Analysis of Southwest Airlines

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Southwest Airlines is an airline operating company that began by Rollin King and Herb Kelleher in the year 1971 in Texas, U.S.A. The continued quality services offered to its customers has seen it become the second best airline operating company in the world in the year 2006 trailing behind Delta Airlines. Southwest Airlines is dedicated to serving the customers under all considerations in the sense that it encompasses individual pride and maintenance of the company’s spirit by providing point to point transport services that are cost friendly in the fifty-eight cities of the United States that it operates. The success of the company is attributed to low costs of operation in the domestic airline industry and fares that are cost effective. It also has the best overall customer service records, it boasts of which have led to it rising among the ranks comparative to other companies in the same industry such as Continental Airlines and American Airlines since they cannot beat its prices to their levels as it is a discount airliner.

Executive summary

In spite of the success of the company realized especially in its sales and withstanding of high competition, the industry in general faces and suffers a major blow from the terrorist attacks that are perpetuated by unknown people. Based on my analysis I came up with several findings of my analysis of the company, it includes the competition that existed between the Airline companies in the industry and the air traffic, the prices of fuels, coping up with the technological trends that emerge, margins that are experienced in fares of the industry, global conflicts, the customers’ expectations related to the services offered, and growth of airports as to be the main problems facing the industry.

In a bid to solve the above problems, some of the suggested causes of action include

Keeping up with the current trends that take place in the industry

Continued innovation and invention to satisfy customers desires

Formation of alliances with other companies in solving of technical problems.

As a matter of fact I recommend that Southwest Airlines take an initiative to go a step higher by exploiting the opportunities that will be realized from expansion of its regions so that many of its customers easily access its services. Secondly, Southwest Airlines should drive out their competitors out of the business and reign over the entire market by application of low price mechanisms. This is enhanced by allowing some of the profits to cut back on low prices and use some to develop and upgrade the hardware (Thompson, 2018). This in turn, intensifies the profits that flow in the future times. All the above should be supported by coming up with technological changes that are cost effective  such as incorporation of the internet that is essential in lowering the costs of operation for both the customers and the organization.

To achieve the recommendations proposed, the company has to involve all its stakeholders and interested parties in the implementation of the same. The strategic plan will be supported by the financial resources that are allocated by the company in each sector in a period of the next five years.

Purpose

The purpose of the case study was to identify the problems experienced by Southwest Airline Company so as to come up with the right solutions and recommendations that will propel its success to greater heights among the competing companies in the same industry. I therefore, came up with a variety of approaches that I believed were essential in collection of the required data and material facts to be used in the analysis of the problem. I applied several approaches among them being interviewing of the operations manager and customers, I also extended questionnaires to a few individuals besides analyzing documents available in the public domain.

First and foremost, there is a significant pressure that is traced from the competition posed by new companies that enter the industry and those that are already established. This is brought about by the new mechanisms they apply in the operation of their activities that poses a threat to Southwest Airlines. Southwest Airlines has responded through the employment of qualified personnel from the competitive labor market (Gray & Balmer, 1998). Competition is enhanced through offering of an attractive salary and wage packages accompanied by lucrative bonuses. As a result, it has seen other firms in the industry slowly get deprived of their experienced working staff which makes it easier for Southwest Airlines.

Secondly, the price of fuel has proved to cause a significant impact in the airline industry across the years with a consistent increase in its cost leading to the reduction of profits that were being made in the previous years. This implies that the company will have to come up with other alternatives to cater for the problem such development of another energy source which will abide by the energy standards complacent with the safety of the environment. Incorporation of a new fuel energy system will elicit other organizations to invent others that will result in general growth and development of the whole airline industry (Garrison & Keller, 2004). Besides the above Southwest Airline might come up with policies that regulate the use of the fuel it acquires so that it is utilized optimally to maintain the discipline of their general expenditure on fuel as there is always a likelihood of prices rising at some point in the future when no company knows the root cause of such an occurrence. It has to be done until the prices are capped off to suit the budget of the company

For the past two decades Southwest Airlines has been using its old technology in operation of its activities. As such, many improvements have been gradual slow that the pace at which the whole industry is moving. It became cumbersome at some point to compete with those that embraced new technologies in the industry as clients perceived their services to be outdated and out of time. The technological problem has been taken care of by initiating a research department in new technologies coupled by reaching out to the markets through organizing of invention and innovation events in the airline sector. Training has also taken root for the existing staff to regularly update them on the changes that emerge in the market so that they are at per with what is happening. The above is anticipated to restore the position of the organization in terms of the market share in relation to its competitors and also ensure the smooth running of the company where people are even able to access the company’s services like tickets online. This covers a larger geographical area as compared to running manual systems.

Management of the customers’ expectations of the company’s operation in relation to their experiences in interaction with the company has raised concern over the overall performance of the organization in the industry. Unlike before, customers have developed a negative attitude towards the services offered and even going an extra mile of seeking the services in other firms. Most of them claim that the quality of services given to them by the employees is not sufficient and pleasing enough to make them loyal to the organization. As such, we analyzed the root causes that might have led them to making such decisions through interviews since it provided first-hand information that could provide specific solutions. From the interviews it was clear that the management had to come up with systems that could respond to customers’ problems on time with the appropriate responses to the same. This could be achieved through the increase in the customer care desk in the company’s outlets across the nation and also the creation of websites that customers could easily access the company’s services without personally presenting themselves at the offices even if they are at far distances. The services offered to customers were to be improved through the offering of training and seminars regarding catering and hospitality. It will make them feel cared and increase their loyalty to the company besides improving its reputation among its competitors in the industry’s market.

With the progressive expansion of the company’s goals and objects in addressing the customers’ demands, more capacities of runways, more employees to cater for the increased number of customers, and larger planes for more passengers have become a primary concern to be quickly addressed by the company. Diversification of the company’s airports was first given a consideration as an alternative to catering for the large population of the clients so that many airports could be built to offload the few ones that are used. In doing away with the problem, it was recommended that the company would employ more qualified staff to fill in the gaps where necessary and also absorb part-time workers that worked on contracts in specific areas to offload some work to the existing permanent staff (Muduli, 2011). Southwest Airlines was also scheduled to acquire more land to expand its premises by building runways that are modern. It also budgeted for acquisition of more planes of larger capacities with modern facilities with higher speeds that the proceeding ones. By implementing the above, it was anticipated that in the next ten years, the company would realize an increase in growth of traffic. This will be coupled with an increment in the number of customers due to the modernized perspective of the customer’s amenities at the terminals that comply with the international standards. It will expand the market base leading to higher profits for the company as per shareholders’ interests.

Lastly, there is the problem resulting from global conflicts of international airline firms. This is attributed to stiff competition that makes international firms to come up with laws that restrict the operation of firms from other nations to operate in their domain within certain limits. It was recommended that the problem would be solved through the creation of alliances with airline operating companies in those specific countries ("Top 10 Airline Industry Challenges", 2018). Policies regarding the regulation of airline operations will also be formulated to define the limits in each domain to be reached by the airlines. The management teams of the airline firms will meet to effect the proposed recommendations in a bid to settle the conflicts. A certain number of trips will be allocated to each airline company according to its capability so that each organization grabs a share of its benefit from the alliance in relation to a portion of revenue. If the above recommendations are implemented the company expects to have minimized friction with airlines in other countries especially the Asian countries. It will also mean that through the peaceful co-existence in the industry Southwest Airline will expand tremendously by creating a good rapport with the other countries. It will also be able to get new ideas from the exposure or interaction with the foreign airlines and make adjustments where necessary in pursuit of fulfillment of customer desires.

In conclusion, the Southwest Airlines case study considered the problems faced by the organization and the whole industry at large. The case study focused on the key problems brought about by the evidence collected from the airline operating firms with Southwest Airlines being the main contributor of information. The direct interview with the operations manager from Southwest Airlines validates the problems together with the recommendations that are outlined in response to the solution of the problems. It is anticipated that in the next ten years with a larger percentage of the problems addressed by the concerned departments of the organization if not all will put the organization ahead of the other airlines in all aspects of operation.

References

Garrison, & Keller. (2004). Southwest Airlines Case Study (pp. 1-17). Cinicinnati. Retrieved from http://www.bookeditorhauck.com/pdfs/1southwest.pdf

Gray, E. R., & Balmer, J. M. (1998). Managing corporate image and corporate reputation. Long range planning, 31(5), 695-702.

Muduli, A. (2011). Southwest Airlines Success: A Case Study Analysis. Retrieved 20 April 2018, from https://www.researchgate.net/publication/268718329_Southwest_Airlines_Success_A_Case_Study_Analysis

Thompson, A. (2018). Southwest Airlines in 2016: Culture Values And Operating Practices (pp. 1-70). University Of Alabama.

Top 10 Airline Industry Challenges. (2018). Pros.com. Retrieved 20 April 2018, from https://www.pros.com/files/9314/4536/7070/Top-10-Airline-Industry-Challenges.pdf

Appendix

According to the data collected from the bureau of statistics in regard to the productivity of Southwest Airlines in relation to the big four airlines in the United States in the year 2015, it was found that Southwest Airlines topped I the number of employees in each plane and also in the number of passengers in each plane. This, at that time had fueled its rise in the revenue collected together with improvement of its reputation among the customers.

Passengers emplaned

Employees per plane

Southwest Airlines

2869

72

American Airlines

1147

109

Delta Airlines

1633

104

United Airlines

1129

116

To motivate its employees, both who were on the full-time and part-time basis the management of Southwest Airlines incorporated a number of benefits to them. These were:

Flight privileges

Healthcare schemes for each employee

Vision and dental coverage services,

Long-term insurance plans for the disabled

A 30% retirement savings plan

Employee stock purchase plan

Mental health chemical dependency coverage

In the interview with the operations manager he anticipated that things kept constant, the profitability of the industry would rise by 5% in every two years, inflation, and average returns taken care of. The above is in line with the rates of fare that are charged on average by any airline firm. The companies are expected also to make 3.2% margin net profit on per passenger basis earned every year double the average earnings witnessed in the past 5 years in the same industry.

January 19, 2024
Category:

Business Economics Life

Subcategory:

Corporations Experience

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Company

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