Southwest Airlines Case Study

Topics: Southwest Airlines, Low-cost carrier, Airline Pages: 8 (2454 words) Published: February 26, 2014


Enhancing Service at Southwest Airlines

Kevin Winstead
Sullivan University
MGT 620

Executive Summary

This proposal addresses the needed steps to be taken in order for Southwest Airlines to see continued growth in the airline industry. Southwest Airlines has been able to remain one of the most profitable airlines in the industry for an extended period of time. Even with the hindrance of the 2001 terrorist attacks involving airplanes and the U.S recession of 2008, Southwest has continued to see strong revenue growth. Meanwhile, other companies were experiencing major losses and in some cases folding. Southwest Airlines has capitalized on the company’s strength of being the top low cost carrier by offering a simple and efficient business plan that prides itself on customer service. Other carriers are now starting to take note of Southwest’s success and emulate many of their practices in an attempt to grab a share of their customer base. To overcome this competition, Southwest must continue to be unique and innovative in their business plans.

Introduction: A New Airline Power is Formed

Southwest Airlines was created in 1971 by Rollin King and Herb Kelleher. Their thinking was that if they offered fares lower than any of the competition, with efficient service, the company was bound to succeed. Their thinking turned out to be on target, as Southwest has for decades been one of the most successful airlines in the country. What began as a small Texas airline has grown to become the fifth largest airline in the United States. Today, Southwest Airlines flies over 70 million passengers per year to more than 62 cities. Southwest orchestrates over 3,000 flights per day. The Southwest fleet consists of over 436 jets which have an average age of nine years old. Since the Department of Transportation began tracking Customer Satisfaction statistics in 1987, Southwest has consistently led the entire airline industry with the lowest ratio of complaints per passengers boarded. Customer satisfaction is one of the cornerstones at the foundation of Southwest’s success.

CUSTOMER SATISFACTION
Complaints per 100,000 customers boarded

Source: http://www.southwestonereport.com/people

Background: A Unique Business Model

When being established, Southwest used a business model that differed quite a bit from ones seen at other successful airline companies around the country. When the airline launched, the fares were much lower than the competition. In fact, many fares were actually below the cost of driving a vehicle over the same route. Southwest’s policy of pricing its service was to compete with auto travel, something not even considered by other airlines at the time. While the fares have increased with inflation, they are still some of the best in the industry. Southwest has been able to keep its fares low and its service ratings high by implementing processes that are unlike those of its competitors. Trips are made more frequently by Southwest than the average airline, passengers are not assigned seats, only Boeing 737 jets are used in the Southwest fleet, un-congested or secondary airports are targeted in their routes, and tickets are primarily sold through the internet. Southwest’s frequent departures provided opportunity to frequent business flyers to catch a later flight if they missed one. They also didn’t assign seats to passengers. They issued colorful reusable plastic cards numbered 1 to 30. Passengers who came first could take the seat of their choice, thus providing an incentive to arrive early. This process of assigning seats eliminated the time-consuming reconciliation of the double assignment of seats on full flights and allowed Southwest agents to keep the plane doors open for last minute arrivals at the gate. The airline didn’t transfer baggage to connecting flights on other airlines and didn’t...

References: Mouawad, J. . Retrieved from http://www.nytimes.com/2010/11/21/business/21south.html?pagewanted=all&_r=0
Trejos, N. (0). Retrieved from http://www.usatoday.com/story/travel/flights/2013/07/02/southwest-airlines-offers-fliers-free-in-flight-tv/2484739/
Retrieved from http://www.airlinepilotcentral.com/
MCCARTNEY, S. (0). Retrieved from http://online.wsj.com/news/articles/SB10001424052970204331304577140740389194590
Johnson, M. E. (2009, May 08). Enhancing Service at Southwest Airlines. Tuck School of Business at Dartmouth,
Retrieved from http://www.southwestonereport.com/people
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