Case Study 1 – Southwest Airlines
1. To what do you attribute the success of Southwest Airlines? The success of Southwest Airlines was mainly attributed to their innovative high-volume, low-margin business model, which included cutting flight prices dramatically, using their fleet at maximum capacity, and entertaining marketing gimmicks. Southwest’s flight structure took advantage of low-density airports and underserved areas and was comprised of a two-tiered pricing structure that books as many seats as possible per flight, ultimately driving ticket price down. In conjunction with flying their planes at capacity, Southwest was able to further cut overhead costs by contracting two-thirds of their fuel costs and offering a no-frills flying experience. One of the biggest factors in Southwest’s ability to cut costs was its fleet utilization at maximum capacity. Southwest was able to reduce loading and unloading bottlenecks that were caused by pre-assigned seating arrangements, decrease flight turnaround times, and increase the number of hours planes were airborne to 12 hours, four hours longer than the industry average. Southwest positioned itself well within the airline market by having low-cost fares and the shortest flight times between destinations, but further enticed its customers through their LUV program that promotes employee satisfaction and individuality. Southwest believes that by creating a pleasurable working environment employee happiness and satisfaction will trickle down to its customers. Additionally, Southwest began creating a one-of-a-kind experience for passengers by running holiday promotions, encouraging employees to dress up for holidays, and partnering with Sea World to create a Shamu plane.
2. How significant is the 10-15 minutes turnaround time of Southwest’s aircraft in terms of savings in investment and utilization of its aircraft compared to the competitors?
The 10-15 minute turnaround time is one of Southwest...
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