Southwest Airline, since time in memorial, has been one of the outstanding competitors in the Airline industry. Its low fares have propelled it to glory among the commuters of United States; these fares are said to be 30% lower than its fieriest rivals in the airline industry in the US.
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In addition to this, the company possesses a structure that is low in terms of cost, which has enabled it to record high margins of profits in spite of the financial year being bad. A good example of a bad financial year was in 2002, when the airline industry faced decrease in demand due to the September 11 terror attack. It has been identified that 2001 to 2005 were the worst years of the airline industry in its history. However while the other airlines were losing money the Southwest airline was reportedly earning money.
The operations of Southwest airlines are unique from other airline thus making it distinctive. While other airlines like the United Airlines and American Airlines deal with routing passengers through hubs, the Southwest deals with routing the passengers from point to point. This enables the airline to acquire more and more passengers to obtain the required demand. Delays are hence reduced tremendously due to the avoidance of hubs.
Another factor that ensures a success story of the airline is cutting of training cost, inventory costs, and maintenance costs. This is ensured by using of one kind of aeroplane called the Boeing 737. The employee to passenger ratio is the best in the airline industry (Hill and Jones, 2009, p. 105).
Factors of success
One of the key factors that have enhanced the success of the Southwest Airline is the way the airline integrates its activities. The airline has successfully integrated its activities in a manner that has made it a headache for its competitors to try to emulate them.
The strategy used by the Southwest Airline in integrating its activities is one of its pillars to successful undertaking of differentiation strategy or integrated cost leadership. This hence enables the firm to operate profitably as compared to its competitors. The sixty-fourth consecutive profits announced by the firm only confirm the success story of the firm (Hitt, Ireland and Hoskisson, 2009, p. 104).
Unique culture and customer service
The firm’s culture is suggested to be its key in influencing its integration and a major contributor to the existing identification of the firm’s unique service to its clients. Apart from lowering of the cost, the uniqueness of its service separates the firm from its competitors. The customer service and the unique culture of the firm are some of the success factors that have become impossible for other competitors in the industry to emulate.
Competitors like Continental Airlines, US Airways, and United Airlines had attempted to emulate the Southwest Airlines by lowering their prices but were unable to offer any unique distinction to customers especially while in air. In addition to this, these competitors were unable to operate at the same range of cost as the Southwest Airlines (Hitt, Ireland and Hoskisson, 2009, p. 104).
Indomitable will to succeed
The Southwest Airlines has been founded on an independent spirit since early days of its incorporation. In 1994, various major airlines conspired against the Southwest Airline thereby barring it from Travel Reservation Network. In a twist of events, the airline did not involve itself in endless and costly court battle but rather it launched the Ticketless Travel a service that has since become a standard mark of the industry.
In addition to this Southwest Airline has been awarded numerously for its indomitable spirit to succeed. In 1996, the airline was awarded for its high rated performance in terms of performance, baggage handling and less customer complaints (Yerkes, 2007, p. 48).
The compensation rate of the Southwest Airline is higher as compared to its competitors. At a time, these compensation rates are said to be the highest in the airline industry. In addition to this, the airline offers the company offers a benefit package that is relative good as compared to other airlines. Profit sharing plan is an operation that was started in 1973 in the Southwest Airline (Thompson and Gamble, 2008, 518).
The compensation procedure undertaken in Southwest Airline emphasizes on productivity, flexibility, and creativity. The pilots are paid according to the trips undertaken and not as per hour. This hence helps in creating the attitude within pilots of minimizing the time of the aircrafts at the airport.
Evaluation of Southwest Airlines
A lot has been said about Southwest Airline but the fact remains more is still to be written. This airline has passed the test of time through the drummer it has faced throughout its history. Its success story has earned it attention and admiration from its competitors in the airline industry.
Customer service is regarded as the top priority of the Southwest Airlines. If fact the airline often refers to it as “Positive Outrageous Service” which is elaborated to mean that in spite of your rank in the in the airline your required to take all the required steps to ensure customer satisfaction (Bacon and Pugh, 2003, p. 266).
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In terms of cost the Southwest airlines ensured that, the productivity of the people and the plane were at their maximum. In order to succeed in this the employees had be ready to work harder. A culture of tight-knit family evolved which included listening to other people’s ideas. In other words, it has been expressed that the spirit of the Southwest Airlines is what keeps them intangible (Bacon and Pugh, 2003, p. 268).
Unless one learns of what Southwest Airline is made of, its success cannot be understood. By out classing its opponents the Southwest Airline cannot be ignored and is a name to reckon with. In the wake of the terrorist attacks that occurred on September 11, 2001, the Southwest Airline increased its presence by solidifying its position in the market in terms of expansion. This goes further to indicate how this airline is opportunistic even worse situations (Gittell, 2003, p. 5).
The airline prefers a model that enhances quality and effectiveness in operations to an extent that it forms a significant part of the firm’s business strategy. The Southwest Airline has been termed as the best profitable company in the US. Its capitalization is higher than a combination of several US airlines.
This is contrary to the first year of its incorporation where it faced financial difficulties as the airline was in a survival mode. In short, the culture of Southwest Airline has transformed over time from a culture that was limited to southwestern area of USA to a culture that embraced knowledge, mutual respect, and common goals.
The business model used by the Southwest Airliner conclusively define why the airline is has successfully established itself in the airline industry. The identification of the customers to be served and ensuring the airline is the lowest cost provider are the main pillars to its ever-growing profits.
The business strategy used by the Southwest Airlines is that of low cost provision and is accompanied with the use of regular services. Significant amount of monies are used by the Southwest Airlines to train their employees and develop their daily operations.
Each and every work that is undertaken by the Southwest Airlines has it s own mechanical and training department. Despite having a unionized airline, the Southwest Airline does not have rigid rules in its work environment. The corporation of people has also enhanced the making of Southwest Airlines a low cost carrier.
All in all the Southwest Airlines has a culture that allows its clients to have an economical travel with enough freedom to enjoy. In addition to this, the culture set by the Southwest Airlines is that which incorporates making of a positive difference in the firm, acquiring of shared knowledge and obtaining of mutual respect. These initiatives introduced in this airline have enabled company management to be efficient and not only that the managers in this airline rely on them in their daily activities.
In competitive cost advantage, the Southwest Airlines are based on work done by people in terms of their compensation, cost of meals, corporate culture, and reservation system.
Bacon, T. R. and Pugh, D. G. (2003). Winning behavior: what the smartest, most successful companies do differently. NY: AMACOM. Web.
Gittell, J. H. (2003). The Southwest Airlines way: using the power of relationships to achieve high Performance. NY: The McGraw-Hill Companies, Inc. Web.
Hill, C. and Jones, G. (2010). Strategic Management Theory: An Integrated Approach. OH: South-western Cengage. Web.
Hitt, M. A., Ireland, R. D. and Hoskisson, R. E. (2009). Strategic management: competitiveness and globalization: concepts & cases. OH: South-western Cengage. Web.
Thompson, A. A. and Gamble, J. E. (2008). The Southwest Airlines in 2008: Culture Values, and Operating Practices. AB. Retrieved from Attachments.
Yerkes, L., (2007). Fun works: creating places where people love to work. CA: Berrett-Koehler Publishers, Inc. Web.