Southwest Airlines: Using Human Resources for Competitive Advantage
Southwest Airlines: Using Human Resources for Competitive Advantage
Executive Summary Southwest was founded in 1971 with a fleet of three Boeing 737 aircraft. Headquartered at Love Field in Dallas, the airline followed a strategy of low fares, few frills, and excellent customer service. Early on, the airline faced many political and regulatory challenges including the Wright Amendment, which prohibited the carrier from offering direct service into Love Field from any state other than Texas and its four neighboring states. Under the leadership of co-founder and CEO Herb Kelleher, Southwest used these challenges to galvanize their employees, ultimately building a highly successful business with a uniquely committed workforce. By 1994, the airline’s success had spawned many smaller imitators such as Kiwi and Reno Air. Big carriers like United, USAir, and Continental also sought to duplicate Southwest’s model with an airline-within-an-airline that, like Southwest, offered low fares, few frills, and frequent service. The new competitive threat had driven down the stock price and analysts were asking whether the airline’s advantage was sustainable.
On September 17, 1994, Ann Rhoades, a former marketing executive and VP of People for Southwest, was asked to review the company’s current position in light of the new competition and evaluate whether Southwest’s wildly successful human resources practices could be imitated.
Competitive Advantage
Southwest Airlines ' successful and profitable business model has been driven by several strategies including high aircraft utilization, a standardized fleet, charismatic leadership, low fares, excellent customer service, an attractive frequent flier program, innovative marketing, a performance-focused organizational culture, strategic human resources management, and lean operations.
The Southwest fleet is composed exclusively of fuel-efficient Boeing 737 airplanes. By using a single type aircraft, the company can
Executive Summary Southwest was founded in 1971 with a fleet of three Boeing 737 aircraft. Headquartered at Love Field in Dallas, the airline followed a strategy of low fares, few frills, and excellent customer service. Early on, the airline faced many political and regulatory challenges including the Wright Amendment, which prohibited the carrier from offering direct service into Love Field from any state other than Texas and its four neighboring states. Under the leadership of co-founder and CEO Herb Kelleher, Southwest used these challenges to galvanize their employees, ultimately building a highly successful business with a uniquely committed workforce. By 1994, the airline’s success had spawned many smaller imitators such as Kiwi and Reno Air. Big carriers like United, USAir, and Continental also sought to duplicate Southwest’s model with an airline-within-an-airline that, like Southwest, offered low fares, few frills, and frequent service. The new competitive threat had driven down the stock price and analysts were asking whether the airline’s advantage was sustainable.
On September 17, 1994, Ann Rhoades, a former marketing executive and VP of People for Southwest, was asked to review the company’s current position in light of the new competition and evaluate whether Southwest’s wildly successful human resources practices could be imitated.
Competitive Advantage
Southwest Airlines ' successful and profitable business model has been driven by several strategies including high aircraft utilization, a standardized fleet, charismatic leadership, low fares, excellent customer service, an attractive frequent flier program, innovative marketing, a performance-focused organizational culture, strategic human resources management, and lean operations.
The Southwest fleet is composed exclusively of fuel-efficient Boeing 737 airplanes. By using a single type aircraft, the company can