SOUTHWEST AIRLINES CASE STUDY
Aurelio Montelongo Jr.
June 22, 2012
Southwest Airlines is in an environment whose conditions for most in this type of industry have been anything but profitable. So why is it that Southwest Airlines, who has been profitable in this volatile market been able to make money? Though Southwest did have a losing quarter it was not due to lack of fliers or its service to its customers, but an investment in its fuel hedging cost. As fuel dropped in price, Southwest was stuck with its contracts at higher prices.
Southwest airlines began flying in 1971 after having to have to fight in court over restraining orders not allowing the new carrier to fly. Both times, Herb Kelleher pleaded his case before the Texas State Supreme Court and won. The very next day Southwest Airlines had its inaugural flight on June 18, 1971. Southwest is a short hop no frills or seating flight. Its hops are less than 500 miles and its employees take pride in their job. It is this type of culture that Southwest boosters and encourages. They have fun at their jobs, while making flying with them an experience to enjoy. As you can see in the following link: http://www.youtube.com/watch?v=xpbs5ucTKWI . As the airline industry struggles to stay afloat, Southwest has found a secret weapon to set itself apart from the rest of the competition: singing flight attendants. Over the years several crew member performances have been caught on film and uploaded to YouTube. We compiled some of the more interesting videos to give you an idea of what might await the next time you fly with Southwest. (Kasperkevic, 2012) http://www.businessinsider.com/this-airlines-flight-attendants-vow-planes-full-of-people-by-singing-2012-3#david-is-probably-the-best-known-of-the-southwest-singing-flight-attendants-1 This is what sets Southwest Airlines apart from other airlines. Though many have tried to mimic the airline, they have been unsuccessful in their attempts to copy the culture and values of Southwest Airlines.
Southwest is in the airline industry and is considered a short hop airline. This means that its flights are usually less than 500 miles. Most airlines have short range flights, for example American has American Eagle. Most other major airliners also have short hop business and there are also airlines that compete with Southwest in the short hop flights like AirTran, JetBlue, and US Airways Express.
Southwest acquired AirTran which was an opportunity that they capitalized on. This opened up new routes to the NE of the Continental United States. Though Southwest has the means to expand and grow, it is cautious on what it acquires and when. They are growing but at their pace, not being dictated by markets and availability of routes. Plus AirTran flies Boeing 737 aircraft which again keeps other cost down like parts, maintenance, inventory, and training on different platforms.
At the moment the threats that Southwest faces is the volatile market of fuel prices, and this lingering recession. Though they have shown a profit in these past few years, eventually as we continue in this recession, people will start to consider their was of travel. Companies can’t have people flying all over the country, if sales are down.
What does Southwest know that no one else in airlines does? It keeps things simple and consistent, which drives costs down, maximizes productive assets, and helps manage customer expectations. One Plane Fits All
Unlike the network carriers and their commuter surrogates, which operate all manner of regional jets, turboprops, and narrow-body and wide-body aircraft, Southwest flies just one plane type, the Boeing 737 series, which saves Southwest millions in maintenance costs—spare-parts inventories, mechanic training and other nuts-and-bolts airline issues. It also gives the airline unique flexibility to move its 527 aircraft throughout the route network without costly disruptions and reconfigurations....
References: Kasperkevic, J. (2012) Southwest Airlines Has A Secret Weapon To Make Everyone Love Flying . The Business Insider. Retrieved June 17, 2012 from http://www.businessinsider.com/this-airlines-flight-attendants-vow-planes-full-of-people-by-singing-2012-3
Brancatelli, J. (2008) Southwest Airlines’ Seven Secrets of Success. Wired. Retrieved June 18, 2012 from http://www.wired.com/cars/futuretransport/news/2008/07/portfolio_0708
Peter, J.P. and Donnelly, J.H. (2011) Marketing Management Knowledge and Skills. Case Two: Southwest Airlines 2008. Pg. 269. McGraw Hill, New York
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