Southwest Airlines Case Study
Discussion Questions
1. To what do you attribute the success of Southwest Airlines?
2. How significant is the 10 to 15 minutes turnaround time of Southwest’s aircraft in terms of savings in investment and utilization of its aircraft compared to competitors?
3. What challenges is Southwest facing in the future and how should they meet those challenges?
4. What should their business and operations strategy be for the future?
5. Has Gary Kelly, the new Southwest CEO since 2004, been able to maintain the profitability of Southwest Airlines while insuring the continuation of their unique culture?
Analysis
Question 1. To what do you attribute the success of Southwest Airlines?
The key points related to the company’s success can be summarized as follows:
• Fleet: all Boeing 737s which means better fuel efficiency and low maintenance
• Scheduling: quick turns that results in high asset utilization
• Service: short haul, point-to-point, low cost, no-frills flights from secondary airports in good-weather areas
• Integration: contract out non-core activities like major maintenance, data processing, and legal services which will decrease costs
• New markets: enter in full force
• Positioning: low cost to travelers, yet reliable and fun mostly aimed at business travelers
• Pricing: driven by break-even capacity; compete with other modes of transportation; two tiered
• Promotion: unusual and creative, targeting business commuters
• Personnel: selective in hiring; cross-trained; shared rewards through above-average pay and part-ownership
• Culture: a reflection of Kelleher—lighthearted, fun-loving, off-the-wall yet serious about teamwork and productivity
Question 2. How significant is the 10 to 15 minutes turnaround time of Southwest’s aircraft in terms of savings in investment and utilization of its aircraft compared to competitors?
The turnaround time is very significant in utilization of aircraft and the low cost position of Southwest airlines. In the early
1. To what do you attribute the success of Southwest Airlines?
2. How significant is the 10 to 15 minutes turnaround time of Southwest’s aircraft in terms of savings in investment and utilization of its aircraft compared to competitors?
3. What challenges is Southwest facing in the future and how should they meet those challenges?
4. What should their business and operations strategy be for the future?
5. Has Gary Kelly, the new Southwest CEO since 2004, been able to maintain the profitability of Southwest Airlines while insuring the continuation of their unique culture?
Analysis
Question 1. To what do you attribute the success of Southwest Airlines?
The key points related to the company’s success can be summarized as follows:
• Fleet: all Boeing 737s which means better fuel efficiency and low maintenance
• Scheduling: quick turns that results in high asset utilization
• Service: short haul, point-to-point, low cost, no-frills flights from secondary airports in good-weather areas
• Integration: contract out non-core activities like major maintenance, data processing, and legal services which will decrease costs
• New markets: enter in full force
• Positioning: low cost to travelers, yet reliable and fun mostly aimed at business travelers
• Pricing: driven by break-even capacity; compete with other modes of transportation; two tiered
• Promotion: unusual and creative, targeting business commuters
• Personnel: selective in hiring; cross-trained; shared rewards through above-average pay and part-ownership
• Culture: a reflection of Kelleher—lighthearted, fun-loving, off-the-wall yet serious about teamwork and productivity
Question 2. How significant is the 10 to 15 minutes turnaround time of Southwest’s aircraft in terms of savings in investment and utilization of its aircraft compared to competitors?
The turnaround time is very significant in utilization of aircraft and the low cost position of Southwest airlines. In the early