South west airlines case presentation (strategic management & operations)
D. PALLAVI (2T3-13)
BHANU PRIYADARSHINI (2T3-15)
G. SAI SOWJANYA (2T3-17)
Siva Sivani Institute of Management , Kompally,
About SouthWest Airlines
Started Services in Texas in U.S. by Herb Kelleher and Rollin king in 1971.
Known as a “discount airline” since 1973.
• 737 Boeing Air crafts,
• 46000 employees,
• 3600 flights per day
• Providing services in an approximate of 57,900 customers per day.
• 93 destinations over 41 states .
• Dedication to the highest quality of customer service
delivered with a sense of warmth, friendliness,
individual pride, and company spirit.
• It primarily provides short haul, high-frequency,
point-to-point, low-fare air transportation service
among 93 destinations in the United States.
• 2014 – Travelers Choice Award.
• 2003 Selected as “AIRLINE FOR THE YEAR”
• 2007 included in top 100 most innovative technology
• First airline to establish a home page on internet
• Ranked number one in customer service
• 43 consecutive year of profitability
• How they acquired the #1 position in terms of
services providing to customers and what are the
strategies they are following to achieve these
• Cost control
• Corporate culture
• Passengers related activities
• Employees related activities
• They encourage good relations between employees
• They made an experiment by giving traditional
• Own ticketing
• Travel agents – 10% commission, 55% booked by them.
• Flew into uncongested airports which reduced 15%-25%
of average flight time.
• Interline baggage–doesn't coordinate with other airlines.
• Drinks and snacks were served
• 84% unionized workforce
• Southwest flew only BOEING 737 JETS.
• The company had 150 that, in total, flew an average of
1,500 trips per day.
• The 737 was the smallest plane in Boeing’s fleet, seating
• The 737s had an average life of 20 years.
• The average age of Southwest’s planes was seven years, one
of the lowest averages in the industry.
SouthWest Cost Control
• Cost control in operations like fuel
• Gate costs and landing fees differ
• No. of departures, 10 from each gate.
• Expansion in new cities
• Public relations- Sponsored golf
• Ambassadors- customers
• Customers are important in selection process, provide
feedback in decision making
• Peer hiring, pilot-pilot hiring and line employees- lines
• Cross training- Switch jobs and Broad latitude – serve
• Compensation was low, but the employees had
• The feeling of the place
• Small family and spirit
• Working towards one common goal
• Employee Satisfaction
• Low fares
• Stable profitability
• Scheduled services
• Customer service
• No international flights
• Carry small amount of
freight and cargo
• Focus on international level.
• Focus on popular
• Fluctuation in fuel charges.
• Expansion-trouble with facilities
• New cities and routes-not for everyone and
Marketing entry strategy
• Low operating costs
• Load factor- adding services to balance supply and
Fuel hedging (1998)
• Purchased fuel options for years in advance to smooth out
fluctuations in fuel costs
• Substantially increased its hedging in 2001 in response to
projections of increased crude oil prices
The immediate expansion decision (Delivery of
two uncommitted 737’s)
• The first option was to expand within the system and add a
new segment directly between Detroit and Phoenix.
• The second option was to enter the Dayton market.
• The final option was to establish a base on the East Coast,
initiating service in Baltimore.
Challenges of SouthWest Airlines
• Meeting growth objectives while maintaining focus
• Preserve the SouthWest culture and spirit that had
1st Option 2nd Option 3rd Option
• Average: $2.50
• Detroit and
• 3 trips per day
• Gate and landing
fees are high
• Phoenix- $2.75
• Detroit- $3.25
• 500 letter written
• Average: $2.5
• Dayton market
• 226 miles
• 9,70,000 population
• Relatively stable
• Fare raising
• 50 min TAT
• Average: 2.5
• 2.4 million people
• 611 miles
• 90 minutes
• Weather conditions