Southwest Airlines in 2010: Culture, Values, and Operating Practices

1252 Words May 21st, 2013 6 Pages
Southwest Airlines in 2010: Culture, Values, and Operating Practices * Problem statement:
Southwest Airlines has high growth and high profitability. However, its cost advantage is not as big as in prior years. * Scenario:
Southwest Airlines based in Dallas was founded in 1967 by Rollin King and Herb Kelleher. It is one of the major domestic airliners which provides carrier and transportation service. Southwest primarily provides short haul, high frequency, point- to point, low fare service.

* Analyses: * Fuel crisis and fuel price become threats to Southwest Airlines Company * The expected growth of oil is suspected to increase 4.3% from now until 2017. With this elastic demand, consumers will stop traveling
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An incident like the ValuJet crash could reinforce this perception. * Strengths 1. High capacity usage 2. The best low cost airline leader for several years 3. Diversity in upper management 4. Revenues increase by 8 percent 5. Increase of net income 6. Dominates the short haul segment of airline industry 7. Fourth largest domestic airline 8. Service innovation 9. Customer service
Southwest has traditionally been a low-cost carrier, which is how they were able to establish a foothold in the market. They tend to operate point-to-point routes, rather than the traditional hub-and-spoke strategy of the legacy airlines, which allows more flexibility in selecting profitable routes. Furthermore, they tend to rely on secondary airports in larger cities, such as Midway (rather than O’Hare in Chicago) and LaGuardia (rather than JFK in New York) to improve on-time reliability, an important aspect of customer relations. This has been aided by successful marketing campaigns, such as‚ “Bags Fly Free”, where Southwest drew attention to a point of differentiation from 18 nearly all their competitors: a passenger’s first and second checked bags are both free. This strong customer reputation has been instrumental in their continued growth. * Weakness 1. No international flights 2. No segmented seating 3. Dependent on a single producer (Boeing only) 4. Lack of

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