I. Introduction
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.
II. Problem:
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.
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...
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On the surface, the players in the U.S. Airline Industry appear to be in an enviable industry filled with glamorous perks and a solid business model. However, analysis paints a different story. Digging deeper reveals significant issues with little possibility for industry wide solutions, therefore making the industry unattractive.
Problems will arise at firms and airlines are no exceptions, but at Southwest, they strive to avoid passing blame. Employees are encouraged to share problems as they pop up and get involved in creating a solution. This attitude represents a paradigm shift from most businesses and impacts the quality of the communications.
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 airplane tickets. Also, Southwest is renowned in the airline industry for its short turnaround time on arrivals and departures. And since people's biggest concern nowadays is money and time, having low price airline tickets to cater their traveling needs in a shorter period of time will surely satisfy them. Moreover, aside from the low prices offered, what attracts to customers is Southwest’s way in dealing with them. The employees of the airline treat their customers well and really listen to their needs.
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.
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.
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...
Several factors drive the recent culture of mergers within the industry; rising fuel costs, a labor-relations culture that originated from government regulation of U.S. airlines, a reactive instead of proactive strategic management business model, a high risk of substitute products as a strategy for growth that dominate the air industry (Martin, 2014). After years of struggling to stay proactive in a shifting market, because of labor demands, a new bankruptcy movement came over the industry putting other U.S airlines in jeopardy. In addition to American Airlines, several other airlines filed Chapter 11. The upsets labor difficulties have on fare and competition is the chief reason for the formation. Accordingly, as market circumstances change organization will more than likely reassess and modify priorities and alliance
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.
Why are are Airline companies merging? And why does poor customer service come with it? In recent years We’ve noticed that big company mergers has become a real issue with 11 airlines joining together, resulting in only. With only 5 major airlines, there is now a monopoly in the airline business, causing flight prices to increase and customer service to decrease.
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
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.
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 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