This Presentation answer these questions: 1. Is there anything that you find particularly impressive about Southwest Airlines? 2. What grade would you give Southwest management for the job it has done in crafting the company’s strategy? What is it that you like or dislike about the strategy? Does Southwest have a winning strategy? 3. What are the key policies, procedures, operating practices, and core values underlying Southwest’s efforts to implement and execute its low-cost/no frills strategy? 4. What are the key elements of Southwest’s culture? Is Southwest a strong culture company? Why or why not? 5. What grade would you give Southwest management for the job it has done in implementing and executing the company’s strategy? Which of Southwest’s strategy execution approaches and operating practices do you believe have been most crucial in accounting for the success that Southwest has enjoyed in executing its strategy? Are there any policies, procedures, and operating approaches at Southwest that you disapprove of or that are not working well? 6. What weaknesses or problems do you see at Southwest Airlines as of mid-2014? 7. Do you approve of the AirTran acquisition and the way that Southwest has gone about integrating AirTran into its operations? Is the integration taking too long? Why go so slow?

1. Group 8
Tran Tu Vy
Nguyen Vu Hoang
Tan
Nguyen Kim
Khanh

6. Agenda
• Company Background
• Herb Kelleher
• Strategic Analysis
• Southwest ‘s People Management Practices and Culture
• Recommendation

7. Company Background
• Founded in 1967 by Rollin King and
Herb Kellerhers
• Started operation on June 1971 with
three Boeing 737 after winning the
lawsuit against them. Serving 3 cities:
Dallas, Houston and San Antonio

8. • As of September 30, 2015, Southwest
operated 692 Boeing 737 aircraft:
• Lowest operating cost structure in the
domestic airline industry and consistently
offers the lowest and simplest fares
Company Background

9. Company Background
• Served more than 1.5 billion Customers since our
inception.
• Operated more than 22 million flights since our
inception.
• Enplaned approximately 136 million Customers during
2014, which is an average of more than 10 million
onboard Customers per month.
• Received 178,299 resumes and hired 4,136 new
Employees in 2014.
Fun Facts

10. Company Background
Mission
• 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

11. To Employees
• We are committed to provide our Employees a stable work
environment with equal opportunity for learning and
personal growth. Creativity and innovation are encouraged
for improving the effectiveness of Southwest Airlines. Above
all, Employees will be provided the same concern, respect,
and caring attitude within the organization that they are
expected to share externally with every Southwest
Customer.
Company Background
Mission

12. How do they stay successful in a
competitive marketWhat Makes Southwest Unique?
• Much of Southwest's success is due to the
willingness of its leadership to be innovative
• Two key opponent of its business model
• Identify the customer
• Be the lowest cost provider
• Southwest management has created a culture
where employees are treated as the company's
number one asset

13. • Faster turn around time
• One class of seating and one type of aircraft
• Point to point flight routes
• Hedging program
• Strong domestic network
• Serving less-congested airport
• High employee productivity
• Exclude meal
How do they achieve low cost?

14. Herb Kelleher

15. Herb Kelleher

16. Herb Kelleher
Leadership Style
The Herb Kelleher leadership style is characterized by
a few elements
• Doing good for the other
• Empathic approach to run everything around
him
• Employee-first approach
• Spiritual leadership comprises of attitudes,
values, and behaviors that are necessary to
motivate the leader and followers.

17. Herb Kelleher
SWA is one of the most honored and valued
airlines in the world
8 years in a row, SWA was named to Business
Ethics magazine as “100 Best Corporate Citizens”
Rewards

18. Overview of airline industry

19. Overview of airline industry

20. Overview of airline industry

21. Overview of airline industry

22. Source: transtats.btts.gov
Overview of airline industry

23. Overview of airline industry
Source: blogs.lse.ac.uk

24. • 2008 due to recession and increase in oil price rival airlines
made add-on fees include checking bags fee, buy tickets in
person to improve their operating performance.
=> US Airlines industry lost $5,2 billion in 2008
Overview of airline industry

25. • Southwest Airline ran “Bags Fly Free” ad campaigns to attract
customers by its cost saving rather than paying up to $50 for
checking bags to other airlines.
• No charging fee for changing the flight

26. • Southwest Airline ran “Bags Fly Free” ad campaigns to attract
customers by its cost saving rather than paying up to $50 for
checking bags to other airlines.
• No charging fee for changing the flight

27. Business Strategy
• Low-cost, low price, no-frills
=> Widely approach to customers.

28. Business Strategy
Fare Structure Strategy
• Wanna Get Away
• Anytime
• Business Select
• Seniors ( over 65 )

29. Business Strategy
Rapid Rewards®
Customers get some benefits:
• Unlimited reward seats
• No blackout dates
• Points that don’t expire

30. Wanna Get Away
• Lowest-fare, need to pay in advance
• Nonrefundable
• No fee for changing to a different travelling date or time
Business Strategy
Fare Structure Strategy

31. Wanna Get Away
• Lowest-fare, need to pay in advance
• Nonrefundable
• No fee for changing to a different travelling date or time
Business Strategy
Fare Structure Strategy

32. Business Select
• Also refundable and changeble
• High priority in boarding, seat, security and drinking
• More points than Wanna Get Away
Business Strategy
Fare Structure Strategy

33. Business Select
• Also refundable and changeble
• High priority in boarding, seat, security and drinking
• More points than Wanna Get Away
Business Strategy
Fare Structure Strategy

34. Anytime
• Refundable and changeable
• Earn more points than Wanna Get Away
Business Strategy
Fare Structure Strategy

35. Source: freakinflyers.com
Business Strategy
Fare Structure Strategy

36. Senior
• For over 65 years old customers
• Price between Wanna Get Away and Anytime fare
• Norefundable
Business Strategy
Fare Structure Strategy

37. Business Strategy
 Be sustainable and keep operating low-cost

38. Source: investor.southwest.com
Business Strategy

39. Source:ir.delta.com
Business Strategy

40. • Using only Boeing 737 aircraft
• 2013, Southwest operated the biggest fleet of Boeing 737 in the
world
Business Strategy

41. Business Strategy

42. Type Number Seats
737-300 119 137/143
737-500 12 122
737-700 463 143
737-800 98 175
As of September 30, 2015, Southwest operated 692
Boeing 737 aircraft:
Source: swanmedia.com

43. • Use Point-to-Point Route Structure Strategy rather than Hub-
and-Spoke System
Business Strategy

44. • Bring “blended winglets” to all planes and upgrade new models
to gain lots of benefits such as reduce fuel consumption,
maintenance cost, reach the height quickly.
Business Strategy

45. • First airline to introduce ticketless travel and selling tickets
through its website
Business Strategy

46. Business Strategy

48. • Mainly take flights to medium –sized citites

52. • Build convenient facilities such as padded seats. Large-
screen TV, wireless Internet

54. • According to Business Insider, Southwest ranked first in
customer satisfaction by US Department of
Transportation in 2013

55. • 2013 introduced Southwest Airline
app

56. • Advertise heavily than any other rival airlines
• Emphasis on the differences between Southwest and other US
airlines

60. SOUTHWEST'S PEOPLE
MANAGEMENT PRATICES AND
CULTURE

61. - At southwest, the operative principle was that: "Employees
come first and customer come second".
- Southwest's thesis was simple: Keep employees happy then
they will keep customer happy.

62. Recruiting, Screening, and Hiring.
• Southwest hired employees for attitude and
trained them for skills.
• The belief at southwest was that superior,
hospotable service and fun-loving spirit flowed
from the heart and soul of employees rather than
being gorverned by strict rules and procedures.

63. • In hiring for jobs, company looked for people-
oriented applicant who were extroverted and
had a sence of humor => employees deliver the
kind of service that showed they truly enjoyed
meeting people and doing their jobs.
• Company analyzed each job category to
determine the specific behaviours, knowledge
and motivations.
Recruiting, Screening, and Hiring.

64. Training
• Training activities at Southwest
were designed and conducted by
Southwest Airlines University.

65. • Southwest Airlines University conducted a variety of courses
offered to maintenance personnel and other employees to
meet the safety and security training requirements of the
Federal Aviation Administration (FAA), the U.S. Department of
Transportation, the Occupational Safety and Health
Administration, and other government agencies.
• Leadership development courses that focused on developing
people, building teams, thinking strategically, and being a
change leader were keystone offerings.
Training

66. Compensation and Benefits
• Southwest’s average pay for pilots in 2013 was between
31 and 92 percent higher than the average pay for pilots
at American Airlines, Delta Air Lines, United Airlines,
and US Airways; the average pay for Southwest’s
flight attendants ranged from as little as 12% higher
to as much as 38% higher than the pay of their
counterparts at those same rivals. Its benefit package
was the best of any domestic airline in 2013.

68. Employees Relations
• About 83% of Southwest’s 45,000 employees belonged to a
union.
• Management encouraged union members and negotiators
to research their pressing issues and to conduct employee
surveys before each contract negotiation.

69. The No-Layout Policy
• Southwest Airlines had never laid off or
furloughed any of its employees since the
company began operations in 1971.
• Southwest had built up considerable goodwill
with its employees and unions over the years
by avoiding layoffs. Both senior management
and Southwest employees regarded the three
recent buyout offers as a better approach to
workforce reduction than involuntary layoffs.

70. Operation Kick Tail
• Is a multiyear call to action for employees to focus
even more attention on providing high-quality
customer service, maintaining low costs, and
nurturing the Southwest culture.
• Southwest management viewed the Operation Kick
Tail initiative as a means to better engage and
incentivize employees to strengthen their display of
the traits in Living the Southwest Way.

71. Management Style
• Managers were expected to spend at least one-third
of their time out of the office, walking around the
facilities under their supervision, observing firsthand
what was going on, and listening to employees and
being responsive to their concerns.

72. • Company executives were very approachable,
insisting on being called by their first names.
• There were only four layers of management
between a frontline supervisor and the CEO.
Southwest’s employees enjoyed substantial
authority and decision-making power.
Management Style

73. Southwest's two big core values
Two core values—LUV
and fun—permeated the
work environment at
Southwest.

74. • LUV grew into Southwest’s code word for treating
individuals—co-employees and customers—with
dignity and respect and demonstrating a caring,
loving attitude.
• Fun occurred throughout the company in the form
of the generally entertaining behavior of
employees in performing their jobs, the ongoing
pranks and jokes, and frequent company-sponsored
parties and celebrations.

75. Culture-building Efforts
• Southwest executives believed that the company’s
growth was primarily a function of the rate at which it
could hire and train people to fit into its culture.
• Southwest’s monthly employee newsletter often
spotlighted the experiences and deeds of particular
employees, reprinted letters of praise from
customers, and reported company celebrations of
milestones.

76. Source: http://www.slideshare.net/kashyapshah11/southwest-
airlines-38000137

77. Recommendation
• Getting similar airplane like Boeing 737
• Expand International flight
• Expand to new territories
• Improve in-flight facilities

78. References
• Southwest Airlines gets the new blended winglet on their 737's.
(2003). Retrieved 03 2016, from
http://forum.keypublishing.com/showthread.php?17952-
Southwest-Airlines-gets-the-new-blended-winglet-on-their-
737-s
• Southwest Airlines SWOT: Financial strength is mainstay, but
cost and culture challenges loom large. (2014, September 21).
Retrieved March 2016, from
http://centreforaviation.com/analysis/southwest-airlines-
swot-financial-strength-is-mainstay-but-cost-and-culture-
challenges-loom-large-187714

79. • Cote, B. (2015, October 13). Leadership Analysis: Southwest Airlines
Flying High with Herb Kelleher, Former CEO. Retrieved March 2016,
from https://www.linkedin.com/pulse/leadership-analysis-
southwest-airlines-flying-high-bob-cote-phd-mba
• Gulliver. (2015, June 24). The world's largest airlines. Retrieved
March 2016, from
http://www.economist.com/blogs/gulliver/2015/06/worlds-largest-
airlines
• Martin, E. (2015, July 29). A major airline says there's something it
values more than its customers, and there's a good reason why.
Retrieved March 2016, from
http://www.businessinsider.com/southwest-airlines-puts-
employees-first-2015-7

80. • Southwest Airlines. (n.d.). Retrieved March 2016, from
https://en.wikipedia.org/wiki/Southwest_Airlines
• Southwest Airlines: A Case. (n.d.). Retrieved March 2016, from
http://www.123helpme.com/southwest-airlines-a-case-analysis-
view.asp?id=167353
• Southwest Corporate . (n.d.). Retrieved March 2016, from
http://swamedia.com/channels/Corporate-Fact-Sheet/pages/corporate-
fact-sheet#funfacts

81. • traveltrotter. (2012, July 2012). Airline cost structure.
Retrieved March 2016, from
http://www.slideshare.net/traveltrotter/airline-cost-
structure-13749344
• traveltrotter. (2012, July 25). Airline cost structure. Retrieved
March 2016, from
http://www.slideshare.net/traveltrotter/airline-cost-
structure-13749344
• amarchukov. (2015). Southwest: the Classic Budget Airline.
Retrieved 02 2016, from http://www.airlines-
inform.com/flight-reports/amarchukov-1755.html
• Thompson, A. A., & Gamble, J. E. (2014). Southwest Airlines
in 2014: Culture, Values, and Operating Practices.

82. Thank You For Listening !!!
We wish you a very good night !