From three Boeing 737 aircraft serving the major Texas airline markets of Dallas, Houston, and San Antonio; Southwest Airlines has grown into to a major carrier boasting nearly 550 planes serving 69 cities (Dess, Lumpkin, Elsner, & McNamara, 2014). What makes Southwest unique is not the success of the Company as much as Southwest’s culture of taking care of its customers and employees. Southwest’s initial strategy was to offer low-cost travel within the Golden Triangle as an alternative to travel by bus, car or train (Dess et al., 2014). In order to offer low fares, Southwest cut costs in every area it could. A fleet consisting of only Boeing 737 aircraft, for instance, helped keep training costs low and allowed Southwest to utilize crews …show more content…
Although stock options and job security are a bonus, some would argue that Southwest’s greatest strength is its culture of taking care of its employees and customers; and that this culture has been the primary reason for Southwest’s continued success and …show more content…
The introduction of luxury options, such as leather seats and in-flight entertainment, from other low-cost providers has forced Southwest to respond in kind. Those upgrades, coupled with rising fuel costs and increased wages, has caused Southwest’s Average Seat per Mile (ASM) cost to rise from $8.05 in 2005 to $12.71 in 2012, after rising just $.98 between 1995 and 2005 (Dess et al., 2014). And although Southwest’s traditionally low prices gave rise to an industry-wide phenomenon known as the Southwest effect (a lowering of average fare price and increased demand whenever Southwest entered a new market), current fares on Southwest are considered the lowest priced fare only 40 percent of the time (Dess et al., 2014). Despite these increases in cost and a widening scope of operations, Southwest has become the only airline in history to be profitable for 41 consecutive years, and was named Airline of the Year by Air Transport World magazine for 2014 (Air Transport World, 2015). Current CEO Gary Kelly attributes Southwest’s success to its employees, calling them the “heart of the airline” (Air Transport World,
We have all heard the phrase, time is money, and for the airline industry this is literally true. Herb Kelleher knew that corporate management needed to be as unobtrusive as possible to allow for the quick turning of planes at the gate. He also realized that an open climate of communication, and decentralized day to day decision making, would motivate employees towards a shared goal of accomplishing this task. Employees viewed themselves as part of the team and by working together they would ultimately produce greater customer satisfaction and loyalty. At Southwest, employees experienced a high degree of work motivation, satisfaction, and performance as defined in McGregor’s theory Y. Employees at SWA were able to perform a variety of skills, and had a degree of au...
“Our people are our single greatest strength and most enduring long-term competitive advantage,” reports CEO Gary Kelly on the Southwest Airline website (https://www.southwest.com/html/about-southwest). The company works hard to hire great individuals and then rewards and supports them to make satisfied, productive employees (Ross & Beath, 2007). In fact, Southwest Airlines has received repeated recognition as a great place to work (“Southwest Corporate Fact Sheet,” n.d.). As a result, Southwest Airlines is able to provide a low-cost, fun-cultured experience with excellent customer service (Ross & Beath, 2007). This has allowed the company to build its final strength in this evaluation: a strong brand
Southwest Airlines is also well-known for having a very productive and loyal workforce. Such loyalty and productivity among the employees were brought by the way Southwest’s management treats them. As they say, the employees are willing to work hard for the company because they feel appreciated by the top management. Southwest maintains good employee relations because what they believe in is that if employees are happy, satisfied, dedicated, and energetic, they'll take real good care of the customers.
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.
Southwest Airlines is competing with "Shuttle by United" head to head in about 9 routes. United has just announced that it is discontinuing its Oakland - Ontario route and hiking the fares in all the 14 routes by $10, which calculated to be 14.5% increase in the fare. Southwest has to respond effectively to these unexpected developments and has to act accordingly while maintaining their current low fare image and increasing their daily operating profits. We have considered the elasticity of the market to be 1.15.
The culture of an organization can simply be defined by its core values, traditions, and beliefs. For over 45 years Southwest Airlines has been successful. Its success has been attributed to a value system that tasks managers with the responsibility
Southwest's philosophy of "Service for Smiles and Profits" encourages employees to treat customer service as the most important aspect of their job. It appears that when employees strive for this high level of service, the rest takes care of itself and success is inevitable (Amanor-Boadu, 2007). Southwest Airline's management structure is designed to carefully direct the activities of employees while still maintaining the spirit of "fun" that is the cornerstone of the airlines' customer service success (Lancaster, 1999). The fundamental concept of management at Southwest is the notion of a "loose-tight" design. Within the context of tight rules of conduct, employees are encouraged to take a wide degree of leeway. For example, the company encourages employees to make their own customer service decisions. Employees are encouraged to try new things, knowing that they will not be punished for innovation as long as they do not violate safety standards, endanger crew or passengers, or keep a plane from taking off or landing on time; this allowed not only to increase the speed of service but it allowed to increase the quality of it too.
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...
All of these elements helped build a strong corporate culture for Southwest. Now that Herb Kelleher has departed, it can be easy to foresee some difficulties in maintaining that family atmosphere. One difficulty being whether the company has the ability to maintain such close relationships with its customers as the market changes and the company grows. We also foresee some problems in maintaining competitive benefits as other companies are modifying their employee policies to become more competitive.
Southwest Airlines is one of the most successful airlines in the United States. There has never been layoffs or strikes in the history of the company, although there were several times when layoffs could have been justified, including the months following the September 11, 2001 terrorist attacks. However, Southwest's Mission statement says “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.” (Southwest, 1988). The Airline has always believed that their corporate culture is one of the keys to their success. The culture recognizes that employees have emotional intelligence and that their attitudes and morale are key to the teamwork and creative environment.
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.
Although many companies are in business to make a profit, Southwest claims that their primary goal is not profit maximization. However, they have been consistently profitable by making air travel affordable to those who previously could not afford it (Freiberg, 1996).Southwest says the customer comes second, showing their devotion to employees. By taking care of their employees, the company encourages employees to take care of the customers. Employees are...
Company had a culture on not giving up through all the adversities the company faced. Strengthening of employees that is when they are motivates employees and is important part of the company. Finally cost awareness is when reduce price in every progression in the business. Southwest airlines are a strong culture company because of how they make the employees feel as part of family. This makes the employees to work hard for the success and that success they see the company as expert and personal
The company’s cultural change, which is still ongoing, may lead to a decrease in employees’ morale. As AirTran’s employees continue to embrace Southwest Airline culture, the issues emerges from this organizational change remain priority.
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