The Merger of Airtran by Southwest Airlines: Will the Organizational Cultures Merge?

The merger is expected to take a total of 5 years with an end result of a fleet of nearly one thousand planes covering more than 150 cities in United States with connecting flights to more than 30 countries around the world. All evidence indicates that a merger between Southwest Airlines and JetBlue Airlines can be completed within 5 years and will be successful in helping the merged company become the industry leader in low-cost, high customer service airline carriers in North America. The minor obstacles such as redundant cities, a balloon payment owed by JetBlue, redundant Point of Sales Systems and baggage tracking systems, and a surplus of employees, is negligible and easily resolved during the 5-year merge period. A few decisions will still need to be made such as what to do about employee contracts being different between the two carriers and pension plans but the merger is being given a good to very good rating for its chances to succeed as

By giving low-cost tickets prices southwest airlines attract to a broad base of salaries and the best cost provider strategy. They also separate themselves from their rivals by being different, an example of a broad differentiation strategy and they have no assigned seats, no baggage fee for the first bag.

The five universal competitive plans include overall low-cost provider strategy, broad differentiation strategy, focused low-cost strategy, focused differentiation strategy and best cost provider strategy (Bethel, 2017). Southwest Airlines popular competitive strategy is keeping customers happy by being low cost, employee driven, future-minded, and differentiated. The overall low-cost provider strategy that is being used at Southwest is a low-cost airline that focuses on no-frills service (Investopedia, 2015). Southwest prides itself on being a people-oriented airline that operates with warm and helpful employees and team members. The most valuable competitive interest has been being its intense focus on hiring the right people (Investopedia, 2015).

Southwest Airlines is globalizing their company in order to reach a bigger market, and become competition for other companies. Southwest Airlines has already conquered the domestic market beating American Airlines, United, and Delta according to Fortune. Access to a new market is what motivated Southwest to globalize, they are expanding to the south of North America, with their new assets found in their acquired airline AirTran Airways (LeBeau, 4) . Southwest Airlines has brought low rates and a great experience to the domestic market, which was warmly received, they now plan to dip into global market to bring better service to all.

The acquisition of AirTran is a great choice for Southwest. Air Tran is also pursuing a low-cost strategy, so there is a good fit from the standpoint of their core competitive approaches. AirTran has flights to several attractive geographic areas and

They are similar the same way in their way of running their organizations which concentrates on the customer service by providing them the best possible services. Southwest is dedicated to provide their patrons friendly and welcoming environment along with great service. Similarly,

American Airlines (AA) and U.S. Airways have merged into one company. The problems resulting from this merger are from a technical aspect the need to merge over 1,400 back-end systems, and improve customer service and area these two airlines have struggled with in the past. If American Airlines continues to lose customers after this merger they might never climb out of bankruptcy that they filled for back in 2011. Merging the two back-end systems needs to be done delicately as this can be an area to compound your poor customer service past. American Airlines has a few options to deal with the back-end system merge by keeping two separate systems, merging one into the other, or creating one new one and merging both into that one. Dealing with

“With very little route overlap between Dallas-based Southwest and Orlando-based AirTran, the acquisition could increase Southwest's network by 25% and boost its weekly departures--already more than twice those of any other LCC--to about 26,000. Southwest generated $11.2 billion in revenue for the 12 months ending June 30; AirTran generated $2.5 billion” (Compart, 2010)

Thus, Before the merging of AirTran, Southwest’s main objectives consisted of various business strategies. For example, Southwest Airlines first strategy focused on point-to-point routes because it eliminated the need for connections, resulted in more direct routes, reduced delays and overall travel time. Southwest Airlines lands at small airports to steer clear of the congestion, to achieve high asset utilization, and to provide maximum convenience for passengers. In addition, Southwest has a workforce that is motivated in providing quick aircraft

Southwest Airlines is a unique airline that has a history dating back over 45 years. To say that Southwest Airlines is unique, one must only look at how the airline came to life. In 1967 Herb Kelleher was hired by Rollin King to close down a defunct charter flying company in Texas. After the work was complete the two men supposedly met for drinks at a bar in San Antonio. At the bar, King drew a triangle on a cocktail napkin with Dallas, San Antonio and Houston at the three points and said “I have an idea for another airline; one that connects just the main metro areas of Texas.” (Roam, 2008)

Southwest Airlines is known for its use of high standards of quality, speed, and cost competiveness over other airlines. It’s commitment to customer service is included in its mission statement: “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.” (Southwest.com). Southwest Airlines has always been about providing exemplary customer service and affordable fares since its inception in 1971. Southwest describes itself as a customer service company that just happens to fly planes. Founder, Herb Kelleher describes three core values for Southwest Airlines:

“On Sept. 27, 2010, Southwest Airlines announced it would purchase AirTran Holdings in a $1.42 billion deal that will expand the nation 's largest low-cost airline to 37 new cities.” (Young)

Southwest has based their original strategy on maintaining low fares, high frequency of flights, on-time arrivals and focusing on the customer experience. However, Southwest has altered their strategy, which previously made them unique in the industry, due to a rising amount of competition from larger airlines that have developed alternative low-cost carriers, essentially diminishing that competitive advantage the “Southwest Effect” once had. Kelly notes that there is “new competition from leaner, larger airlines, low-cost carriers as JetBlue Airways Corp. and Spirit Airlines Inc.”7, making the competitive advantages that Southwest offered less and less sustainable.

Southwest Airlines is known as one of the most caring and considerate companies. Since 1971, Southwest Airlines has prided itself in their exemplary customer satisfaction and family like approach to customers. American Airlines excels in many areas, but the ones that will be discussed are emotional intelligence, and cultural organization. More often than not, developing these areas are easier said than done.

Over the years Southwest Airlines has steadily grew, but their growth has been highly controlled. This highly controlled growth has allowed them to avoid the trap of growing beyond their means. With the acquisition of AirTran Air, it accelerated Southwest’s entry into the international markets. As we hold a large investment in Southwest Airlines, I believe this merger with AirTran Air will not affect the strategy and culture of Southwest Airlines. Southwest Airlines strategy and culture has a history of being successful as well as creating large profits for the company and its stakeholders. I do see Southwest Airlines maintaining their laser like focus on their basic strategy, but it will take time to fully transition Southwest’s strategy and culture to Air Tran Air. With this said we should retain our investment in Southwest Airlines as the company has been consistently profitable for decades and has weathered hardships such as, the September 11 terrorist attacks, and the 2008-2009 recession.