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By: Andrew Streff, Brett Burger, Graham Steen, Monica      Zakrzewicz, Ujiro Okiomah & Sam Smith
OutlineHistory & OverviewThe Five ForcesPerformanceSouthwest SpiritStatisticsThreats & Future Challenges
History of Southwest Airlines    The Southwest Airlines was proposed as a local airline    serving only three cities in Te...
History of Southwest Airlines        On June 18th 1971 Southwest Airlines makes its first        commercial flight.       ...
History of Southwest Airlines          October 1996 Southwest Airlines expands into the          Northwestern United State...
OutlineHistory & OverviewThe Five ForcesPerformanceSouthwest SpiritStatisticsThreats & Future Challenges
Porter’s Five Forces         Supplier power         Buyer power         Substitutes                                 *South...
OutlineHistory & OverviewThe Five ForcesPerformanceSouthwest SpiritStatisticsThreats & Future Challenges
Performance          Earned a profit for 32 consecutive years:             - Fly more passengers per employee than any oth...
Performance       Has had the fewest customer complaints since 1987       Most admired airline in the World, 1997-2003    ...
OutlineHistory & OverviewThe Five ForcesPerformanceSouthwest SpiritStatisticsThreats & Future Challenges
Southwest Spirit      External Spirit: Great Customer Service.      Ex: A gate agent volunteering to watch a dog for two w...
Southwest Spirit       Internal Spirit: Employment at Southwest is highly       desired.       In 2004, 1,706 employees we...
Southwest Spirit       Internal Spirit: Camaraderie in the Company.       • New-employee orientation, known as the new-hir...
Southwest Spirit        Internal Spirit: Corporate labor relations.        81% of employees were unionized        Southwes...
OutlineHistory & OverviewThe Five ForcesPerformanceSouthwest SpiritStatisticsThreats & Future Challenges
Statistics        Southwest airplanes flew an average of eight times a        day, nearly double the industry average.    ...
Statistics        Southwest pilots belong to an independent union. Other        airline pilots belong to the Airline Pilot...
Resources              •   Spirit & High Moral              • Routes & Lack of Hub              • Reputation              ...
OutlineHistory & OverviewThe Five ForcesPerformanceSouthwest SpiritStatisticsThreats & Future Challenges
Threats        On entering the Northeast market, Southwest Airlines        would now be competing directly with JetBlue Ai...
Threats         With the potential of the Northeast market, several         threats to Southwest’s smooth operations such ...
Future Challenges        In 2005, Southwest had the highest salaries for pilots of        narrow-body jets (38% above thos...
Recommendations          The reputation of Southwest Airlines in the Western and          Southern part of the country wou...
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Southwest Airlines

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Undergraduate group project at Oklahoma State University. This was in a Business Strategy Class

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Transcript of "Southwest Airlines"

  1. 1. By: Andrew Streff, Brett Burger, Graham Steen, Monica Zakrzewicz, Ujiro Okiomah & Sam Smith
  2. 2. OutlineHistory & OverviewThe Five ForcesPerformanceSouthwest SpiritStatisticsThreats & Future Challenges
  3. 3. History of Southwest Airlines The Southwest Airlines was proposed as a local airline serving only three cities in Texas. San Antonio, TX Houston, TX Dallas, TX© 2008 G5 Consulting Firm LLC. All Rights Reserved
  4. 4. History of Southwest Airlines On June 18th 1971 Southwest Airlines makes its first commercial flight. October 1978 President Carter signs the Airline Deregulation Act. President Jimmy Carter signs the Airline Deregulation Act.© 2008 G5 Consulting Firm LLC. All Rights Reserved
  5. 5. History of Southwest Airlines October 1996 Southwest Airlines expands into the Northwestern United States. In 2005 Southwest Airlines carried more domestic passengers than any other U.S. airline.© 2008 G5 Consulting Firm LLC. All Rights Reserved
  6. 6. OutlineHistory & OverviewThe Five ForcesPerformanceSouthwest SpiritStatisticsThreats & Future Challenges
  7. 7. Porter’s Five Forces Supplier power Buyer power Substitutes *Southwest Airlines is performing well in a bad industry New entrants Rivalry *Southwest Airlines business strategy is Low-cost leadership© 2008 G5 Consulting Firm LLC. All Rights Reserved
  8. 8. OutlineHistory & OverviewThe Five ForcesPerformanceSouthwest SpiritStatisticsThreats & Future Challenges
  9. 9. Performance Earned a profit for 32 consecutive years: - Fly more passengers per employee than any other airline - Have fewest number of employees per aircraft - Own almost 80% of there aircrafts© 2008 G5 Consulting Firm LLC. All Rights Reserved
  10. 10. Performance Has had the fewest customer complaints since 1987 Most admired airline in the World, 1997-2003 Maintained a debt-to-equity ratio much lower that the industry average© 2008 G5 Consulting Firm LLC. All Rights Reserved
  11. 11. OutlineHistory & OverviewThe Five ForcesPerformanceSouthwest SpiritStatisticsThreats & Future Challenges
  12. 12. Southwest Spirit External Spirit: Great Customer Service. Ex: A gate agent volunteering to watch a dog for two weeks; Austin passenger needing a kidney transplant operation was flown there by a southwest pilot in his private plane Flight attendants are encouraged to have fun, jokes and have humorous announcements.© 2008 G5 Consulting Firm LLC. All Rights Reserved
  13. 13. Southwest Spirit Internal Spirit: Employment at Southwest is highly desired. In 2004, 1,706 employees were hired and 225,895 applications were received. An employee had not been laid off since 1971. Employee turnover hovered around 7%; the lowest rate in the industry.© 2008 G5 Consulting Firm LLC. All Rights Reserved
  14. 14. Southwest Spirit Internal Spirit: Camaraderie in the Company. • New-employee orientation, known as the new-hire celebration -Wheel of fortune, scavenger hunts, Southwest Airline Shuffle • Advanced Employee Training -Three-day classes called “Leading with Integrity”. “Walk-a-Mile Day” • Employees conserve fuel during flights, ice storage equipment, luggage faced handles out.© 2008 G5 Consulting Firm LLC. All Rights Reserved
  15. 15. Southwest Spirit Internal Spirit: Corporate labor relations. 81% of employees were unionized Southwest pilots belong to independent union In 1974 Southwest was the first airline to introduce employee profit sharing. Employees owned about 10% of the company’s stock.© 2008 G5 Consulting Firm LLC. All Rights Reserved
  16. 16. OutlineHistory & OverviewThe Five ForcesPerformanceSouthwest SpiritStatisticsThreats & Future Challenges
  17. 17. Statistics Southwest airplanes flew an average of eight times a day, nearly double the industry average. Southwest usually turns around airplanes in 15 minutes, as opposed to the 45 minute industry average. Southwest uses only one type of airplane, the Boeing 737. American Airlines uses six different airplanes© 2008 G5 Consulting Firm LLC. All Rights Reserved
  18. 18. Statistics Southwest pilots belong to an independent union. Other airline pilots belong to the Airline Pilots Association. In 2005, Southwest pilots had the highest salaries for pilots of narrow-body jets (38% above United Airline’s)© 2008 G5 Consulting Firm LLC. All Rights Reserved
  19. 19. Resources • Spirit & High Moral • Routes & Lack of Hub • Reputation • One type of Plane© 2008 G5 Consulting Firm LLC. All Rights Reserved
  20. 20. OutlineHistory & OverviewThe Five ForcesPerformanceSouthwest SpiritStatisticsThreats & Future Challenges
  21. 21. Threats On entering the Northeast market, Southwest Airlines would now be competing directly with JetBlue Airways also a low-fare carrier out of NYC’s JFK International Airport. *Currently, JetBlue has 60 A320 Airbus aircrafts and orders with Airbus for as many as 233 A320 aircrafts© 2008 G5 Consulting Firm LLC. All Rights Reserved
  22. 22. Threats With the potential of the Northeast market, several threats to Southwest’s smooth operations such as airport congestions, air-traffic control delays, lengthy turnaround time at airport gates and severe weather.© 2008 G5 Consulting Firm LLC. All Rights Reserved
  23. 23. Future Challenges In 2005, Southwest had the highest salaries for pilots of narrow-body jets (38% above those at United Airlines). They just concluded a bitter contract negotiation with flight attendants that resulted in a richer than-expected settlement for the union.© 2008 G5 Consulting Firm LLC. All Rights Reserved
  24. 24. Recommendations The reputation of Southwest Airlines in the Western and Southern part of the country would be enough to help them break into the Northeast market. Southwest Airlines could also break into the region by providing special fares to travelers flying to warmer climate zones such as Florida and other states in that region.© 2008 G5 Consulting Firm LLC. All Rights Reserved
  25. 25. Questions...
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