Southwest Airlines Case Analysis
1. How does Southwest Airlines increase the customer's willingness to buy (customer value)? Southwest airline creates customer value by providing an all around pleasant travel experience for its customers. Its ground and flight crew are extremely accommodating and flights are safe and on time. The fares are inexpensive compared to other hub and spoke airlines, which are attractive to business travelers during weak economies as well as to other travelers who would usually drive to locations instead of paying a high fare. Southwest imposes fewer restrictions on their lowest fares, such as staying over Saturday nights at destinations. It is also more lenient with itinerary changes; the airline imposes no penalties. For four consecutive years, the Department of Transportation's annual customer service report card has named Southwest tops in its class for all three major categories: 1.
On-time Performance - percentage of flights arriving within 15 minutes of scheduled time 2.
Baggage Handling - ratio of mishandled baggage reports per 1,000 customers 3.
Customer Complaints - ratio of complaints received by the Department of Transportation per 100,000 customers
2. How does SW increase productivity, and efficiency while driving down costs (company value)? •
Southwest pays its employees less but treats them extremely well and compensates with stock options and profit sharing giving them a sense of ownership. Southwest employees are extremely committed to the organization’s goals and understand what needs to take place in order to be profitable and still maintain consistently high customer service level. Southwest’s employees watch costs carefully, take on more responsibilities compared to their counterparts at other airlines, and are more productive than its competitors’ employees in many ways. •
Southwest pilots fly 80 hours per month compared to 50 hours for most major airline pilots. Flight attendants work...
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