RAVI KUMAR- 136
If you get your passengers to their destinations when they
want to get there, on time, at the lowest possible fares, and
make darn sure they have a good time doing it, people will fly
You put your employees first. If your employees are treated
right , they will treat your customers right, your customers will
come back, and that’s what makes your shareholders happy.
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. It primarily
provides short haul, high-frequency, point-to-point, low-fare air
transportation service among 58 cities (59 airports) in the
Incorporated in Texas in U.S. by Herb Kelleher
and Rollin king in 1971
Commenced customer service with 3 boeing
Now operates more than 500 boeing 737
Operate more than 3300 flights a day
35000 employees engaged
The United States’ most successful low-fare,
high frequency, point-to-point carrier
Known as a “discount airline” since 1973
For the 12th year in a row, FORTUNE
magazine recognized Southwest Airlines in
its annual survey of corporate reputations in
2003 Selected as “AIRLINE FOR THE
2007 included in top 100 most innovative
First airline to establish a home page on
Ranked number one in customer service
36 consecutive year of profitability
“art of motivating a group of people to act towards achieving
a common goal”
According to HERB KELLEHER
Leadership is a way of life, culture, desire and commitment
Leadership is the job of every employee, not just upper level
Every employee should have the ability to ascertain situations
and be able to act on their own decision
Employees should be able to lead other employees to make
He does not rule over his employee but rather, rules with his
• Work should be fun ...it can be play . . .
humour • Both at workplace and inside the plane
• Work is important ...don’t spoil with
altruism • Welfare of people comes first
• People are important...each one makes
• Employee and customer commitment
SUCCESS IS HOW HIGH YOU BOUNCE WHEN YOU HIT
WHY IT IS SUCCESSFUL ?
WHY IT IS SUCCESSFUL ?
•Open sharing of information
Discounted stock purchase
• People consider it as crusade instead of
• Most glowing star in southwest policy.
• Eagerness to be at the top.
• Challenges top competitors as US
• CEO HERB KELLEHER played major
role with his unique mgmt style.
• Team of PARKER, COLLIN to handle .
OPEN SHARING OF
• Trust of customers declared it as most
admired airlines and company.
• Respects ideas of employees.
• Committee of managers, employee
• Respect for sense of humor.
• Compatible attitude of learning.
• Customer service
• Low fares
• Stable profitability
• Scheduled service
• No international
• Carry small amout
of freight and cargo.
• Inconvenience to
• Operate At
• Focus On Popular
• Fluctuation in gas
and oil prices
Integrated Low Cost/Differentiation
Use a single aircraft model (Boeing 737)
Use secondary airports
Fly short routes
Low cost meals
15 minute turnaround time
No reserved seats
No travel agent reservations
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
Advantaged after Sep. 11, 2001 attack, the oil shock
from Iraq War, and Hurricane Katrina
only one model of aircraft
Boeing 737, medium range-narrow body commercial
passenger jet aircraft
Easy to replace parts and ground support equipment
PRICE ELASTICITY OF DEMAND
The percentage change in quantity demanded (Q)
that occurs in response to a percentage change in
firm identifies different consumer groups, in
the market, each with a different demand curve.
Southwest Airlines recognizes that any given flights
has different types of travelers
Business travelers vs. Vacation travelers
maximize profit, the firm sets a price for each
group by equating marginal revenue and
Southwest Airlines uses third-degree price
discrimination to fill the plane with travelers in the
most profitable way
Depending on the price of elasticity of demand for
Charge a higher price for business travelers who
have relatively inelastic demands and vice versa
Employee and customer satisfaction