SOUTHWEST AIRLINES CASE

Questions to ponder
1) What does it take to make money in this business?
To make money in this business one requires followings things
Efficient cost structure
Good marketing strategies
Better relation between employees and management
Proper maintenance of flight
On- time performance or no delay
Customer oriented
High frequency of flight
Skilled workforce
Employee engagement

2) Why is Southwest a success?

Southwest airlines has become known over the past two decades as a
successful airline company. Following are the reason why Southwest
is a success
Unlike under airline company Southwest airlines uses only one
kind of aircrafts i.e. Boeing 747s which saves maintenance and
training cost.
Provides best customer services
Point-to-Point flying with no central hub
Fewer customer complaints.
Efficient relationship between management and employees
Avoiding non-essential services such as in-flight meals in order
to cut cost and enhance efficiency of operations.
 2) What are SW sources of competitive advantage? (You have to
build a model)

SOUTHWEST
AIRLINES

SOURCES OF COMPETITIVE Efficient relation

Short-Halt and
ADVANTAGES between upper
Point-to-point
and lower
routes
management

Limited Use of No unnecessary

Travel agents cost on meal

Very low 15-min Gate

fare Turns

4) What is their strategies? Competencies?

Southwest airlines has become known over the past two decades as a
successful airline company. The various strategies that are adopted by
company are-
They concentrated on flying to airports that are underutilized and
close to metropolitan areas.
Southwest airlines only use Boeing 737s which is fuel efficient
aircraft. By using single type of aircraft, the company has save on
maintenance and training cost.
 It emphasized point-to-point route with no central hub which
helped them to reduce the travel duration.
Unlike other airlines that rely heavily on computer and artificial
intelligence to maximize flight revenue, southwest typically
offers only two fares on a route, a regular coach fare (there is no
first or business class) and an off-peak fare.
Southwest has never offered meal service on its flight. Meal
service can add $40 per passenger to the cost of a flight. Instead,
passenger on southwest are served beverages, peanuts (referred
to as frill) or other light snacks such as cookie.

5) What does it take to execute this strategy? Are these sustainable and
imitable?
The strategies of Southwest Airlines can be summarised into following
points
Low cost- Low fares
Frequent flight
Short-Haul trips
No frills
On-time performance
For successful execution of these strategies one need efficient and
effective management system who can analyse data on the basis of
various facts. Following points. For executing the above mentioned
strategies it is necessary that management should to analyse the
business environment first and then future action should be carried out.
Yes these strategies are imitable. Many competitors are already
imitating the strategies of Southwest Airlines and using it.
These strategies are sustainable but in order to sustain they need to keep
changing with the environment.
6) How does SW gets its competitive advantage? What does it take to
imitate this?
Following measures were taken by Southwest airlines to gain
competitive advantages-
Southwest started with business strategy to compete with road
transport not other airlines.
Southwest concentrates on flying to underutilized are and close
to metropolitan areas.
Inducting fuel efficient air carrier 737s
One highly visible competitive advantages is companys cost
structure
Southwest airlines offers extremely low fares as compares to
domestic airlines.
It operates only one type of aircrafts.
Using point-to-point routing system
Putting a premium on customer service.

7) How serious is the competitive threat?

Southwest airlines has surpassed its competitor in the field of domestic
airlines but we see it still faces lots of competitive treat. As we can see
in the case study most of the domestic airlines has started following the
strategies of low cost airlines (United and Continental).
Today most of the competitor are imitating the low cost strategies of
Southwest airlines to stay in competition. Fairly recent low-cost
competitors (JetBlue) are gaining market share with similar strategies.
Two of the airline company namely, United and Continental had
directly challenged Southwest Airlines by using their policies and
procedure.
8) What is the issue should Ann raise at the meeting?
Ann should raise following issue at the meeting
Protection of strategies, policies and procedure from being copied
by competitors.
To gain competitive advantages company should now focus on
international market.
The airline's merger with Air-Tran is clearly pulling executives'
attention away from other issues like service.
Company should focus more on its customer reward system and
improve it.