...Southwest Airlines Christopher Slusser Embry-Riddle Aeronautical University Abstract Southwest airlines are currently the dominating airliner in the United States. Many other companies have tried to join Southwest in their current dominance, but have not held up to their standards. This paper will take a deep look into what and how Southwest operates in order to keep themselves a head of the game. A broad explanation of their current management style and where they plan to be in the future will touched on. To be at the top, Southwest has taken an in depth strategic planning and the willingness to do the impossible. TABLE OF CONTENTS Abstract…………………………………………………………………………..2 History……………………………………………………………………………4 Decision Making………………………………………………………………….5 Companies Strengths and weaknesses……………………………………………6 Short Term Goals…………………………………………………………………8 Long Term Goals…………………………………………………………………9 Ethics……………………………………………………………………………..9 Leadership………………………………………………………………………10 Performance Affected by Environment…………………………………………11 Threats…………………………………………………………………………...12 Opportunities…………………………………………………………………….13 Strengths…………………………………………………………………………14 Continuous Improvement………………………………………………………..15 Overall Strategy……………………………………………………………...…..17 Southwest Effect…………………………………………………………………18 Suggestions……………………………………………………………………....19 Southwest Airlines Southwest is an airline that was incorporated in Texas on June 8th, 1971. The company began their venture with...
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...1. Southwest’s espoused values are clearly stated in their 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. We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. 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. They also make it well known that employees come first and customers come second. Employees are encouraged to take their job serious but not themselves. Southwest Airlines believe that if their employees are having a good time they will offer better service and be more effective performing their job. Herb Kelleher, co-founder, Chairman, and former CEO of southwest, is known for forming a unique and a fun-loving culture that has worn off on his Employees. He has reveled publicly his own love of drinking Wild Turkey Whiskey and chain smoking cigarettes to help give Southwest a party image. His attitude has also worn off on the current CEO of Southwest, Gary Kelly. Gary takes part in dressing up for every hallowed. Gary has dressed as Gene Simmons from KISS, Captain Jack Sparrow, and Billy Gibbons from ZZ Top. He also dressed...
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...1. Southwest Airlines has always been known for its innovation but for the first decade of its operations, IT innovation was not part of the plan. Starting in the 1980’s this began to change. What innovations did IT enable at Southwest in the 1980’s, 1990’s, and into the early 2000’s; and what were the business drivers behind these innovations? IT-enabled Innovation: Business Drivers: e.g. process integration and information sharing the logistics of operating a big, highly integrated company at the lowest possible cost while enhancing customer service add more as necessary 2. What were the three major IT initiatives undertaken by Southwest during the 2002 to 2006 timeframe and why was each of these undertaken? Major IT Initiative: Rationale Behind this Investment: e.g. an overhaul of the IT unit to ensure that Southwest had the right people, with the right knowledge in an IT organization that was aligned with business needs, goals, and objectives Design new technology foundation to accommodate the larger, more complex SWA. Allow for the customer to service themselves. Implementing a self-service kiosk, this kept costs low and allowed for faster service. Created and implemented Southwest’s own process of installing, testing, and maintaining kiosks. New system for delivery and prioritizing of new system – creating a declined process Standardized the tools and process. Maintaining and improvement of delivery and reliable service. 3. How did...
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...Executive Summary Southwest is a company founded in 1967 by it’s founders, Rollin King, Herb Kelleher, and Lamar Muse. Southwest's company model changed the rules for the air carrier industry and soon after new air carriers were created based on Southwest’s model. Southwest focused on their customers and company culture in order to really make their company stick out from other air carriers. They also had cheaper air fares and shorter turnaround times compared to the U.S. average within the industry. As Southwest continues to expand throughout the years they find it harder to maintain the great company culture that attracts their customers. In order to not lose any market share they must focus on their customer service, company culture, on-time arrivals, and also low air fares. Focusing on increasing their demand and market share combined with a focus on their customer service will allow Southwest to maintain and expand their market position within the U.S.’s air carrier industry. Founded in 1967, Southwest has grown to become a company known for its customer service, low-fares, and high reliability. The founders of the company were Rollin King, Herb Kelleher, and Lamar Muse. The founders had created a strong company model that changed the rules that airlines all over operated and competed by. It became such a strong model that by 2008 many airlines were actually created based on Southwest’s company model. Southwest planned to stick out by charging fares that were...
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...Southwest is an impressive organization because it’s the most flown airline within the United States and has been consistently profitable (Northouse, 2009). Southwest is ranked 205 in the Fortune 500 and their profits in 2011 were 459 million which exceeded their 2009 profits of 363.6 million (CNNMoney, 2011) Against industry problems and business pressures-air-traffic congestion, merger of rivals, stricter government regulations regarding aircraft safety and maintenance, and mounting customer dissatisfaction with airline service, Southwest has managed to continue climbing to the top. The company strategy from day one was to be an airline that pursued a low-cost/low-price/no-frills strategy. This strategy opened their market segment to a larger portion of the U.S population and gave the company their tag line “The Freedom to Fly” (Northouse, 2009). Southwest also known as “the love airline” first took flight in 1971. Herb Kelleher, initially a lawyer retained by the airline to get it off the ground, was running the place by 1978. The airline was initially known for sexy flight attendants in hot pants to gain attention before it became the leader in low cost fares. "You can have a low-cost carrier and people still don't fly it because they don't know about it," Kelleher said. "And so, the schtick kind of fit in with getting known" (CBSNEWS, 2012). The airline now employs 34,000 people, services 64 different facilities, owns 500 planes, and is the nation’s sixth largest airline...
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...1) Before describing Southwest Airline’s organizational culture, it is important to know what is meant by this term. Organizational culture refers to the norms and values of an organization, including the vision shared by its members. At Southwest, their culture was lived first and foremost through their employees who they valued dearly. Southwest renamed human resources “The People Department” because they understood that their people are their competitive advantage and most important resource. Their family spirit could be seen in many ways; for example, there is the catastrophe fund in which voluntary contributions are made for Southwest employees who need help. Their culture promotes informal teamwork and employees routinely help each other out. In order to ensure they have the right people to preserve this culture, Southwest places great importance on recruiting the right people. As Ann Rhoades (the Vice President of People) noted, “If they say ‘I’ too much in the interview, they don’t get hired.” This displays how much of a critical role, teamwork plays at Southwest. In addition, Southwest looks for people who are creative as they value those that will constantly be innovators. For instance, as part of the interview process, applicants are given crayons to draw a picture that tells a story of their life; Southwest wants people who think outside the box. Furthermore, Southwest’s relaxed management style ensures that work is always a fun place to be. Kelleher believes that...
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...Southwest Introduction For 40 years, Southwest has been very profitable and extremely successful as the largest domestic carrier in the United States. Because the rise in competition, varying costs in jet fuel, and struggling economic conditions, Southwest has been forced to move to a profit boosting strategy (opposed to their customer-oriented strategy previously used). Southwest has since added new fees and sacrificed comfortability of its customers to boost capacity in their cabins. Southwest has since also acquired AirTran Holdings Inc. to expand and give the company its first service in Atlanta. Despite this expansion, Southwest has yet to reap the benefits of the acquisition. Problem Southwest experienced a change in leadership in August 2001. Herb Kelleher stepped down from his position and appointed Colleen Barrett, and James Parker to take over. Since this change, Southwest's culture has also experienced a change. Strong employee ties have since dulled. Because of this culture change, Southwest's customers have also been affected. Due to their struggling corporate culture, rising competition, increased costs, and alternative means of transportation; Southwest has sacrificed some of their greatest benefits at the expense of their customers. Alternative #1 I feel that Southwest made a pretty bold move by acquiring AirTran. I feel that one of the best solutions in dealing with competition is to make your company readily available so that everyone has the opportunity...
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...one of the most competitive industries in the world. From its onset, Southwest Airlines has made significant inroads in pursuit of low fares. The organization has been determined to be the lowest cost airline in the industry for the selected routes that it flies. Considering their position, the question arises as to how they consistently remain more successful than their competition. The answer is not one that sheds light on one specific area, but a series of factors that, when combined, allow Southwest Airlines to shine above their peers. The goals of Southwest’s management within Southwest include keeping operations simple and consistent, maximizing assets, managing customer expectations, and keeping costs to a minimum. Management has achieved these goals by incorporating the following: 1. Using a One plane fits all philosophy. The competition operates many different jets to meet their missions. Southwest saves millions in inventories, training, maintenance, and other problems associated to non-commonality. This is in addition to having the ability to swap planes from one route to another. 2. Flying from one point to another. Other airlines use the common “hub and spoke” system, unlike Southwest, which flies from one point to another, non-stop. This reduces ground time and delays, while assisting with on-time performance. 3. Implementing a “no frills, no fees” policy. To keep cost to a minimum, Southwest sells seats in three price points. Prices are all inclusive and allow...
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...How Southwest sees its own environment in its own business and Industry Southwest Airlines’ Mission and Objectives Southwest Airlines' mission emphasizes a remarkably large degree on customer service and employee commitment. 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 proclaims, "We are a company of People, not planes. That is what distinguishes us from other airlines and other companies." In many respects, the vision that distinguishes Southwest from many of its opponents is the degree to which it is defined by a unique partnership with, and pride in, its employees. The airline's goal is to deliver a basic service very proficiently. This translates into a number of central objectives. A fundamental pillar of its methodology is to provide safe, low price transportation in combination with maximum customer convenience. The airline provides a high rate of flights with consistent on-time departures and arrivals. Southwest's employees also desire to make this product service a "fun" experience Southwest Airlines’ Strategy Southwest Airlines is categorized as a Low Fare/No Frills airline. However, its size and importance have led most analysts to consider it to be one of the major airlines despite its fit in the low fare segment. In a fundamental sense Southwest's business level strategy is to be the cheapest and most efficient...
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...Case studies Learning excellence: Southwest Airlines’ approach Ulla K. Bunz and Jeanne D. Maes Introduction With the airline industry in the USA hardly making financial records, how has it been possible for a small company such as Southwest Airlines to completely satisfy their customers since 1971? (Bovier, 1993). What lessons has the management of Southwest Airlines learned in such a relatively short time period? How have these lessons enabled the company to capture such a portion of the market? (Bovier, 1993; George and Jones, 1996) Southwest Airlines began its service in 1971. Since then the killer-whale painted planes have become familiar to their customers and to corporate America. Besides being profitable, expanding constantly and defending its high place on the Fortune 500 list, Southwest has a very special trait: attitude (Bovier, 1993). The Southwest perspective stems from CEO Herb Kelleher and Southwest’s employee motivation. The purpose of this article is to discover the sources of success of Southwest Airlines as a company with high employee motivation. Three factors will be addressed: (1) Southwest as an “excellent” company; (2) the source of employee motivation in this “excellent” company; and (3) whether lessons learned can adequately address potential future problems for Southwest. The authors Ulla K. Bunz and Jeanne D. Maes are based at the University of South Alabama, Mobile, AL, USA. Abstract In an era in which adapting to change means survival, it is...
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...AirTran, Spirit, and Southwest Airlines have all up their fairs. In some instances, even making them higher than the major carriers on some of those roots. In this week's destination CEO, Jeff Flock, sat down to talk with the man of the controls of Southwest Airlines, Gary Kelly, to find out how in these turbulent times he's able to keep his company at a safe cruising altitude and as the most profitable airline in the country. Thank you, Gary. How are you doing, Kevin? Gary Kelly may not know the names of all 32,000 Southwest employees-See you, Troy. --but walk with him through the airlines, Love Field home base in Dallas. Althea, I'm Gary Kelly. And you get the impression he knows most of them. Jimmy, how you doing man? The 51-year-old Kelly and wife Carol are headed to their ranch near Austin for some rare R&R. Kelly always sits in the noisiest most cramped back row of the plane. The paying customers get the good seats and when he flies he likes to talk to them. I'm not a flight attendant. I'm just a guy that works in the office. The 6'3 former high school star quarterback was an Arthur Young accountant in 15 years as Southwest CFO he never sought the big job. I've never had any aspiration to be a CEO. 1 Why? I don't know. I guess I just perceived that stresses, and the strains, and the anxieties were something I didn't want deal with. Is that true? No. Kelly gets credit for locking up fuel hedging contracts that has Southwest paying far less for...
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...Low-fare strategies are reoccurring external environment factors affecting Southwest Airlines and the entire airline industry. “Southwest management fully understood that low fares necessitated zealous pursuit of low operating costs and had, over the years, instituted a number of practices to keep its cost below those of rival carriers” (Southwest Airlines in 2008, Case 23). Southwest Airlines has and continues to utilize various methods to overcome these obstacles. One method is fuel hedging and derivative contracts. Southwest began using fuel-hedging strategies, in 1998, to reduce their volatility to fluctuating fuel costs. “Southwest’s oil-hedging prowess has made it the master of the airline universe…locked in low cost fuel prices in advance” (Southwest’s hedge on fuel backfires, 2011). In the past, this has been tremendous savings for Southwest. However, when crude oil prices drop to $69 per barrel, Southwest paid higher prices for their fuel because they are locked into derivative contracts. According to the case, the derivative contracts are over twenty percent for 2011/2012 for roughly $76 - $77 per barrel. “The company was hit with its first quarterly loss in two years…Southwest lost money on its fuel hedges—future purchases of gas for its jets” (Southwest fuel hedge misstep, 2011). Assuming fuel prices continue to decline, Southwest does not have any alternatives solutions in place to combat their derivative contracts. Analysis and experts in the industry...
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...a brand name must be built, often over long periods of time. At SWA, job descriptions are informal and employees pitch in to “get the job done.” Pilots may help load luggage to ensure an on-time departure; flight attendants clean airplanes to help turn them around at the gate within 15 minutes from arrival to departure. This allows SWA to keep its planes flying for longer and thus lowers its cost structure, savings which SWA passes on to passengers in lower ticket prices. Southwest airlines which are one of the well-known low cost carriers in the United States used the niche market strategy to maintain competitive advantage from its rivals. They avoided large airports, focused mainly on short flights which are ideal for families and business people, as well as excluded seating requirement and on flight meals to reduce their cost South West Airlines tangible resources can be divided into three main categories; human resources; financial and physical resources (Henry, 2008). Physical resources refer to physical facilities and equipments that are owned by the company. Airplanes constitute the large portion of South West's physical resources. In 2011, the company had 572 aircraft, making it the largest operator of aircrafts in the world. The aircraft make up a significant part of the organization asset base (South West Airlines, 2012). Computer and computer networks also phone a vital part of South West physical resources. South West operates offices in over 76 terminals within...
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...From the case study and e-Activity, determine the key reasons why Southwest Airlines has such high customer satisfaction ratings in comparison with other airlines. Provide two (2) examples that illustrate instances of customer satisfaction to support your position. It isn’t often that the words ‘exceptional customer service’ and ‘airline’ are in the same sentence. Tricky rules regarding flight-schedule changes, high fees and sometimes-rude employees have given the airline industry a bad rap. It is this reputation that Herb Kelleher went up against when he founded Southwest Airlines in 1971. “Herb’s vision was that we were going to provide excellent customer service in an industry not known for treating customers well,” says Teresa Laraba, senior vice president customers for Southwest. They’ve succeeded. Now, 41 years later, the airline is known for exemplary service—corporate employees even send personal letters of thanks or apology for flight delays and other inconveniences to customers. The result of this effort is a high degree customer loyalty. The proof is exhibited through social media. At press time, southwest had more than 3.1 million ‘likes’ on its Facebook page, compared with 363,000 for United Airlines and 355,000 for Delta. Provide two (2) examples that illustrate instances of customer satisfaction to support your position. Focus on your hiring process: Southwest looks to hire people with engaging personalities and who are excited to work with the public. They...
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...SOUTHWEST AIRLINES’ STRATEGY Southwest Airlines is considered one of the major airlines, despite its fit in the low-fare segment. Its business-level strategy is to be the cheapest and most efficient operator in specific domestic regional markets while continuing to provide high level of customer convenience and service from its employees. LOW COST STRATEGY 1. Southwest serves smaller, less crowded airports which tend to have lower gate costs and landing fees. It minimizes its turned around times and this maintains schedules cheaply and easily. 2. Southwest keeps its basic cost and fare structure. It has never served meals or reserved seats in advance. Although it recently introduced a business class, it still offered limited number of different fares compared to other airlines. This allows majority of its customers to book through their website which reduces costs related to reservations and commissions. 3. Southwest only flies one type of airline to hold down maintenance and training costs, making short hops between cities at high frequencies and using most of its jets. EMPLOYEE LOYALTY Southwest has a highly motivated workforce. It treats its employees right with an employee retention of 92.3%. In an industry where unions and management have often been at war – the airlines never had a strike, layoffs or pay cut. Its CEO Gary E. Kelly meets with union leaders quarterly to discuss finances and strategy. Other recent cost cutting measures include...
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