Commercial Airlines And The Commercial Airline Industry

Business Strategy – BAD 4013 – SUMMER 1999 Case Study Southwest Airlines I. Strategic Profile and Case Analysis Purpose The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit. Twenty-seven years ago, Rolling King, owner of floundering commuter airline, and Herb Kelleher, King’s lawyer, got together and decided to start a different kind of airline that would provide a short-haul, low-fair, high-frequency, point-to-point service in the United States. The company began service on June 18, 1971 with flights between Dallas, Houston, and San Antonio (“The Golden Triangle” as Herb called it). Southwest Airlines is the fourth

Southwest Airlines was incorporated on March 15, 1967, in Texas as Air Southwest Co. by Rollin King and Herb Kelleher. At the time, Southwest Airlines had a fleet of three Boeing 737 aircraft serving Dallas, Houston, and San Antonio. Southwest Airlines Founder Herb Kelleher had faith that by operating within Texas, the airline could escape from federal regulation. According to SWA, on February 21, 1968, Braniff, Trans-Texas and Continental Airlines attained a provisional restraining order from a District Court forbidding the Texas Aeronautics Commission (TAC) from delivering SWA Certificate. On May 13, 1970, the Texas Supreme Court unanimously votes to overturn the lower courts ' findings and rules in favor of Air Southwest (SWA, History by Date, (1)). Conclusively, on December 07, 1970, the United States Supreme Court denies appeal by Braniff and Texas International (TI) of Texas Supreme Court decision (1).

This paper reviews the tragic mid-air crash of PSA flight 182 and Cessna N7711G a Cessna 172 over San Diego and its resulting FAA rules and regulation changes, and their affect on the U.S. aviation industry. PSA Flight 182’s mid-air resulted in the most sweeping FAA changes to airspace to date. The FAA rules and regulation changes was a success in preventing similar mid-airs of this type.

President Obama had to make a decision and protect our airways, so all airline passengers had to be screened for explosives. A lot had to happen quickly for the TSA, and they had to make a lot of big decisions. According to their website, the TSA doesn’t reevaluate their set policies until a debatable issue pops up or an incident occurs (TSA Reports New

Airline travel is arguably safer than that of car travel, with not only less risk for in motion issues and collisions of any sort, but not issues about missing the turn off. Airline travel issues do not usually persist during travel, yet can sometimes happen before the take-off even begins. The issue with Airline travel is not travel hazards, but instead travel protocols often carried out by the airline companies. United Airlines specifically has gone through too many CEO switches and un-transparent business ethics leading to customer complaints and needs to reevaluate business ethics.

Southwest Airlines represents a rather unique organizational force that has driven the company to success since its inception in 1971. One of the most unique features about the organizational structure is that it is largely decentralized and employees are openly welcomed to express their opinions on a wide range of organizational issues. However, despite the "hands off" management strategy, the company consistently ranks as one of the top airlines in regards to customer complaints; in 2008, for example, the company received 0.25 complaints on average for every one hundred thousand passengers who used the aviation services (Triangle Business Journal, 2009). This analysis will look at some of the organizational factors that have contributed to the success of Southwest Airlines over the course of the last few decades.

In February, 1991, the US Air flight 1493 (Boeing US Air 737), scheduled from Syracuse Hancock International Airport, NY to San Francisco International Airport, California, accidently collided with SkyWest Flight 569 upon landing in Los Angeles. When the 737 went for its final approach the local controller got distracted with a series of abnormalities including an aircraft that switched off the tower frequency inadvertently and a misplaced flight progress strip that resulted in the SkyWest being informed to take off from the same runway where USAir 737 was landing. The National Transportation Safety Board (NTSB) found the probable cause to this accident was flawed procedures used in the control tower that created inadequate redundancy and loss

At the onset of the airline industry in the United States, major network airlines were the sole providers of air travel. This multifaceted industry was a difficult industry to break into as a consequence of “sophisticated customer segmentation, hub-and spoke models and costly information systems for reservations, fare wars and intense competition” (Thompson 2008). Shrinkage in airline ticket prices augmented the demand for airline travel. Many markets were simply deserted or over-looked by major network airlines; this is a region a fresh “second tier of service providers” could enter into. This endeavor proved to provide a consumer savings of billions per year. Thus in June of 1971, after a tumultuous battle with other Texas-based

Southwest Airlines is one of the most successful airlines in the United States. There has never been layoffs or strikes in the history of the company, although there were several times when layoffs could have been justified, including the months following the September 11, 2001 terrorist attacks. However, Southwest's Mission statement says “Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.” (Southwest, 1988). The Airline has always believed that their corporate culture is one of the keys to their success. The culture recognizes that employees have emotional intelligence and that their

Since the airline industry is a direct product of market conditions, it is greatly affected by all externalities. Many people noticed a decline in travel after the September 11th tragedy occurred due to safety concerns. When there is a huge increase in fares that definitely interferes with the demand for travel; it causes the price of tickets to continue to rise since a clear correlation between supply and demand exists. When the economy is doing well in terms of the employment rate, and when the dollar is strong people have the tendency to travel more (Jerram,1998).

The terrorist attacks of September 11, 2001 severely affected the airline. On the morning of September 11, 2001 the Federal Aviation Administration suspended all commercial airline flights and Southwest did not resume flight operations until September 14. During this time Southwest canceled about 9,000 flights. After flights were resumed, revenues were severely impacted and ticket refunds increased. To aid the airlines affected by the terrorist attacks, the Air Transportation Safety and System Stabilization Act provided some compensation to qualifying United States airlines to help compensate for the losses (Southwest 2005).

Fiscal policies of the government can have significant impact on the industry’s performance. Governments generally impose high taxes on airline industry, which is passed on to the customers in the form of higher air fares, alternatively airlines reduce the number of staff is cut down costs. An example is United Kingdom, when the UK government imposed high taxes on the aviation industry, the number of cargo operators reduced sharply in order to reduce costs (My-Efficient-Planet, 2010).

Southwest Airlines was created in the late 1960’s by a businessperson Rolling King, and law school graduate Herb Kelleher, who sought a faster travel time between Houston, Dallas, and San Antonio, Texas (Dess, et al., 2014, p. C137). After overcoming all of the antagonism and legal problems of many major airlines, Southwest was able to take its first flight in 1971 (Dess, et al., 2014, p.C137). With a dedication and will power to grow the company, King and Kelleher sought out ways to increase growth.

In the airline markets, SIA has strong competition from not only Asia areas, airlines but also many international brand airlines such as United Airlines and American airlines (best airlines in American for 2012). Although SIA has a great brand reputation with global markets, but it also continually develops the new equipment in the busy airline industry to provide the new attractive point for increasing the customer satisfaction.

Closely linked to economy - The airline industry can be described as highly cyclical since it