Southwest Airlines

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This presentation encompasses the classic case study of Southwest Airlines, USA. Explaining why they have been so successful even in recession period. It is a part of case-study based lectures at Symbiosis Institute of Business Management, Bangalore.

Text of Southwest Airlines

  • 1. Share the Spirit A Symbol of Freedom

2. Rollin King Herb Kelleher 3. Herb, lets start an airline Rollin, youre crazy. Lets do it! The Napkin Concept 4. The Mission Statement of Southwest Airlines Dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. Vision Statement of Southwest Airlines At Southwest, we strive to be the new generation of flight transportation while providing luxury at a price anyone can afford. 5. Just say when campaign Expands service to California, begins at Chicagos Midway Airport. Acquires a competitor, Muse Air 1971 1972 1973 1972 -19791967 1982-1985 Southwest Airlines is formed Southwest was forced to sell one of its four planes to meet payroll. Employees made up for the lost jet by turning planes around and starting the next flight in 10 minutes. Southwest begins service in New Orleans. Until Congress deregulated the airline industry (in 1978), Southwest couldn't fly beyond Texas Southwest begins flying between Dallas, Houston, and San Antonio. Southwest makes money, starting a string of 36 straight profitable years. 6. 1996 2000 2001 20021987 2003 Frequent flier program and Increased number of Flights. In 2000,SW placed biggest aircraft order ever, delivery of 94 Boeing737. the worst year ever for the airlines industry ,SW posted its 30th consecutive profit SW started selling through Website www.southwest.com September terrorist attacks : SW managed to post a profit SW Airlines was the 4th largest US airlines in terms of domestic customers carried 7. 2006 20082002 Begins phasing out plastic reusable boarding passes. New rules after the 2001 terror attacks required boarding passes with passenger's name. The Federal Aviation Administration proposes a $10.2 million civil penalty against Southwest for using planes that hadn't been inspected for fuselage cracks. Congress votes to repeal a law in 2014 that prevents Southwest from operating long flights from its home base at Dallas Love Field. Several planes were later found to have cracks. Revenue reduced. Kelleher steps down as chairman. Southwest launches service in Minneapolis and announces plans to expand to New York's LaGuardia Airport, Boston's Logan Airport, and Milwaukee. 2009 8. SWA Divided the US passenger Airline Market into 3 categories: 1) Major Carrier annual revenue 1billion; 95% domestic passengers carried 80% all major carrier domestic 2) National Carrier annual revenue 100million-1billion 3) Regional and Commuter Carrier annual revenue less than 100million In 1978, the United States had 36 domestic carriers The major carriers adopted the hub-and-spoke route system, SWA adopted point-to-point route system. 9. Bold & Creative Advertisements 10. This is how SW Airlines replies to their Competitors 11. Inverted Pyramid Approach 12. Keep it Simple Business Model They are known for Sparse customer amenities No seating class distinctions Fewest customer options No choices on type of aircraft Simplest pricing structure no meals But, they are very well known for Providing safe, Reliable, Short duration air service Lowest possible fare Good schedules for destinations served Fewest cancellations Best on-time performance Safest airline worldwide Fastest gate turnaround Simplest customer-interface Highest customer ratings Most consistently profitable 13. The Fantastic Fifteen 14. SW:Anatomy of a 15-minute Turnaround 7:55 Ground crew chat around gate position 8:08 Boarding call ,baggage loading, refueling complete 8:03:30 Ground crew move to their vehicles 8:07 Passenger off plane 8:04 crew moves towards gate 8:06:30 Baggage unloaded, refueling 8:15 Jet way retracts 8:10 Boarding complete. ground crew leaves 8:15:30 Pushback from backs 8:18 Pushback disengages plane leaves for runway 15. How SW strategy is Implemented Passenger related departure Very low ticket prices No site assignments No baggage transfer No connection with other airlines No meals Short haul, point to point travel Limited Passenger service High aircraft utilization 16. What Makes Southwest Unique? 17. Southwest Airlines has become a legendary example of the power of servant leadership principles. Its achievements are impressive considering the competitive, cut-throat airline industry in which it thrives. Southwest Airlines has been named "one of the "Top Five Best Companies to Work for in America" by Fortune Magazine It has had the fewest customer complaints 18 years in a row as reported by the DOT Air Travel Consumer Report The Southwest Airlines has been profitable for 31 consecutive years, named the "2nd Most Admired Company in America by Fortune Magazine, and has an average employee turnover rate of less than 10% If you made a $10,000 investment in Southwest Airlines in 1972, it would be worth more than $10 million today. It has developed strong employee and customer loyalty - a feeling of devotion, duty and attachment to Southwest (West, 2005) 18. Southwests 10 Practices for Building High Performance Relationships 19. SUCCESS IS HOW HIGH YOU BOUNCE WHEN YOU HIT BOTTOM 20. WHY IT IS SUCCESSFUL ? Competitive advantage Internal customers Management style Leadership Work-culture Family spirit Trust Training Collective bargaining Creative spirit Discounted stock purchase Flexibility Open sharing of information 21. SWOT low-fare, high frequency airline committed to exceptional customer service. great climate and culture for employees, We hire Attitudes. Excellent service in the areas of on-time performance, baggage handling, and overall customer satisfaction. SW has 481 Boeing 737 jets. No hub-and-spoke system (although considered by many to be a positive) No first class seating Fly only in USA , 63 cities and 32 states. Uses only one type of planes. Lack of unity in decision making ability. Hire more part time workers Provide higher quality and luxuries for customers willing to pay extra With airline companies selling planes SW can purchase models similar to the 737 Add new cities not flown to by Southwest such as Atlanta, Charlotte, Chicago, and New York Mergers and takeovers of other airlines could produce low-cost challenges to Southwest by those competitors Government regulations and restrictions, Fluctuation in gas and oil prices New entrants into the airline industry is an extremely low risk, due to the costs but it still prevails. STRENGTHSOPPORTUNITIES WEAKNESSESTHREATS 22. 1) For the 12th year in a row, FORTUNE magazine recognized Southwest Airlines in its annual survey of corporate reputations in 2008. 2) 2003 Selected as AIRLINE FOR THE YEAR 3) 2007 included in top 100 most innovative technology organization 4) First airline to establish a home page on internet 5) Ranked number one in customer service 6) 36 consecutive year of profitability ACHIEVEMENTS 23. 7. ONE OF THE TOP 50 BEST PLACE TO WORK-AT 12TH PLACE. 8. GRASSROOTS INNOVATION AWARD -2013. 9. AIRLINES RATING IN LOW COST-AT 2ND PLACE. 10. IN WORLS MOST ADMIRED COMPANIES AT 7TH PLACE IN 2013. 11. TOP 25 Brands of 2013, AT 1ST 12. AT 1ST PLACE IN CUSTOMER SATISFACTION-2013. 13. U.S TOP 100 GLOBAL REPUTATION PULSE-AT 46 PLACE. 24. ALASKA AMERICAN WEST SOUTHWEST US AIRWAYS DELTA UNITED AMERICAN OPERATING INCOME (in $Mn) 11 -56 291 20 -114 -469 -760 -1000 -800 -600 -400 -200 0 200 400 OPERATING INCOME (in $Mn) in 2001 OPERATING INCOME (in $Mn) O p e r a t i n g i n c o m e 25. ALASKA AMERICAN WEST SOUTHWEST US AIRWAYS DELTA UNITED AMERICAN NET INCOME (in $Mn) 5 -43 176 -24 -90 -365 -507 -600 -500 -400 -300 -200 -100 0 100 200 300 NET INCOME (in $Mn) in 2001 NET INCOME (in $Mn) N e t i n c o m e 26. CURRENT STATISTICS OF SOUTHWEST AIRLINES Cities Daily Nonstop Cities Served Year Departures Established WN FL Chicago (Midway) 233 64 1985 1994 Las Vegas 210 54 1982 2003 Baltimore 206 57 1993 2001 Denver 167 56 2006 2003 Houston (Hobby) 161 45 1971 1997 Phoenix 162 46 1982 2007 Atlanta 165 44 2012 1993 Dallas (Love Field) 124 18 1971 - Orlando 120 43 1996 1998 Los Angeles 109 23 1982 2003 Type Number BOEING 737-300 122 BOEING 737-500 15 BOEING 737-700 425 BOEING 737-800 52 27. Credits: KASHYAP SHAH VINITA GOSWAMI VRINDA JAIN ANUBHUTI GUPTA MANISHA NANDAL MANTHAN JANI SRIRAM KRISHNAMURTHY Thank You ! -Have a safe journey