Southwest Essay Question

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

2. United Airlines likes to use strategic planning to try and stay ahead of the competition but in its history it has not always worked. United Airlines has tried to make mergers without the approval of the union and were not able to complete it when the department of justice said that the merger would not happen because it would bring a loss in competition. One of the things that has helped the business, is that they use a hub and spoke method for their passengers. This allows the company to provide many different air ports and terminals that its customers can use and also helps to stream line flight schedules and saves the company millions of dollars every year. Partnering with these major companies to form a global alliance helps to circumvent national laws, share resources to develop additional routes and global marketing strategies. The major alliances were Star, Oneworld, SkyTeam, and Wings. The agreememnt that these companies made to work together saved all of the millions of dollars and was able to help all of the companies to compete globally.

Air Southwest was incorporated on “March 15, 1967” (1966 to 1971, 2016), at a time when “price competition from interstate competitors was ferocious” (Heskett & Sasser, 2013, p. 3). However, Rollin King one of Southwest original founders had an idea that would shake things up. While having a couple of drinks with his friend Herb Kelleher, he scribbled is point-to-point triangular service idea

Company leaders at United have to understand the market structure including what would happen if the decision was made to drop the unprofitable route. If United was to give up that particular route the question then becomes 'what are the ripple effects?' of that decision. The negative aspects of such an action as dropping an unprofitable flight might lead to further negative consequences. As one recent report touted "It is no secret that the airline industry is bracing for a tough 2012" (Shannon, 2011, p. 24) and United must take that into consideration as well. When airline companies are forecasting rough seas, decisions such as dropping unprofitable flights become even more important.

Total Resource Network (TRN) congratulates Southwest Airlines for thirty-eight years of consecutive profitability. This is a major accomplishment that should be applauded especially during this economic recession and recovery period. Southwest’s success has been attributed to their core values and mission that begin with their employees and exceptional customer service. These two attributes along with low airfares have

Southwest spearheaded “Shuttle By United” by emphasizing the particularly city-pairs where they competed directly. Additionally, Southwest heavily promoted their 21-day advance fares and other discounts. Southwest’s average fare for the intra-California market decreased from $45.00 in the third quarter of 1994 to $44.00 in the fourth quarter of 1994 and into early January 1995. The Oakland-Seattle route was $51.00, down from $60.00 in the third quarter of 1994. Southwest vice president of marketing and sales estimated the average passenger fare for “Shuttle By United” was roughly 5-10 percent higher in the nine markets it competed directly with Southwest and about $20.00 higher than the average Southwest fare in the markets it did not compete directly.

As reported by CNN Money, the U.S. Justice Department sued United Continental in an attempt to prevent a deal with Delta Airlines. According to the DOJ, United is already the dominant airline in New Jersey's Newark Airport. If United inks a deal with Delta, it would entail an airport monopoly as the airline will hold an unfair number of slots. In effect, travelers would have to pay more expensive fares.

United’s early routes were flown east-to-west from New York City via Chicago and Salt Lake City to San Francisco as well as north-south on the west coast. The routes came from connecting airmail routes and from these routes came the first two hubs for United, which are Chicago and San Francisco. These are two hubs that are still the principal hubs for United Airlines today. In 1933, United introduced the Boeing

Delta is the 2nd largest airline company, holding 17% of the domestic market share (RITA, 2015). Southwest, the largest airline company, has 17.8% of the domestic market share (RITA, 2015). Limited suppliers is mildly unattractive, but is expected to become neutral for Delta. Product differentiation is neutral and expected to become mildly attractive. Delta will become more popular again because of peoples willingness to pay for a better product. Delta is a higher quality compared to Southwest airlines. While flying with Delta, the customer will get the opportunity to choose a desired seat, and will receive refreshments (Main Cabin, 2015). Southwest does not serve snacks on flights, but when flying on Delta, if the trip is longer than 900 miles, passenger will receive the snacks (Main Cabin, 2015). Rivalry is mildly attractive but will become neutral. Switching cost is neutral and will become mildly unattractive. Since the decline of the economy consumers have become more frugal. They are looking for the best deal they can find. Quality of substitutes is mildly unattractive and will remain mildly

Firstly, one of the company’s weaknesses are the negative comments about Southwest on Social Media due to overbooking of flights. This past year, there were multiple incidents about overbooking, and some of them were worse than others. Gary Kelly, the CEO of Southwest Airlines revealed that Southwest will no longer overbook its flights, because this tactic sometimes leaves travelers without a seat, "The last thing that we want to do is deny a customer their flight" Kelly said on CNBC. Competitors had negative incidents earlier this month and it resulted to a chaotic disaster. More specific, a United customer was pulled up the aisle and off the aircraft by the staff in Chicago, when he declined to give up his seat. The airline wanted seats for a United employer, who was on the way to work in another flight. This situation got worse and it turned to a nightmare. Months later, “United is still working to clean up the mess”. (Southwest Airlines: We won't overbook anymore, 2017). United offered 10,000 dollars to people who were willing to give up their seat, when there is an overbooked flight, but that does not hide the negative behavior of the United employees. Another competitor who has the same tactic is Delta. This is the reason that Southwest decided to stop overbooking because the company does not need a United situation on its hands. In general, it is typical for airlines to sell more tickets than the number of seats because people who work in this industry expect people to cancel last minute. Although, when a flight is overfilled, state rules force the airlines to first check whether people are willing to give their seats voluntarily, and then try to sell more

When the merger was officially made, passengers including those who travel extensively for business, have been troubled with taking longer to get to their destination due to connecting flights and using different airlines such as Frontier, Spirit or Southwest. United slashed two-thirds of its flights and drop 39 nonstops and cut approximately 18% passenger totals at the airport, leaving much room for rising competition between the other airlines.

LAX and Delta Airlines both have refused to release details of specific agreements until after the completion of the big airline terminal gate switch up. This leads to only presenting the current facts available and speculating on the possible terms of agreements between Los Angeles International Airport and Delta Airlines. The large monetary injection of upgrades into the airport shows the risk levels of Delta Airlines management and their belief the monetary investment will produce returns in the

It might be a smart business decision for United Airline since they need their crew to be at other location

United Airlines used questionnaires to classify their potential customers by their motivations and identified nine motivational segment profiles which are: global executives, schedule optimizers, corporate troopers, mile accumulators, reluctant travelers, tour takers, quality vacationers, travel seekers, and frugal flyers (The Times 100, 2003, p. 2). The reasons why travelers choose to fly United varies. For example, some may choose this airline because of price, while others choose it because of their frequent flyer program, schedules, or other services.

in light of recent actions by United and Continental, both of whom had entered Southwest’s low