Labor Relations This is an area where Southwest Airlines needs to focus more of their attention. Currently, Southwest Airlines, is approximately 85% unionized and the airline is trying to negotiate seven contracts concurrently. The ramp, operations and cargo unions have been working without a contract since 2011. The pilots and mechanics have not had a contract since 2012 and the flight attendants contract expired in 2013 (Leff, 2015). In a statement made by the president of Southwest Airlines’ Pilots Association, union representatives must do something while ongoing poor decisions are being made by management that are affecting our airlines passengers (Schlangenstein, 2016). Additionally, the union is also demanding the removal of CEO Gary …show more content…
Southwest Airlines has always proudly identified themselves as a low cost airline. They have successfully been able to incorporate Human Resource management, merger and acquisitions, financial performance and allocation of resources as part of their corporate strategy. When it comes to the meat and potatoes, Southwest Airlines has implemented a corporate value-creating strategy. Ultimately, because of this strategy, Southwest is surpassing its competitors and gaining a larger share of the market. Furthermore, this strategy is adding perceived value to its products and services by taking advantage of the economies of scope (Bradley, 2016). The airline’s business units can take advantage of their differentiation by lowering their cost structure. For example, Southwest Airlines 714 fleet consist of only one type of aircraft, the Boeing 737. The advantage of having one type of aircraft is extremely cost efficient as the airline only has to train mechanics to repair one type of aircraft and they only have to store parts for one type of aircraft therefore lowering overhead and human resources expenses which translates into lower fares to its passengers (Southwest, …show more content…
Southwest Airline’s ability to diversify, while limited, is still an option. When Southwest airlines first made its mark in the industry, it was a local carrier flying between Dallas, Houston and San Antonio. Today, Southwest fly’s internationally and is continually adding additional countries to its destination list. The introduction of its Amadeus Altéa reservations system is set to operate both the domestic and international bookings. The same competencies that helped establish Southwest Airlines in 1973, are being implemented today with its diversification and growth
The Organizational Structure of Southwest Airlines. One of the determining factors of the organizational behavior in an organizational structure. It includes several areas such as issues of authority and control, communication team, market and geographic structure, product division. Southwest Airlines determine all these areas and proved a strong competence in all issues. The SWA organizational structure is well-known for being functional. First of all, because their structure is multi-divisional, “each division in a multidivisional structure is essentially a different business. Moreover, the responsibility of each divisional manager is to design the divisional structure that best meets the needs of the products and customer of that division” (Jones, 2007, p. 155). The major positive aspect of such kind of structure is an increased organizational effectiveness and control. In this system, behavior is controlled through internal upward mobility. “A large divisional company possesses an internal labor market which increases managers’ motivation to increase organizational effectiveness” (Jones, 2007, p. 157). One more important issue in such type of structure is how to keep the customer’s happiness. The SWA coped with this question easily. They put the
Some speculate that this “new light” will not be positive for the airline; after all, one of the reasons Americans love Southwest is because it has always differed from other large and impersonal airlines, such as American Airlines and Delta. Southwest has always seemed like the underdog taking on the giant, overpriced competitors; now they seem to have hopped on board with the “big boys” of the airline industry. Another disturbing trend is that studies show Southwest’s fares have risen 39% over the last five years compared to a 10% rise in the rest of the industry, while Southwest still lets bags fly for free. There is some debate if that will be one of the items swept away in the airline’s big restructuring. Time will tell if Southwest’s top-notch customer service will still be enough to set them apart from other airlines, or if their new, “stiff” image will leave them with shaking heads and deficits on the balance sheet (Tuttle, 2013).
Southwest Airlines operates in the American domestic market. It is well known for its growth over the years. Its mission is the dedication to the customer service of the highest quality that is delivered with a sense of friendliness, company spirit, personal pride and warmth, (Inkpen & Degroot, 2). The airline industry had general environmental factors that do impact it is several ways within the market.
Having a low cost of operations is one of the contributing factors to Southwest Airlines’ financial success. Such low cost model of the corporation is brought about by an effective strategy. Southwest uses only one type of aircraft – the fuel-efficient Boeing 737. This tactic keeps training and maintenance costs down. Moreover, the no-frills approach to customer service contributed to the low cost of operations for Southwest.
Since 1987, when the Department of Transportation began tracking Customer Satisfaction statistics, Southwest has consistently led the entire airline industry with the lowest ratio of complaints per passengers boarded. Many airlines have tried to copy Southwest’s business model, and the Culture of Southwest is admired and emulated by corporations and organizations in all walks of life. Always the innovator, Southwest pioneered Senior Fares, a same-day air freight delivery service, and Ticketless Travel. Southwest led the way with the first airline web page—southwest.com, DING, the first-ever direct link to Customer’s computer desktops that delivers live updates on the hottest deals, and the first airline corporate blog, Nuts About Southwest. Our Share the Spirit community programs make Southwest the hometown airline of every city we serve.
Relating to the economic environment, competition among airlines has become fierce, which has hurt the operating margins of Southwest. Because margins are so low, Southwest employs several tactics that are designed to ensure profitability. For example, most of their flights are statistically guaranteed to be booked, and they overbook these flights to compensate for customer cancellations. However, in recent events, overbooking flights has
Southwest Airlines has been in business for more than thirty years. Presently, operating airplanes and flight services is very competitive, and in most cases, is not cost-effective industry; however, Southwest Airlines has been consistently profitable company, which is successfully designed with the intention of achieving high growth. According to an interview of Southwest Airlines former CEO, Herb Kelleher, when he visited Graduate School of Business at Stanford University, despite all airline industry challenges, the “low-fare airline has grown into the third largest in the world as measured by the number of passengers carried, and the largest with destinations exclusively in the United States” (2006). To the customers, Southwest Airlines is known by the low-fare service, short distance routes and high frequencies flights.
If the short haul passenger was the backbone of Southwest Airlines success, then their 737s were the lifelines that supported it. By choosing the 737 as the airplane for all of Southwest's flights, the company saved time and resources in training its employees. The crew could be easily substituted for one another due to the extensive training on the 737. Low costs and, therefore, low fares are an enormous competitive advantage, when combined with their high-quality and loyal workforce. A very unique culture was found at Southwest Airlines among all of its employees.
From the very start Southwest Airlines founders Rollin King and Herb Kelleher decided that its main goal is to get passengers to their destinations on time and at the lowest possible price. To be “different” from others was the only way to survive and to stand out in the struggle for #1 customer’s choice. Southwest Airlines did even more than that. Southwest Airlines paved its way to the top owing to all the innovations, which it ushered in making the flights easier, better and cheaper for its customers. Southwest was the first airline with a frequent flyer program to give credit for the number of trips taken and not the number of miles flown. It pioneered senior discounts, Fun Fares, Fun Packs, a same-day airfreight delivery service, ticketless travel, and many other unique programs. Southwest Airlines never gave promises it could not
Southwest Airlines is a very successful airline despite their competition. The number of airlines throughout the country continue to dwindle down, due to one of the big four airlines buying them up. Just within the past 8 months, Virgin Airlines became part of Alaska Air Group during a $2.6 billion buyout (Hugo Martin, 2016). This is a perfect example of implementing one of the five P’s. This is a ploy of Alaska Airline Group to create stiffer competition for Southwest in larger airports on the west coast. Looking closer at Southwest and their success, they have been success as their mission and vision are both appeasing to their internal and external customers. Who would not like to work for an organization that recognizes their employees for their work and going above and beyond. This is a core value of Southwest’s and allows their passengers to identify the employee and congratulate them on their success after reading their recognition article in the magazine located in their seat pocket (Maier,
Southwest Airlines has come from an underdog to being one of the best airlines in the industry. This reputation translates from its strategic management of resources. The Co-founder and former CEO, Herb Kelleher, established a unique corporate culture that leads to high customer satisfaction, employees’ morale, and one of the most profitable airlines in the industry (Jackson et al., 2012). The corporate culture concentrates on empowerment the workforce. It shows through Southwest Airlines core values that “happy employees lead to happy customers, which create happy shareholders” (Jackson et al., 2012). Since its first grand opening in 1971, Southwest Airlines has shown steady growth, and now carries more passengers than any other low-cost carrier in the world (Wharton, 2010). To expand the business operations, Southwest Airlines took over AirTran in 2010 as a strategy to gain more market share for the Southeast region and international flights. However, the acquisition of AirTran brought upcoming challenges both internally and externally for Southwest Airlines. In this case analysis, the objectives are focusing on the change process post the merger with AirTran, and evaluating alternatives to address the impacts of the merger.
The theoretical frameworks are Unitarist, Pluralist and Marxist/Radical which is proposed by Alan Fox in 1966. The employment relationship will be conceptualised by these theories so that these will improve the understanding of the concept of employment relationship within businesses. Although Unitarist, Pluralist and Radical/Marxist by Alan Fox are the most used theories, individualism and collectivism by Purcell in 1987 can also conceive the topic of employment relationship.
In a dysfunctional time for the airline industry, most airlines, especially major carriers, are adapting the concept of "doing less with more." One low-cost carrier, JetBlue, is changing the domestic aviation landscape in this regard and is defying the odds. Here is a company that has examined each marketing mix elements carefully, has adapted them to its customer’s needs, and is succeeding because of this approach.
...ustomer orientated companies, which it at Southwest. Feedback must be attained from customers and employees. Being focused on the customer is seen in Southwest’s emphasis on how employees make the experiences enjoyable for customers. This is a process of letting the employee interact with customers and then monitoring how the employee performs with customers. The Human resources department hires personnel on their fit with the Southwest culture. That is highly focused on the employee’s ability to satisfy the customer. The HR team looks for those who do things that are fun, to try to lighten up the environment. They try to find those who are helping other employees and encouraging them. Southwest’s HR team has a big responsibility in hiring the right individuals for the job. This task is very hard but if you’ve every flown Southwest you can see this process working.
airline in history to enjoy a twenty consecutive years of profitability. Many business scholars and strategic experts tend to argue that, Southwest “formula” for success boils down to cutting costs with their one type of plane model, cheap fares, and plenty of advertising. These are pretty easy and basic model that can be replicated and apply to another airline, one would think? However, all the airlines that try to adopt the low-cost model have failed. That’s because there is passion, enthusiastic, and high-spirited culture that offers the desire and tenacity with a sense of “Espirit de corps” for employees that’s the real secret to Southwest’s success. It is a clear fact that culture has everything to do with Southwest’s