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Strengths and weaknesses of southwest airlines
Strengths and weakness of southwest airlines
Strengths and weakness of southwest airlines
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Strengths – Southwest Airlines is a market share leader. In 2010, “it transported more passengers from U.S. airports to U.S. destinations than any other airline and offered more regularly scheduled domestic flights than any other airline” (Crafting & Executing Strategy, 2015, p. 736). Southwest also ranked the 2nd best airlines according to the American Customer Satisfaction Index (ACSI) rankings of customer satisfaction (Ausick, 2014). Another strength is that Southwest uses a different approach by putting their employees first and encouraging them to show a friendly, fun loving spirit. Southwest believes that happy employees will provide high quality customer service. Which will give customers a positive flying experience and encourages repeat travel. Plus, to keep fares low Southwest uses various methods to cut …show more content…
To some customers this is important because they like the comfort of larger chairs, more legroom, business services, and priority check-in and boarding. Southwest also doesn’t offer assigned seating. Most customers like to know ahead of time where they are going to sit. Having an open seating policy can delay boarding since passengers do not know where there will be seat availability or if their group can sit together. Another weakness is that Southwest is one of the most highly unionized airlines. An unresolvable disagreement can turn into a strike, which leads to a great loss of money. Such as the machinist strike in the early 80’s and the difficult negotiations in 2000 – 2001 over “new wages and benefits for ramp, baggage operators, provisioning and freight personnel” (Crafting & Executing Strategy, 2015, p.763). Opportunities – The acquisition of AirTran is a great opportunity for Southwest because it serves new cities and a major airport not covered by Southwest. This purchase can bring in an additional 2 million passengers annually (Crafting & Executing Strategy, 2015, p.
Southwest Airlines roots can be traced back to Texas in the 1960’s where a company by the name of Air Southwest Co. was created to provide interstate flights in Texas to avoid federal aviation laws. This technique of trying to avoid federal regulation was challenged when 3 other major airlines filed a lawsuit against Air Southwest Co.; later the state of Texas upheld Air Southwest Co. right to fly within the state of Texas and the Supreme Court decided not to review the case. (Southwest Airlines, n.d.) This was a challenging start for Southwest as it was being targeted right off the bat by some of its competitors. The company name was changed in the early 1970’s to Southwest Airlines Co. and a headquarters was established in Dallas, TX. The company’s main focus was interstate flights between the 3 major cities in Texas including Dallas, Houston, and San Antonio. (Southwest Airlines, n.d.)
When booking lights, passengers had a choice to select between the two fares. They can either pay $26 or $13 for their ticket. Both fares offered the same seats. The difference is that with the $26 fare, customers were offered gifts such as ice buckets or whiskey. They found this option to be very effective as majority of customers selected the $26 fare over the $13 fare. Southwest acquired an additional airline allowing them to offer more departure times. This allowed passengers who missed their flight, to get onto the next one. (Mudili, 2011). By letting passengers who missed their flight to get onto the next flight, this helped retain the passengers instead if turning them away. It is also providing good customer service by working with the customer and not against
Despite its growing domestic network, the company didn’t offer international flights until July 2014, and even then, it only offered limited destinations (“Southwest Corporate Fact Sheet,” n.d.). Furthermore, the company’s reliance on a single aircraft is cause for concern. Southwest Airlines was also weak with technology utilization initially but has since turned this into an asset, as described later. Finally, the company has a limitation with providing customer perks due to its low-cost operations (Ross & Beath,
The airline does not serve meals on board, and there are no luxurious or first class seats offered. Services like these have been seen by the airline as unnecessary for an airline that provides a short-haul trip from city to city. By this, Southwest was able to offer low price tickets to customers, which was good for the company because most people would prefer to fly without those services mentioned if it meant for cheaper ticket prices. Even though Southwest offers no-frills, there is still a high degree of customer satisfaction that continuously builds customer loyalty for the company. As mentioned, Southwest offers low prices on their airline tickets.
More than 37 years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline. They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. And you know what? They were right. What began as a small Texas airline has grown to become one of the largest airlines in America. Today, Southwest Airlines flies over 104 million passengers a year to 64 great cities all across the country, and we do it more than 3,400 times a day.
Distribution. Unlike other airlines in the industry, Southwest Airlines does not use third party booking reservation systems. They are unique in such a way that they operate ticket sales directly through their company. By limiting third party booking reservation systems, Southwest can keep their sales distribution in
Advertising: As one of the largest domestic airlines, Southwest Airlines has an enormous advertising budget to sustain its presence and increase its market share through focusing on the benefits of flying Southwest over its competitors. Southwest recognizes that flying is no longer a pleasurable experience for many customers, even on Southwest, historically a budget airline. Even though Southwest is often regarded as a no-frills airline, it still attempts to build goodwill from its customers based on its advertising. Of the $249 million it spent on advertising in 2011, Southwest Airlines is unique in that it does not sell additional ad space on the exterior of its aircraft. Many domestic airlines have begun selling aircraft exterior space as a way to increase revenue, but Southwest Airlines insists that it wants to keep its product and advertisi...
Before to select the proper alternative, three alternatives were analysed and evaluated under four decisions criteria: customer experience, cost, growth rate / market penetration and ease to implementation (See Exhibit 2: Factor Analysis). Between all the alternatives, it was suggested that Southwest Airlines enters to New York City by bidding the slots and gates at the LGA (See Exhibit 3: Alternatives Analysis). This alternative sustains the challenge of changing the customer experience which means adding more flights from and to the East; furthermore, entering to new markets will reinforce “the power of the network” through LGA. At the same time, this decision will allow signing more code-sharing agreements with other airlines flying to international destinations and offer new products and services to LUV customers as loyalty rewards, in-flight internet, onboard duty-free purchases, etc.; as a result of this, it will increase passenger’s insights and experiences by flying with Southwest Airlines. Nevertheless, there is potential risk by selecting this alternative, in the recent years the energy prices has had a huge increase affecting costs, fares and even capacity needed, however Southwest Airlines has been able to hedge fuel for decad...
Southwest has done what others in its industry seem to struggle to do, which is to make flying fun. This has been the cornerstone for how the Southwest operates, thinks, and plans. Many of the policies, procedures, and practices Southwest has used are aimed directly at providing patrons with a unique, fun, and enjoyable experience. This value and the effort Southwest has made to place customers at the forefront of its plans and strategy, has paid off as the company is one of the most popular and well-respected in the transportation industry.
This is why they have become a company with high retention rates. Southwest Airlines is voted “the best place to work” for a simple reason. The company invests in their employees and is committed to their values and vision through training and development.
Southwest Airlines strategy of focusing on short haul passenger and providing rates as low as one third of their competitors, they have seen tremendous growth in the last decade. Market share for top city pairs on Southwest's schedule has reached 80% to 85%. Maintaining the largest fleet of 737's in the world and utilizing point-to-point versus the hub-and-spoke method of connection philosophy allowed Southwest to provide their service to more people at a lower cost. By putting the employee first, Southwest has found the key to success in the airline business. A happy worker is a more productive one as well as a better service provider. Southwest will continue to reserve their growth in the future by entering select markets only after careful market research.
The mission of Southwest Airlines is a dedication to the highest quality of service delivered with warmth, friendliness, individual pride, and company spirit (Mission…, 2007). The company also provides opportunities for learning and personal growth to each employee. Creativity and innovation is very important and highly encouraged, for the purposes of improving effectiveness. Employees are to be provided the same concern, respect, and caring attitude within the organization that the employees are expected to share with the customer. Southwest Airlines was initially created to be a low-cost alternative to high price of intra-Texas air carriers (Freiberg, 1996). Southwest’s fares were originally supposed to compete with car and bus transportation. It was a little airline, and it would withstand the test of time. As a discount, no-frills airline, it would provide stiff competition for larger airlines. Their strategy was to operate at low cost, offering no food, no movies, no first class, and no reserved seats. They created their own market and provided increased turnaround times at the gate, by avoiding hub-and-spoke airports and opting for short-haul, direct flights. Through this market approach, Southwest has a majority of market share in the markets they serve.
The low cost and no frills strategy is make travel affordable at low cost. The company only operates one type of aircraft which is Boeing 737 to help maintenance cost low. Southwest was the first airline to use E-ticketing in this way customer can reserve spot and buy ticket on their web and allow less expense in printing tickets. Medium measured airports which allowed them to produce better time performance and less fuel costs so plane do not have to wait in the line at the runway. The core value of the company of “LUV and fun” makes the company great place to work that gives customer with a great experience.
Another internal challenge for Southwest Airlines is the conflicting management style and business operation with AirTran. On top of that, the external challenges such as the increase of competitions and gas prices are some of issues f...
The company’s cost leadership strategy of keeping their fares low to ensure frequent and convenient travel along with its playful, fun poking advertising, exciting promotional ways, and various vibrant ways of operation enabled the company to expand exuded its effect on both customer and competitors, thus lowering the prices in the new market. This is the ‘Southwest