The challenges that are facing the aviation sector are increasing by the day and this has caused bankruptcy or closure of some of the previously reputable airlines. As such, some airlines have embraced unique strategies to remain competitive. Southwest Airlines is an example of such airlines. This company has remained profitable for many consecutive decades. The Southwest Airlines’ profile will act as the pivot for determining the success of this industry over the past years.
Corporate identity will form the basis of analysis and this includes sections like Customer Numbers and Flight Operations, Brand Name and Advertising, Human Resource Management and Employment as well as the competitors of the company. The sections highlight the mechanisms undertaken by the company in maintaining customer volumes and profitability while enhancing its policies. As such, this is an analytical report whose focus is on the structures and operations of the Southwest Airlines which have enabled it to maintain efficiency in terms of employees’ productivity and customers.
The system of the contemporary airline sector comprises of several publicly and privately owned airlines. These airlines have local flights, long and short international flights forming the basis of their operations. Several factors determine the financial stability and growth of this industry making it highly volatile. Losses that run into millions have been reported by a number of minor and major airlines over the last decade. These losses have forced some airlines to embrace stringent mechanisms of reducing their fiscal spending while enhancing efficiency. Others have opted to shut down. Terrorism is among the factors that affect this industry.
Other factors include strict laws set by the labor unions, competition, fuel costs’ volatility and stringent environmental and aviation laws. The analysis of this report aims at establishing strategies of the Southwest Airlines which have enabled it to remain profitable and afloat the competition through effective policies of its human resource and other information that is pertinent to the profile of this company.
Initially, Southwest Airlines was started on 16th March 1967 following the Air Southwest Co.’s incorporation. Rolling King and Herb Kelleher were its co-founders. Nevertheless, this airline was faced with several legal battles during its initial stage. It had the operations of its three main airlines based in Texas as a way of dethroning them. Nevertheless, the company emerged victorious in the Supreme Court’s case on 29th March 1971 allowing it to operate in the airspace of Texas and beyond freely (Gittell, 2005). After this victory, the company adopted the name Southwest Airline Co. with Dallas, Texas as its headquarters. It also started operating in Texas using 737 Boeing airplanes exclusively.
At first, this company had 3 Boeing 737-200 airplanes only. Nevertheless, the firm has expanded the fleet to include the Boeings 737 airplanes only. Currently, the company has over 500 airplanes. In addition, it has limited its flights to operate within the airspace of the United States only. On average, the company makes over 3000 flights per day. Morris Airline, a competing firm was acquired by this company in 1992. This increased the flight routes and airplanes of this firm. The acquisition amounted to $ 134 million. Southwest Airline was the first company to establish a website via which customers were able to view company and flight information in 1995.
In 2008, ATA Airlines was also acquired by Southwest Airline at US$7.5 million. This made Southwest Airlines the owner of the landing slots of the New York’s LaGuardian Airports and ATA Airlines’ operating certificate. Southwest airlines also acquired another company in 2010 as a strategic way of reducing competition, increasing the landing slots that it owns, airplane fleet and flight routes (Gittell, 2003). Air Tran Airlines’ acquisition was approximately $3.2 billion with the potential of increasing the long term and medium revenues, market share and profits of the company. The Boeing 737-MAX purchased recently by the Southwest Airline is an addition to its fleet. This airplane has more seat capacity, efficiency in fuel consumption as well as innovative on-board equipment.
Flight Operations and Customer Numbers
According to the U.S rankings of airlines, Southwest Airlines is the largest carrier of passengers. It beats other large and well-established international airlines that include the Delta airlines. A steady increase in the customer volumes has been recorded since the company was established in 1971. This is due to the fares that this company levies its customers. During inception, this company aimed at charging customers fares that are as low as the fares that they pay for car or bus rides for similar destinations. This endeared the airline to customers making it the only airline recording an increase in passengers in its routes. Its passengers increased to 26000 from 3000 in a period of approximately 2 years.
Customer loyalty has also caused an increase in the customer base of this airline due to the quality of its flight plans and service. Today, this company is in control of almost 40 percent of the overall market share of the U.S local flights. In 2010, the airline recorded a profit that amounted to $7.6. This airline has a reward system for its customers via which they are allowed a free flight during the eighth flight. The system also includes issuance of gifts and goodies during holidays as well as reduction of air tickets’ prices (Gomez-Mejia, Balkin, & Cardy, 2007).
The operations and flight time of this company are also highly efficient. This has made other airlines to follow its model. Examples of the efficient operations of this company include its efficient turnaround times that last for approximately 15 minutes. The turnaround times of the other airlines are between 30 and 45 minutes. Coordination and team work among its employees enhance this efficiency.
Using Boeings 737 as its aircraft has also enhanced efficiency and profitability of this company. Using one model of aircraft has enabled the company to reduce its operating costs in terms of buying parts and equipment, maintaining the aircrafts and training the employees on how to maintain and use the aircrafts. This has made the employees of the airline more productive because it eliminates the need for employees to engage in mandatory and frequent training whenever new aircrafts and equipment is acquired.
The final strategy is the low air tickets’ cost which has become synonymous with this company. This strategy has made Southwest Airline unique in the market where luxury offers and amenities dominate the industry. Using this strategy, the company has reduced its amenities and this has enabled it to sustain low tickets’ cost without suffering losses in the flight operations. According to this company, offering luxuries and amenities that other airlines offer would be highly costly and unsuitable because it uses planes that are designed for short flights. Among the excluded amenities include video/audio programming, cabin for the first class, airport lounges and reserved seats’ assignments.
Advertising and Brand Name
Using catchy phrases, adverts and other methodologies that satisfy the customers, the firm has been able to attract customers over the years. This has enabled the company to establish a marketing team that is highly efficient and better than those of the other companies. For instance, this company uses comical phrases while advertising its services. They include ‘welcome aboard’, ‘grab your bag, it’s on!’, ‘love is still our field’ and ‘just plane smart’ among others. The company has endeared itself to customers by using such slogans. In addition, this firm is reputable for being the first company to use a website in disseminating information about its flights (Muduli, 2011).
Through this, the company established a brand name which enabled it to operate a successful site in the industry. The high percentage of unique visitors and online revenues of this company are attributed to this website. An example of this is the southwest.com which recorded 70 percent of the flight bookings of this company. It generated 73 percent of the online bookings’ revenues of this company.
This company also has a unique marketing plan that includes the use of themes in the airplanes and flights. For instance, the staff of this company can use an accentuated dialect or sing to provide in-flight entertainment while at the same time disseminating flight information to passengers. In addition, this company uses themed caricatures to paint airplanes. This attracts customers while making them feel comfortable and at ease. The airline has also established itself as a strong brand in this industry by avoiding accidents through which aircrafts crash and passengers die. Consequently, this company took the 10th position in the list of the top safest airlines worldwide. This company is also recognized for its rates of customer satisfaction in the United States according to the transportation department. This is because when compared to the other companies in the sector, the company has low customer complains.
There are several competitors of this company offering short flights and low cost as their market strategy in the U.S. As of 2003, the major competitors of this airline included JetBlue, America West, ATA, Spirit, Air Tran, and Frontier. There are also other companies that have attempted to use the flight model of this company. These include Delta and Continental whose efforts yielded negligible fruits leading to their abandonment (Gittel, 2003). Nevertheless, there was a considerable reduction in the competitors of this airline in 2013 because of acquisitions, losses and bankruptcy that took place. For instance, Southwest Airlines acquired Air Tran and ATA as a way of reducing competition, increasing its landing slots, expanding fleet and enhancing its share in the market.
Another company also acquired Frontier leaving JetBlue as the major competitor of this company. The flight models as well as products of JetBlue and those of Southwest Airlines are similar. In addition, JetBlue has better amenities for passengers than those of Southwest Airlines. This implies that JetBlue threatens the survival and future of Southwest Airlines on long term and medium basis.
Employment and Human Resource Management
Currently, the staff of this airline stands at 40,000 people. Over 140,000 applications were made for different positions in the airline in 2010. This can be attributed to the unique job opportunities, employee engagement when it comes to management, employee welfare as well as the experience that employees get from the company (Maduli, 2011). Kelleher, one of the founders of this company has established an efficient human resource department in this company making it highly efficient.
This has been achieved by delegating duties, ensuring minimal supervision and independence that employees need to exploit talents and to remain innovative. The primary objective of Kelleher is to ensure comfortable and unique working environments that satisfy the employees. Through this strategy, productivity is heightened among the employees who in turn offer a better customer service.
This company’s human resource has also played a vital role in enhancing job satisfaction among the employees and promoting the experience of customers. For instance, the work environment of this company has been promoted by the human resource department to enhance team work and cohesion. Team work among employees ensures that they support one another which enhance efficiency in service delivery. Team’s laxity implies inefficiency of the entire team rather than individual’s inefficiency.
Going by this analogy, a mechanism of strengthening efficiency as well as exercising cohesiveness of the employees has been established by the human resource department. This has been established via simple gestures that include the involvement of pilots in loading or packaging luggage.
In addition, the company’s human resource department has played an influential role of improving the employees and top management’s cordial relations by creating frameworks and policies that enhance free integration of both groups. The HR department has established an open-door policy that allows employees to express their grievances without interference by the management.
Frequent meetings are held between the management and the employees on frequent basis without specific agendas. The meetings are aimed at establishing a forum through which employees can express their policies, problems and ideas to the management of the company (Gomez-Mejia, Balkin, & Cardy, 2007). After identifying issues, the management creates the ‘culture committee’. This addresses the raised issues by finding long-lasting and fair solutions while communicating with the management and the human resource.
The HR employs unique policies while training and hiring employees. The company employs the ‘target selection’ approach while hiring. This approach entails hiring employees based on the position that matches their talents and capabilities (Hauk, 2004). This implies that the positions given to the employees suit their talents and job characteristics. After hiring the employee, the company implements a trial employment approach which entail assigning trial duties to an employee so that he/she can adapt to the new role.
The management uses this approach to determine the employee’s suitability for their position. The employee is also trained on regular basis. Departmental transfers are also made to improve the skills and knowledge of the employees in the company. An internal system for improving career has also been established by the HR department. This enhances productivity among the employees because identifying and training potential supervisors and managers occurs naturally. Consequently, the turnover rates of this company are among the lowest in the sector.
Future Threats to the Company
The rising fuel costs that have hit the entire world are a major threat to this company. The operations of this company are affected by these costs directly. Nevertheless, this firm has established a fuel hedging system which enables it avoid the impacts of the volatility of the fuel markets.
Another threat that is facing this company is the increase in the costs of labor that has a direct link to the labor unions as well as the rising trends in the economy. The rise and volatility of economic trends has the potential of affecting crucial factors like inflation and dollar’s strength (Gittel, 2005). Consumer spending is reduced by these factors since they reduce the volumes of the customers who use the airlines.
In a nut shell, Southwest Airlines has been able to endure several hardships. This has enabled it to grow continuously to be a dominant player in the sector where it operates. Over the years, the company has been able to maintain profitability constantly from the time it was founded. The company has achieved this even when the industry has been facing hardships that have forced other airlines to close down after incurring huge losses or going bankrupt. As such, the airline ought to be seen as an example that other players in the industry ought to emulate.
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Gittell, J. H. (2003). The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance. New York: McGraw-Hill.
Gittell, J. H. (2005). The Southwest Airlines Way. New York, NY: McGraw Hill Professional.
Gomez-Mejia, L. R., Balkin, D. B., & Cardy, R. L. (2007). Managing Human Resources (5th ed.). Upper Saddle River, NJ: Pearson.
Hauck, T. (2004). Southwest airlines: case study. Beechmont Avenue, Cincinnati: Garrison & Keller.
Muduli, A. and Kaura, V. (2011). Southwest Airlines Success: A Case Study Analysis. BVIMR Management Egde, 4 (2): 115-118.
Originally posted 2015-11-16 08:12:52.
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