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Southwest airlines a strategic perspective
Southwest airlines a strategic perspective
Airline strategic planning
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Southwest Airlines tops as one of the most competitive commercial airlines, serving customers in both the United States and other newly introduced international markets. A company and industrial analysis was carried out to determine the performance of Southwest Airlines. Findings of the organizational analysis indicated that the organization’s flight routes to surrounding destinations earned similar revenue, which was not the case with flights to far locations. As a result, Southwest Airlines did not realize additional returns to fund its operations.
According to the conducted industry analysis, the organization faced a threat from local airline competitors since they operated on similar routes. Southwest was facing a significant challenge
Not all of the external factors affecting Southwest Airlines are helpful, however. In terms of threats, Southwest Airlines faces several challenges. The airline industry is a highly competitive market and costs are continuing to rise (e.g. rapidly increasing fuel costs and labor costs). Unfortunately, these factors greatly increase the risk of another company emulating the strategies and core competencies of Southwest Airlines (Ross & Beath, 2007). Ross & Beath (2007) mention this threat in regards to JetBlue rapidly approaching innovative, low-cost operations. There is also not a clear sense of customer loyalty in this market, outside of frequent flyers seeking loyalty card perks. Overall, the biggest threat to Southwest is its competition.
Cost controlling is very important in the airline industry. Southwest is very good at controlling their costs. They offer a no frills service for people who want to get to their destination for as little as possible, and are not concerned about the bells and whistles like in-flight movies. Southwest also realized that when their planes are on the ground, they aren’t making money. They decided to keep their planes in the air as much as possible and have worked hard to keep a low turnaround time. They manage to unload passengers and load new passengers for the next flight within twenty minutes, which is shorter than the industry average. Southwest also uses only one kind of plane, the Boeing 737, in order to reduce costs of parts and training employees to use different types of planes. All of these methods have lowered the cost of operations for Southwest and allowed them to have a profit of $4.7 billion, which is twice that of United Airlines. And because they are so efficient they can pass the savings on to customers.
Southwest Airlines Company (SAC) has turn out to be a shining example not only in the airline industry, but in the business world as a whole. At the heart of the carrier, their vision and mission statements have been diligently working to turn a dream into reality by becoming the world’s most loved, most flown, and most profitable airline, as well as be dedicated to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit, respectfully (Investor Relations, 2015). As a Fortune 500 company, SAC employs over 49,000 personnel to provide first-rate service more than 100 million customers annually. They credit much of their success to its triple bottom line approach
Southwest Airlines: A Case Analysis. ORGANIZATIONAL ANALYSIS It is evident that the greatest strength Southwest Airlines has is its financial stability. As known in the US airline industry, Southwest is one of those airlines who are consistently earning profits despite the problems the industry is facing. With such stability, the corporation is able to make decisions and adjust policies, which other heavily burdened airlines may not be able to imitate.
The airline industry has been full of competition for years. It takes determination, preparation, knowledge, and recourses to start an airline company, and that is just what happened forty-five years ago in Dallas Texas. Southwest airlines is an very successful airline company serving around 100 million customers annually (Southwest Corporate Fact Sheet). Many things stick out about Southwest such as their satellite-based WIFI and free luggage. These accommodations appeal to the customers. The company described its mission as “dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit” (About Southwest). But from a business standpoint it is necessary to look into
Southwest Airlines has been in business for about 50 years, and has been very successful. It is a strong company with a strong leader and has a lot of strengths that have helped it stay in business. It has a firm operating strategy, strong fleet operations, and recognition in the industry. However, with strengths come weaknesses. Weaknesses like heavy dependence passenger revenues, declining operating efficiency, and dependence on one airplane producer can cause complications for Southwest’s business operations.
Southwest Airlines /Competition Paper Introduction: Air transport is a global industry and as such every airline is a likely challenger for every other. It is contrary to expectation that any airline will be able to contest on a large scale without being associated to other carriers. Traffic feed is the industry's lifeblood and stand-alone carriers will be labored to carry low-revenue point-to-point traffic when front with airlines able to offer manifold route alliances. Southwest Airlines is a major carrier to the USA accounting for about 85% of its airfreight tonnage, but it also operates scheduled services to South Africa, Japan and Hong Kong. The subject of strategic alliances inside the air transport industry is not a well-researched area. This is due, in part, to the truth that alliances are a nearly new happening in the industry. The 1990s in specific have seen a commotion of alliance activity of all descriptions. At present it is operating more than 2,100 flights per day and carrying over 44 million passengers a year to 50 different cities all over the United States. Southwest is very well known for its best on-time record, best baggage handling and has the pride of getting least customer complaints in the airline industry. The airline has won the airline industry's Triple Crown award for Best Airline continuously for five times from 1992-96. The airline is also famous for its innovative discount and convenience packages introduced by it from time to time including the frequent flyer program, fun fares, same-day airfreight delivery service etc. Southwest Airlines in the U.S is having some success at weathering the current industry turbulence. They’re showing profits and/or expanding their routes to take up the slack left ...
Inkpen, Andrew C. "Southwest Airlines 2011." Thunderbird School of Global Management n.pag. Havard Business Review. Web. 24 Feb 2014.
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.
It has stayed relevant to the market through its propelled philosophy of relationships to generate profits in the business. Since its establishment in Monroe, Louisiana the once tiny airline has stretched to greater heights serving in 6 continents. It has also established a distinguishable name among its competitors with a reputation of leading customer services. However, even as an established venture, the company needs to maximize its profits in order to stay in business and expand in to new territories beyond its conquered boundaries. A strategic analysis was carried out by our team to establish the company’s current situation. A SWOT analysis was performed to come up with three referenced, strategic alternatives. This alternatives are meant to act as a strategic guidance to the company in order to enhance growth. The strategic recommendation provided will improve and enable the business to cope with the competitors while the implementation of the strategy section will outline the way to go about achieving these alternatives in the business setting. Lastly, we put up a discussion on the evaluation procedures and necessary controls for the
Today Southwest manages nearly 400 Boeing 737 aircraft in 59 U.S. cities. And it has the best customer service. Factor that Impacts Industry Rivalry The degree of rivalry that exists within an industry will affect its overall profitability. Factors affecting rivalry include high fixed costs, excess capacity, low differentiation, slow growth, and high exit costs. In the 1970s, fixed costs of airlines were not low.
Southwest airlines is now the nation’s largest carrier in terms of originating domestic passengers boarded according to the most recent data available from the U.S transportation. The carrier offers flights to some of the world’s most popular destinations. They also operate the largest fleet of Boeing aircraft in the world to serve 93 destinations in 40 states, the District of Columbia, the Commonwealth of Puerto Rico and five near international countries which are Aruba, Bahamas, Jamaica, Dominican Republic and Mexico (Swamedia, 2015). Another key point to Southwest’s successful operation is that they only employ one type of aircraft, the Boeing 737. By resisting the customary practice of employing numerous types of aircrafts, the carriers can save on operational costs such as training technicians and focus on other customer-driven needs (Slate,
The aviation industry has witnessed key structural changes over the past few decades (Dennis, 2007). Notably, the changes have seen the rise of low cost carriers otherwise known as budget carriers. The low cost airlines have significantly won the support of many startup airlines leading to their spread all over the world into both the long-and short-haul markets. This phenomenon has resulted in a change in the competitiveness of major airlines in the industry (Dennis, 2007). Since the budget airlines charge low on ticket prices, the lost revenue is recovered through food, seat allocation and priority boarding. A good example of low cost carriers is the Southwest Airlines that operates in the United States.
The strategy has been to interest travelers not from other airlines but from trains, buses, cars by providing with the fastest as well as the less expensive service. In order to support the strategy the company decided to fly only one type of airplane, the Boeing 737, and to substitute linear flying for the hub-and-spoke model. However the largest contributor to the success at Southwest is its culture and employees. “Your spirit,” says Mr. Kelleher,, is “the most powerful thing of all.”
Southwest has many strong aspects contributing to its success. Its firm operating strategy, strong fleet and dominant market share in North America has kept them in the game along with JetBlue and other competitors. Through the acquisition of AirTran it has gained a great opportunity and expanded its market internationally, which was considered to be one of the things holding them back in the previous years. The company’s very conservative growth strategy, which has delayed its globalization, has also worked in their favor during the economic decline by not becoming involved in an area, which they were unfamiliar with.