a number of policies and programs. Treating employees well at Southwest did not mean that they were paid high salaries.

1.3The Changing Times and Challenges
Southwest Airlines had a change in leadership in August 2001. Herb Kelleher assigned his power to his workmate, Colleen C. Barrett and James F. Parker. Both Barrett and Parker had worked together for more than 22years and they also had worked with Kelleher for much longer from the time he was a lawyer.

Parker was a quiet diplomat and he had been the company’s lead labor negotiator for years. Parkers didn’t see celebrations as something that contributing to the company’s productivity but later it comes to his sense that the party preparations were a model of teamwork and employee bonding, and he started to participate in the celebrations in 2002.

Barrett was always being the culture keeper of Southwest since the earliest days of the company. However, she was sensitive to respond as a public speaker and let Parker take lead with Wall Street and all the media.

The growth of Southwest with the additional numbers of employees had never been an easy task to keep the culture intact. The distance between the rank and file and top management was rising. The task was becoming increasingly unrealistic and very challenging as Barrett sometimes could reach only a fraction of Southwest 35,000 employees through personally...
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