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Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
Comparative  Analysis Of  Southwest Airlines And  US Airways
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Comparative Analysis Of Southwest Airlines And US Airways

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  • 1. By Ngoie Joel Nshisso<br />International Business<br />Ph.D. program<br />Northcentral University<br />September 2009<br />Comparative Analysis of Southwest airlines and US Airways<br />Introduction<br />The present comparative analysis of Southwest airlines and US Airways is made to succinctly evaluate the level of integration of leadership, training, employee benefits, conflict and negotiation in the two airlines companies. In order to grasp the context of the study, a brief history is presented below and supported by factsheet of each company in table 1.<br />History of Southwest airlines<br />Southwest airlines (2007) was incorporated in Texas and commenced Customer Service on June 18, 1971, with three Boeing 737 aircraft serving three Texas cities - Houston, Dallas, and San Antonio. Today, Southwest operates more than 500 Boeing 737 aircraft between 64 cities. Southwest topped the monthly domestic originating passenger rankings for the first time in May 2003. Yearend results for 2007 marked Southwest’s 35th consecutive year of profitability. Southwest became a major airline in 1989 when it exceeded the billion-dollar revenue mark. Southwest is the United States’ most successful low-fare, high frequency, point-to-point carrier that operates more than 3,300 flights a day coast to coast, making it the largest U.S. carrier based on domestic departures. The mission of Southwest airlines is: dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. (Man on a mission, 2009)<br />History of US Airways <br />US Airways traces its roots to a company called All American Aviation, which took to the skies as a flying postal service outfit in 1939, some 44 years before the first America West flight. <br />Customer service has always been a priority at US Airways, and we are committed to making every flight count for our valued customers. The safety and satisfaction of our customers is a top priority for our airline. Customers First is the result of a joint effort of the airline industry, the US Congress, and the US Department of Transportation to address the key service elements that affect our customers. (US Airways Group, 2009)<br />Comparative factsheet of Southwest and US Airways airlines<br />The factsheet in table 1 provides useful information about top leaders, employees, equipment, and destinations statistics that will serve for this comparative analysis.<br />The importance of leadership at Southwest airlines and US Airways<br />Southwest airlines and US Airways kept the visions and missions by relaying on leadership of their top managers. This is very important to mention because however strong, big and available land and capital, as factors of production can be, without strong leadership, results cannot be achieved.<br />Considering the high ranked leaders in these two companies, it is said that: <br />Herb Kelleher co-founded Southwest airlines in 1971 against significant odds. A practicing lawyer by trade, Kelleher fought through over 30 injunctions and lawsuits, including judgment by the U.S. Supreme Court, which commenced deregulation of the airline industry. <br />Mr. Kelleher has received numerous accolades, including induction into the U.S. Chamber of Commerce Leadership Hall of Fame, being named “CEO of the Year” and one of history's top three CEOs by Chief Executive magazine, being named “CEO of the Century” by Texas Monthly magazine, being named “U.S. Master Entrepreneur” by Inc. magazine, and being awarded the L. Welch Pogue Award for Lifetime Achievement in Aviation by Aviation Week. (Travis, 2009, para 1-3)<br />Doug Parker is chairman and chief executive officer of US Airways Group. Parker became chairman and CEO upon the merger of US Airways and America West Airlines in September 2005. Prior to the merger, Parker was chairman, president and chief executive officer of America West Holdings Corporation. Parker joined America West in June 1995 as senior vice president and chief financial officer and was elected chairman, president and chief executive officer in September 2001.Prior to joining America West, Parker spent four years with Northwest Airlines as vice president and assistant treasurer, and vice president of financial planning and analysis. From 1986 to 1991, he held a number of financial management positions with American Airlines. (US Airways Group, 2009, para 1-4)<br />The brief biographies of CEOs Keller and Parker describe a great deal of leadership that Hellriegel and Slocum (2007) define leadership as:<br />The process of developing ideas and a vision, living by values that support those ideas and that vision, influencing others to embrace them in their own behaviors, and making hard decision about human and other resources.<br />Leadership is accomplishing something through other people that wouldn’t have happened if you weren’t there. And in today’s world, that’s less and less through command and control, and more and more through changing people’s mindset and hence altering the way they behave. Today leadership is being able to mobilize ideas and values that energize other people. (p. 210)<br />Leadership traits of these CEOs shaped the two companies to help them compete in the airline industry and keep alive their organizational culture. US Airways seems not to have a defined culture that employees and customers can read. However, throughout its history, it is believed that the organization have an aggressive culture of merger that creates a constant need of cultural integration tainted of conflicts and confusion. When US Airways merged with America west airlines, a former top manager of the acquired company was quoted saying: <br />Cultural integration is one of the more challenging things we have to do, US Airways is an East Coast company, built over time as a much more serious company with uniform standards for employees. We're much more laid-back. After the merger was announced, every team had dramatically lower effectiveness. (Judy, 2009, para 8) <br />In the opposite of US Airways, Southwest airlines take the culture seriously and make it known to employees and public. It is published trough different media support like in figure 1.<br />Employment at Southwest airlines and US Airways <br />The two companies present in their websites some information about benefits that employees and job seekers can consult to envisage their career path or understand their benefits. Before to formulate a point of view on how each company presents employee benefits to job seekers, it is important to first define recruitment concept. <br />Recruiting can be defined as:<br />The process by which organizations locate and attract individuals to fill job vacancies. Most organizations have a continuing need to recruit new employees to replace those who leave or are promoted, to acquire new skills, and to permit organizational growth. Recruiting is an even more important activity when unemployment rates are low and economic growth is strong, as firms compete to attract the qualified employees they need to succeed. (Cynthia, Lyle, & James, p. 232) <br />In order to find which company has potential opportunity to attract qualified and skilled employees, we have analyzed employee benefits offered by both companies and discovered that they all offer same benefits: medical insurance, vision plan, prescription drug coverage, dental insurance, 401(k) with company contribution, paid vacation and days off, life insurance, accidental death and dismemberment, short and long-term disability, flexible spending accounts, tuition assistance, domestic partner program, employee assistance program. <br />US Airways gives a simple list of benefits package offered while Southwest airlines give concise details (explanation and monetary value) of each benefit. <br />If presented with job offer by the both companies, job seekers will be tempted to accept offer for which he knows what and how much benefits he will receive. Thus, Southwest airlines do good marketing on its recruitment policy.<br />Training as a tool for company’s reputation<br />The airline industry is the most changing workplace because of challenges related to national and international competitions, new scientific discoveries, federal aviation administration’s regulations, mostly after September 11’s terrorist attacks, and economic downturn. In such unforgiving environment, well-trained labor force becomes a major player for success. <br />Customer service, low fare, or highly motivated employees will never supplant safety in the airline business. This huge burden lays on pilot who has the responsibility not only to make sure that the plane is safe to fly but also apply necessary techniques to save lives in case of eventual turbulences during flight. The safe landing and evacuation of passengers of US Airways flight 1549 in Hudson River by captain Chesley Sullenberger, on January 15, 2009 has revealed that continuous training of pilots in this company played a big role in the incident and consequently brought a tremendous appreciation for US Airways. Hart (2009) report the event in these words:<br />Experienced, well-trained captain made a difference. Chesley B. Sullenberger III was the skillful and levelheaded captain who glided the Airbus A-320 to a safe landing in water that was barely above freezing. A fully intact fuselage permitted the aircraft to remain afloat as ferries and other nearby boats sped to the rescue.Captain Sullenberger's background as a local air safety chairman and Accident investigator for the air line pilots association, as well as his many years of flying experience including as a fighter pilot in the U.S. Air Force, obviously served him well in this emergency. (para 3) <br />The incident in the Hudson River demonstrated that US Airways understand the need of training. Information shows that for pilots’ training, the company invested “$124 million in full-flight simulator, training device” (Airline Procurement Channel, 2009) according to different type of aircraft used: “Boeing 767-200ER, Boeing 757-200, Boeing 737-400, Boeing 737-300, Airbus A330-300, Airbus A321,Airbus A320, Airbus A319” (US Airways 2009). Southwest airlines do not have a history of incidents like the one of US Airways. The training of its pilot is made simple by the use of only one type of aircraft, Boeing 737. With respect to low training cost, uniform training system, and small team of trainers, the option of using only 737 Boeing aircraft can negatively affect Southwest airlines in case of discontinuity or major upgrade of this type of aircraft by the manufacturer. In this century of change because of consumers’ demands, Southwest may look like an old fashion company. <br />Conflict and negotiation<br />Merger, expansion, unionization, and lobbing for regulation or deregulation are trends for airlines companies in a business environment of competition and change. Dealing with any of these business aspects requires conflict management competency and good negotiation skills. In the lines below, we will first define the concepts conflict and negotiation before looking at their application in the two airlines under consideration. <br />There have been several definitions of negotiation. Many of them point to the exchange of goods and service in terms of sales. However, in relation to acquisition and merger, the most comprehensive definition is provided by Hellriegel and Slocum (2007) who said that “negotiation is a process in which two or more interdependent individuals or groups, who perceive that they have both common and conflicting goals, state and discuss proposals and preferences for specific terms of a possible agreement” (p. 305). In the case of merger and acquisition, negotiation follows these five steps: <br />(1) Preparation and planning. In this very first step it is important to determine a best alternative to a negotiated agreement (BATNA) because it helps determine the lowest value acceptable, (2) definition of common ground rules, (3) clarification and justification, (4) bargaining and problem solving, (5) closure and implementation. (Stephen & Timothy 2009, p. 499)<br />Conflict precedes negotiation and can be lingering during negotiation until the deal is reached. “Conflict refers to a process in which one party (person or group) perceives that its interests are being opposed or negatively affected by another party” (Hellriegel & Slocum 2007, p. 294).<br />Southwest airlines and US Airways have experience of merger and acquisition recorded in their history as presented in the tables 2 and 3.<br />Analysis of merger and acquisition information provided in these tables demonstrates that US Airways have a long history and experience of successful negotiations. It is probable reasonable to think that because of its “master in negotiation” the company learned to navigate throughout its multitude turbulences and became almost capable to bounce-back from bankruptcy like the most recent in 2009. Its aggressive culture of acquisition and merger has also exposed the company to constant conflicts caused by clash of culture with employees coming from acquired company and had to negotiate work compensations and policies with unions. Fortunately, US Airways seemed to succeed in integrative negotiations strategy that “involves joint problem solving to achieve results benefiting both parties” (Hellriegel & Slocum 2007, p.308). <br />On the contrary, adopting a culture of low growth strategy, Southwest airlines have faced less mergers and consequently experienced low conflict pressures that have paved a way to catch-up with major airlines like US Airways in terms of labor force, daily flights, and sales revenue. <br />Many reports have presented Southwest airlines as the best, low fare and profitable company and US Airways as the worst airline in customer satisfaction. This research did not want to fail in the temptation of basing judgment on one facet of airline industry and pronounce a verdict. Ranking the two airlines should be done in comparison of several points or departments that encompass the airline industry. This analysis looked at Southwest airlines and US Airways in the areas of leadership, employee benefits, training, conflict, and negotiation. <br />Because of its charismatic leadership and long standing as CEO, Gary Kelly have helped Southwest airlines to perform well by maintaining its vision, mission, and culture to outperform US Airways. Employee benefits at Southwest are clearly communicating to present and potential employees showing that this company has a good communication channels and is well perceived as maintaining favorable work environment in comparison to US Airways. <br />However, in the aspect of negotiation and conflict management, US Airways has strong experience of merger, acquisition and bring different cultures together to form a company that is just like a flight with experienced crew who know how to go through turbulent sky and land safely. In the airline business where competition, regulation, terrorist threats, and union are very tough, US Airways will probably well find its way out quicker than Southwest airlines. The out performance in training seems to be also better at US Airways, where different assortment of aircrafts require big investment, different type of training and more trainers, giving to the company flexibility to adapt to the change in airline technology while Southwest airlines is content with only one type of aircraft, Boeing 737 that projects an image of old-fashion company that resist technology change.<br />US Airways will need to embrace merger and acquisition with more contingency plan to reduce pitfall and not portray the image of poorly managed company. Communication of its employee benefits need more details to attract and retain skilled employees. Southwest airlines will need to understand that more and more competitors are imitating its low fare strategy with diversified and modern aircrafts. Having almost the same number of employees but serving fewer destinations than US Airways will soon or later negatively affect performance, impose more operating costs, and reduce its profitability. <br />Figure 1<br />Three visual stamps to convey the essence of Southwest airlines’ culture to its employees<br /> <br />Table 1<br />Factsheet of Southwest airlines and US Airways<br />FactsSouthwestUS AirwaysDaily flights3,300 3,241 Destinations65 destinations30 States200 destinations 30 countries Employees35,000 33,298Fleet (Aircraft)544 652HubsChicago St. Louis, Dallas Love Houston Hobby, Phoenix Charlotte, Philadelphia, Phoenix, Washington D.C., New York, Boston, Pittsburgh and Las VegasCEOGary KellyDoug ParkerHeadquartersDallas, TexasTempe, ArizonaSales revenueUS$11.0 bnUS$ 11.5 bn<br />Table 2 <br />Southwest airlines’ merger and acquisition<br />DatesSouthwest airlinesResult1985Muse AirSucceeded1993Morris AirSucceeded2008ATA AirlinesSucceeded2009Frontier AirlinesFailed<br />Table 3: US Airways’ merger and acquisition<br />DatesUS AirwaysResult1968Lake central airlinesSucceeded1972Mohawk airlinesSucceeded1986Empire airlinesSucceeded1987Pacific Southwest airlines/San DiegoSucceeded1988PSASucceeded2000United AirlinesFailed2005 America westSucceeded2007Delta AirlinesFailed <br />References<br />Cynthia, D. F., Lyle, F. S., & James, B. S. (2006). Advanced human resource management. Boston, MA<br />Hart, V. (2009). US Airways Flight 1549 Lands Safely in Hudson River; Bird Strike Likely. Retrieved on August 28, 2009 from<br />http://www.associatedcontent.com/article/1392026/us_airways_flight_1549_lands_safely.html <br />Hellriegel, D., & Slocum, J.W. (2007). Organizational behavior. <br />Mason, OH: Thomson South-Western.<br />Judy, N. (2005). New US Airways making sure disparate cultures will fly as 1. Retrieved on August 28, 2009 from http://www.azcentral.com/arizonarepublic/business/articles/1002amwest-culture.html<br />Man on a mission (2009). The Mission of Southwest Airlines. Retrieved on August 28, 2009 from http://manonamission.blogspot.com/2005/04/southwest-airlines-luv-mission.html<br />Stephen, P. (2003). Organizational behavior.<br />NJ: Upper Saddle River<br />Stephen, P.R., & Timothy A.J. (2009). Organizational behavior.<br />NJ: Upper Saddle River<br />Southwest (2009). Factsheet. Retrieved on August 28, 2009 from http://www.southwest.com/about_swa/press/factsheet.html#Daily Departures<br />Southwest (2009). Culture. Retrieved on August 28, 2009 from http://www.southwest.com/careers/culture.html<br />Southwest (2009). Southwest Airlines Careers. Retrieved on August 28, 2009 from http://www.southwest.com/careers/freedom_connected.html<br />US Airways (2009). The History of US Airways. Retrieved on August 28, 2009 from http://www.usairways.com/awa/content/operations/merger/general/history.aspx<br />US Airways (2009). Factsheet. Retrieved on August 28, 2009 from http://www.usairways.com/common/resources/_downloads/aboutus/pressroom/factsheets/factsheet.pdf<br />US Airways Group (2009). US Airways chronology. Retrieved on August 28, 2009 from http://www.usairways.com/awa/content/aboutus/pressroom/history/chronology.aspx<br />US Airways Group (2009). Company Slogan, Mission statement and Vision statement. Retrieved on August 28, 2009 from http://www.company-statements-slogans.info/list-of-companies-u/us-airways-group.htm<br />US Airways Group (2009). Chairman and Chief Executive Officer. Retrieved on August 28, 2009 from http://www.usairways.com/awa/content/aboutus/pressroom/bios/parker.aspx<br />Travis J., B. (2009). Corporate innovation at Southwest Airlines. Retrieved on August 28, 2009 from http://www.sciencedirect.com.proxy1.ncu.edu/science?_ob=ArticleURL&_udi=B6W45-4W73H7B-2&_user=7629509&_rdoc=1&_fmt=&_orig=search&_sort=d&_docanchor=&view=c&_acct=C000072328&_version=1&_urlVersion=0&_userid=7629509&md5=9f9313250080198129ad0e6e3bb1505b<br />Airline Procurement Channel. (2009) CAE nets $124 million in full-flight simulator, training device orders. Retrieved on August 28, 2009 from http://www.atwonline.com/channels/airlineprocurement/article.html?articleID=2194<br />

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