Southwest Airlines in 2010: Culture, Values, and Operating Practices

Southwest Airlines Co., established in 1971 by Rollin King and Herb Kelleher, began its operations with only three Boeing 737 aircrafts. It is headquartered in Dallas, Texas(Hawkins, Misra, & Tang, 2012). Southwest is well known as one of the largest low-cost carriers. With this strategy, the company has dramatically grown up and deeply rooted in the US airline industry. Now, Southwest Airlines Co. operates 633 aircrafts to 93 domestic cities and the highest number of passengers used Southwest Airlines to fly around U.S in Jan 2014 (Hawkins, Misra, & Tang, 2012). To accomplish more than 40th consecutive years of both profitability and competitiveness, Southwest Airlines Company is constantly trying to find the routes to differentiate itself from other domestic carriers (Hawkins, Misra, & Tang, 2012).

Southwest Airlines is excellent in planning out their long-term goals. The above SWOT analysis proved that the company is successfully carrying out the cost leadership strategy to manipulate their competitors and boost up their company. Their mission in providing Low Fare cost is one of the best strategy that they can have to increase their market share, but not just that it also put a significant increase in the demand of air travel. Southwest Airline rapid rewards program is brilliant, so they should continue and expand it even more.

Southwest airlines were founded in 1971 by King and Herb Kellerher. They started with a low cost strategy in a risky market where profitability depends a lot on fuel prices and external factors, such as the willingness of consumers to pay ticket prices. They started growing a lot with various strategies that permitted them beat a lot of their competitors, but in order to stay in the market they need to improve those strategies and come up with new ones to stay differentiated from the other airlines. Now they’re ranked the top 7 airline that controls the share of the market, but new strategies will be needed for them to continue to be a

Controlling operational costs is a challenge for all airlines. Southwest Airlines strategies include; implementing a fuel hedge policy, using one type of aircraft, and maintaining a low employee turnover rate. On the other hands, the merging itself pushes the

Within the airline industry, Southwest is best known for their customer loyalty. Which is derived from staffing capabilities, as their hiring process is selective and training is highly regimented and rigorous yet, wages, benefits, and empowerment for incentivization are extraordinary. Additionally, every policy established has a centralized focus on the customer first, rather than the

This can be viewed as a negative point because Southwest generates all of it’s revenue directly from it’s fixed assets (Planes) and if they are not re-investing into their main revenue driver it is hard to continue to grow sales.

Southwest Airlines continues growth during challenging times with no its low price, no frills and good customer satisfaction, setting themselves apart from the competition. Organizational change is part of the culture that successfully allows Southwest Airlines to set itself apart. The airline industry is subject to external forces such as fuel prices, labor costs, passenger economic status, and public perception. Southwest Airlines has developed a successful business model based on standardization and efficiency that has allowed them to keep operating costs low and as predictable as possible.

What are the key success factors for Southwest airlines? What are the key things it does to keep its costs lower than competitors?

Airlines use a formula of combining their yield and inventory costs to determine ticket prices. While it is imperative to focus on the idea of being profitable, the focus is to maximize the cost of the flight revenue. One huge factor that encourages an increase in the cost of tickets relates to a customer ordering a ticket close to the departing date, define this as a risk factor because they need to make up for all unsold seats. A high percentage of the revenue is dedicated to overhead costs such as fuel and labor. When a ticket price is higher with one airline than the other, the customer interprets this as being an excessive cost. The demand is greatly affected by the external market

The airline industry is an enormous industry that has been growing since January 1, 1914 the first day a plane was carrying a paying customer. Southwest Airlines was founded on March 15, 1967 in Dallas, Texas. Since that day Southwest has been growing faster than a newborn baby on formula. Southwest now flies more than 47,000 people, has more than 3,600 flights a day and is flying to 94 destinations through the United States and is in six additional countries. Southwest is very large and stable, it perfectly reflects its entire industry. Although this is going to be mostly about Southwest one will be able to have a good idea as to how the rest of the companies in this industry are affected by some factors.

Southwest Airline is one of the most successful airlines. Southwest Airline success is because the airline stays on track with the company’s mission. The mission of Southwest Airlines is dedication to the highest quality of customer service delivered while keeping cost low. Since September 11, 2001 many airlines have struggle to survive. The airlines again are struggling because of the low economy. Southwest Airlines shows the example on how combining different strategies a company can because successful.

Southwest’s ability to provide quality services to long standing customers has allowed the airline to be the lowest-costing airline (strength). However, the escalating fuel cost and the threat of other competitors modeling the same service (weakness). Nevertheless, Southwest Airline has continued profiting, even though difficult

The airline company of Southwest Airlines was founded in 1971 by Rollin King and Herb Kelleher. Southwest Airlines originally started by just servicing the Dallas, Houston, and San Antonio areas in Texas. Some things that Southwest became known for right off the bat were a frequent miles program, which allowed the traveler to bank traveler air miles to be latterly used credit for a free ticket or even some reduced airfare. Southwest also was ranked number one in its customer service for the fourth consecutive year in a row in 1984. Two years later, Southwest took over Transtar Airlines and also took over Morris Air in 1994.

Southwest Airlines was established in 1967 by Herb Kelleher in Dallas, Texas. The Airline was developed as a low-cost airline through their exclusive use of Boeing 747, always attempting to fill their planes to capacity, using a direct route system (as opposed to a hub and spoke system), and choosing not to serve meals during the flights. (Raynor, 2011) Originally it would only serve customers who wanted to travel across Texas; to Houston, San Antonio, and Dallas- with Dallas being their headquarters and their main operations occurring at Love Field. While they faced a tumultuous start due to threats they faced from regulations and competition due to their strategy not matching with other airlines at the time, in 1973 they “were profitable for the first time” (Southwest Airlines Co Success Story, n.d.) and have been profitable ever since.

The economic downturn has seen a significant drop of investments in the aviation market. Airport ground handlers and airplane part manufacturers have also had to retrench their workers in order to counterbalance the poor market. The amount of air traffic is likely to decrease as well, as people are travelling lesser and choosing cheaper alternatives.