Operations Study: Southwestern Airlines

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Southwest Airlines Co. (“Southwest”) is a major U.S. airline that primarily provides short Haul high-frequency, point-to-point, and low-fare service. Southwest was incorporated in Texas and commenced operations on June 18, 1971 with three Boeing 737 aircraft Serving three Texas cities; Dallas, Houston, and San Antonio. Today Southwest operates nearly 400 Boeing 737 aircraft to 59 U.S. cities. Southwest has the lowest operating cost structure in the domestic airline industry and consistently offers the lowest and simplest Fares. Southwest also has one of the best overall customer service records. LUV is Southwest’s NYSE symbol, selected to represent the company’s home at Dallas Love Field, as well as the theme of Southwest’s employee and customer relationships Within 30 years, Southwest Airlines has become the fifth largest major airline company in America. It currently operates 520 Boeing 737s throughout the United States. The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit. It primarily provides short haul, high-frequency, point-to-point, low-fare air transportation service in the United States. The company essentially functions as a “point-to-point” operation rather than a “hub and spoke” service like its competitors. This provides for a unique competitive advantage, which has led this company to be a strong performer within the industry. The major success to their continued success is due to their low-cost model, as compared to their competitors, which allows Southwest airlines to differentiate itself from the competition and perpetuates its success and popularity among consumers. When we look at southwestern airlines competitive environment using porters five forces we find that the bargaining powers of Customers in the airlines industry have many options and are price sensitive. If driving is cheaper than flying southwest may lose customers. There are also over 100 carriers in the U.S. market therefore there are many options for customers. The bargaining power of suppliers: Southwest is at the mercy of the labor Unions and Gas suppliers. If these costs become too high then price raises will mandatory. The threat of new entrants: With so many major airlines going bankrupt there is a large supply of airplanes and personnel. This means that it is easier than ever to start up and airline and try and compete with Southwest. The threat of substitute products: Flying has very few substitutes in the U.S. market if you need to be somewhere in a hurry. However there are other forms of transportation including busses, trains, and cars. The intensity of competitive rivalry: There is intense industry competition. Every route is hotly contested with price wars and a grab for customers. Price margins are low, and airlines need to be able to trim costs any way they can. Southwestern airlines has got the following strengths;

Southwest's commitment to customer service has led to an excellent track record. They held the unofficial Triple Crown in customer service for three consecutive years. The Triple Crown consists in being the best in on time performance, baggage handling, and customer satisfaction. This is an amazing feat considering no other airlines have held all three components for a single month.

Southwest has a major advantage over other airlines because it operates a single type of plane, the Boeing 737. This means that all their pilots, facilities, and crews are trained on any plane that Southwest owns. Southwest also operates a fleet with an average age of 7 years. This means that they have less maintenance problems, and this leads to fewer delays, and higher customer service. Sensible expansion policy. Southwest has developed a very sensible strategy for expansion, paying particular attention not to strain the balance sheet. It has also achieved a national...
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