Southwest Airlines Case Study

The target demographic for Southwest is very broad. The fact the airline has a brand that appeals to price-conscious travelers who do not mind the airline’s no-frills philosophy means it attracts lots of small business owners, young adults, middle-class families, and those who are traveling a short distance. Southwest operates a simplified airline to keep costs down. It only operates one type of aircraft, and its no-frills plan includes no assigned seats or class seating, no meals, and no onboard movies. The company has a strong emphasis on customer service and a differentiation strategy to keep customers happy and loyal. When hiring for customer service positions within the organization, Southwest focuses on attitudes rather than skills and encourages peer hiring. This strategy helps the company identify those who fit the organizational culture and who are most likely to further the company’s philosophy of

Southwest Airlines corporate philosophy can be credited to one of the founders Herb Kelleher. It is an airline company with a unique culture “goofiness”, which keeps the morale of its employees high (Smith, 2004), and is a company that welcomes fun, dedication, and effort. Southwest believes that a happy employee will create a happy customer, and will create loyal customers. Mr. Kelleher effectively implemented its style, culture and emphasis on quality in the daily actives at Southwest (Smith, 2004), and he did so without the help of outside consultants.

Southwest Airlines was started 45 years ago in 1967 by two entrepreneurs: Herb Keller and Rollin King who had the right vision and culture by which to become successful entrepreneurial leaders. This vision was achieved as Southwest Airlines became the greatest airline in the USA. As a young business in the airlines industry, Southwest Airlines in the initial years confronted very tough situations, and it was due proper planning and with the assistance of its employees that kept Southwest Airlines afloat from sinking. There were already pioneer big companies well established in the airlines industry when Southwest Airlines joined the industry. Some of these companies had a good share of

Southwest Airline was from an idea on a napkin between Rollin King and Herb Kelleher. Eventually, after a few regulation issues, the airline became official on focusing point-to-point travel between Dallas, Houston, San Antonio. One of the early key success factors which stated in the case, “ In contrast to larger airlines servicing the cities through connecting interstate routes, Southwest would fly directly to each of the cities, and the flights would take roughly one hour each.” Not only Southwest has the advantage of time but also the trust on safety from frequent flyers by having a direct flight to each city. Likewise, within two years (1971-1973) due to price segmentation based on the time of before and after 7 PM along with weekends, the company became profitable.

Southwest Airlines is a passenger airline company that arranges and provides scheduled flights for passenger and transportation freight services. The company mainly provides, low-fare, point-to-point services all over the US and near-international markets. The headquarters is located in Dallas, Texas and as of December 2014, the company employed over 46,278 people. The company was founded by Rollin King and Herb Kelleher in 1971. Southwest was the first airline to introduce the frequent mile program. This took place in the mid 1980’s. This type of program allowed passengers to add up traveled miles to use later as credit on a future airline ticket. The traveled miles would add up and would also reduce the price of a ticket. Southwest created the idea of senior discount, fun fares and the fun packs. These were perks that attracted people from different age groups. When Southwest originally was incorporated, the idea was to operate in three cities in Texas, but after taking over Morris Air and TranStar in 1987, this gave them a cutting advantage in the airline industry.

Southwest Airlines embodies the best that a large company can be. The structure is designed to allow quick action and support of its large body of employees rather than complete control and bureaucratic red tape. It is widely recognized as one of the most desirable places to work and is constantly emulated by its competitors, not to mention other business not in competition. It is an entity that holds its employees in the highest regard, even above its external customers. Its culture is unique and strong and based on love and respect. Even after its current leaders are gone, the

Southwest Airlines has been in business for more than thirty years. Presently, operating airplanes and flight services is very competitive, and in most cases, is not cost-effective industry; however, Southwest Airlines has been consistently profitable company, which is successfully designed with the intention of achieving high growth. According to an interview of Southwest Airlines former CEO, Herb Kelleher, when he visited Graduate School of Business at Stanford University, despite all airline industry challenges, the “low-fare airline has grown into the third largest in the world as measured by the number of passengers carried, and the largest with destinations exclusively in the United States” (2006). To the customers, Southwest

Southwest Airlines was founded by Rollin King and Herb Keller on March 15, 1967 with headquarters in Dallas . It’s initial name was Air Southwest Co . and the objective was to fly within Texas in order to avoid price controls and market regulations imposed by the Civil Aeronautics Board. Three competitors started legal action against the new airline, but ” Air Southwest prevailed in 1970 when the Texas Supreme Court and later US Supreme Court upheld Air Southwest's right to fly within Texas” (Tshaonline.org; Wikipedia.org). On March 29, 1971 the airline changed its name to Southwest Airlines. In the same year, the airline began servicing Dallas, Huston and San Antonio. In 1977, Southwest Airlines listed its stock on the New York Stock Exchange.

The domestic airlines in the US market is the broader context in which Southwest Airlines conducts its business. As a domestic airline, Southwest Airlines provides air transportation for cargo and passengers along scheduled routes and on routine intervals. The airline industry is a service industry comprised of the following services: coach class passenger transportation, first class passenger transportation, business class passenger transportation, and cargo. However, Southwest Airlines is unique from many of its competitors in the airline industry because it does not provide any distinctive classes of transportation. The single class of transportation it provides may be considered coach. Therefore, the two services that Southwest

Southwest Airlines which was incorporated in Texas was founded by Rollin King and Herb Kelleher in 1966. Moreover, in 1971, Southwest began customer service, with three Boeing 737 aircraft that serviced three Texas cities: Dallas, Houston, and San Antonio and 25 employees. However, King and Kelleher’s start-up did not come easy being that a few Texas based airlines such as Braniff, Trans-Texas, and Continental Airlines initiated a legal battle to keep Southwest on the ground. Thus, in late 1970, the decision to allow Southwest Airlines to fly in Texas became final when Kelleher argued his company’s case and eventually prevailed in the Texas Supreme court. As of 2012 Southwest Airlines had:

In 1967, Rollin King and Herb Kelleher founded Southwest Airlines to link the cities of Dallas, Houston, and San Antonio (Parnell, 2014). However, Southwest didn’t schedule its first flight until 1971. In 1989, Southwest revenue passed $1 billion and were the first airline to have a homepage on the internet to sell their tickets (Parnell, 2014). According to Parnell, Southwest saves more money selling tickets online than they do sell them through an agent (2014). In addition, Southwest is the largest airline to carry the most passengers and their Rapid Rewards program is considered the favorite among others in the industry (Parnell, 2015). It’s also the reason why they’ve been profitable “38 consecutive years” (Parnell, 2014). In 2001 when

Southwest Airlines has been a model of admiration for the airline industry and businesses from around the world combined. Southwest Airlines is a rag to riches story that has had to fight for everything it has become. Before Southwest was able to take on its first passengers, they had to fight competitors in the court system for nearly three and a half years.

operated. During this time, travel agent fees were going through the roof and reserving an airline ticket was a complicated, drawn-out process. To counter this, Southwest implemented its own reservation system tailored to their own needs, which also included the industry’s first paperless ticketing system; but this wasn’t the end of IT innovation from Southwest Airlines. In 1995, Southwest.com was launched, and the online ticketing and reservation system was launched in 1996. Soon thereafter, Southwest Airlines ticket sales were primarily coming from their online reservation system (70%). By the late 90’s, Southwest.com was the most visited airline website [4].

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

With 1988 operating income of $801 million on a revenue of $8.55 billion, American Airlines, Inc. (American), principal subsidiary of Dallas/Fort Worth-based AMR Corporation, was the largest airline in the United States. At year-end 1988 American operated 468 aircraft on 2,200 flights daily to 151 destinations in the United States, Bermuda, Canada, Mexico, the Caribbean, France, Great Britain, Japan, Mexico, Puerto Rico, Spain, Switzerland, Venezuela, and West Germany.