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Southwest Airlines
Southwest Airlines has grown since 1967 to become one of the largest low-cost carriers in the world through a strategy of cost leadership, differentiation, and focus. It keeps costs low by operating a single aircraft type, using secondary airports, and having an average of three cabin crew. Southwest differentiates by offering fun experiences, pets on flights, and bag-free travel. The company focuses on serving price-sensitive and convenient travelers with frequent, reliable flights on shorter routes comparable to driving times.
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Southwest Airlines
- 1. MARKETING MANAGEMENT Southwest Airlines:In a Different World Presented by:Avishek Bhattacharya Achintya PR Divya Marwah Mukul Attri Nayana Unni Prasahant Patro Siddharth Modak
- 3. Company Profile • Foundedin 1967 by Rollin King, Herb Kelleher and Lamar Muse • Started operations in 1971 with three Boeing 737s after winning the lawsuits against them • Well known for its Low Fare policy and low cost of operations • ‘Airline of the Year Award’ – 2003 • Presently operating in more than 60 countries with over 500 Boeing aircrafts • Came up with a famous policy of ‘Employee First, Customer Second’
- 4. Core Strategy “If youget 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 your airline.”
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- 6. OTHERS SOUTHWEST Focussed on long routetravels. Mainly, short route journeys.
- 7. OTHERS Focussed luxury, complementary and in-flightservices. SOUTHWEST “Fun-LUVing Attitude” for in-flight entertainment.
- 8. OTHERS SOUTHWEST Strictly adhered fora disciplinary and sophisticated travel. Pets Are Welcome on Southwest(P.A.W.S)
- 9. OTHER SOUTHWEST Only cash payment, foronboard services. Cashless cabin (Credit Card only for onboard purchases.
- 11. Other Differentiation Strategies • • • • • • Lowcost meals Less turnaround time Employees first, Customer second policy “Bags fly free” policy Ticketless travel Early-bird Check-in, unaccompanied minor service charge
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- 13. Hedging A hedge isan investment position intended to offset potential losses/gains that may be incurred by a companion investment. SWA used hedging for the following objectives: • Plan towards profitability. • Plan cash flows. • Lower overall fuel expenses.
- 14. OTHER SOUTHWEST Multiple types of aircraftsare used Single type of aircraft is used that is boeing 737
- 15. OTHER AIRLINES SOUTHWEST AIRLINES Followedhub and spoke model Followed the point to point Model
- 16. OTHER SOUTHWEST Luxurious travel with lotof in-flight complementary services Cheap, convenient and in-flight entertainment
- 17. OTHER SOUTHWEST On an averagethere were six cabin crews. Maximum three cabin crew
- 18. Other Cost LeadershipStrategy • • • • • Use secondary airports (Less congested) Operates in mid-sized cities. Low cost pricing strategy No complementary meals High utilization rate of fleet of aircraft.
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- 21. Targeted two typesof traveler: 1) Convenience, time-oriented travelers, 2) Price sensitive leisure travelers.
- 22. “Rapid Rewards Programs”for frequent flyers.
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- 24. Other Focus Strategy •Frequent reliable departures • Try to make air fares comparable to driving expenses for shorter routes. • Exploring North-East markets • Code-sharing agreements for greater reach.
- 25. Bidding and acquiringslots and gates at LaGuardia • Airport La Guardia is used by low cost airlines for domestic, international and transcontinental flights. • One of the smallest airports in United States of America • Southwest paid US$7.5 million to acquire certain assets from bankrupt ATA Airlines in 2008. • Reason: To acquire the operating certificate and New York’s LaGuardia Airport landing slots formerly controlled by ATA. • Southwest got 14 slots, enough to operate seven takeoffs and seven landings per day at LaGuardia. • New York's LaGuardia landing slots are the company’s first entry into the major market.
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- 28. Strengths • • • • • • • • • Strong fleet operations Dominantmarket position in North America Friendly Staff Best low fare carrier Largest airlines in the world in terms of highest number of passengers per year Recognized as a great value and excellent services Flexible working hours even though 82% of employees are unionized Strong brand image Highest daily domestic departures than any other commercial U.S. airline
- 29. Weakness • Declining profitsand margins • Heavy dependence on passenger revenues • Heavy dependence on a single producer – Boeing • Conservative growth strategy • Limited to cities domestically • Operates its own booking service • Does not offer segmentation (business flights, first class, etc.)
- 30. Opportunities • • • • • • Recovery of USAirline Industry Acquisition of Air Tran Holdings Recovery of US tourism International Expansion Longer flights are being introduced Traveller traffic is expected to grow by 3.5% through 2019.
- 31. Threats • • • • Intense competition Regulation restrictions Pricefluctuations in petroleum markets High unemployment and inflation keeps travellers from flying • Joint ventures can negatively affect brand image • Exposure to Shaky American Economy