Case Study on Sw Airlines

7/31/2019 Case Study on Sw Airlines

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Southwest Airlines has two statements declaring their 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.”

This mission defines that customer service is their top priority. Southwest

differentiates themselves not only by their reputation for customer service but by

the value it places on a happy workforce. Southwest declares their commitment to

delivering a quality product to customers while strongly focusing on customer

service. Since its beginning, Southwest has relied on its values – concern, respect,

and caring for employees and customers.

Southwest Airlines prides themselves on employee focus with the belief that

happy employees will generate happy customers. Southwest does not have a

vision statement, but has a mission dedicated to their 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.”

Southwest Airlines is committed to their workforce. Southwest’s hiring and

training practices are unique and one of the ways they enhance their corporate

culture. Southwest looks for people that embody the “spirit” of Southwest,

therefore hiring for attitude and training for skill.

Southwest Airlines is fulfilling its mission statements by holding themselves

accountable. Southwest posts reports to their website outlining their commitment



to customer service, safety commitment and delay contingency plan.

Additionally, the execution of these values can be seen by the customer.

Southwest Airlines SWOT analysis

Southwest Airlines is committed to offer the greatest quality in customer service

that is continuously being provided with a high feeling of affection, kindliness,

pride, and determination. After almost four decades in service, it is the leading US

carrier with a low fare. It persists to distinguish itself from the other airlines. It has

attained low cost due to its careful selection of routes. Let us perform Southwest

Airlines SWOT analysis to determine its success story.

Strengths

• Fleet standardization caused it to be among one of the best carrier with low fares

• Flexible in bargaining variable operational periods of working

• Maximizes employment of Internet for reservation

• Excellent workforce relations

• Excellent service

• Has achieved rapid growth since its initiation

• Presents credit on the trips instead of total distance tour

• Thoroughly deliberate each candidate, to select the best that is capable to

provide excellent performance



• Offers lucrative cost deals with minimum add-ons, and outstanding customer

service.

• Admirable relations with workforce that leads to higher sales

• Has Boeing fleet that has minimized maintenance expenses

Weaknesses

• Traditional development strategy

• Being easily duplicated by other airlines

• Restricted to a few cities

• Manages mostly its own reservation service

• Cargo carrying space is inadequate

• Relies on only one airplane manufacturer

• Less number of supervisory staff may cause ill discipline

Opportunities

• Extension of flights to other locations

• Start of global and other flights

• Develop customer contentment further

• Apply modern industry techniques for development

• Potential for research in marketing

• Increased advertisement by Internet



Threats

• Reduction in air travel due to recession

• Increase in oil price

• Assaults by terrorists, due to which people are inclined to adopt other means of

transportation

• Development of online reservation structure by competitors

• State rules that increase the operating costs

• Increase in operating expenditures due to rise in security expenditures

The Southwest Airlines SWOT analysis has explained the reasons for success of

the airline, and potential for further improvement.

Southwest Airlines Strategy

Don’t be fooled by its name. Southwest Airlines is a big national player and, with

its $1 billion acquisition of AirTran, will begin to start flying to Mexico and the

Caribbean.

Southwest claims to carry more domestic passengers than any other airline. In

short, the carrier, in its 31 years with lead creative shop GSD&M, has vaulted from

being an underdog to a big cheese. All that growth has given Southwest marketingexecutives pause. Is the brand’s long-running, anti-establishment positioning in the

marketplace still relevant?



Such is the core question behind Southwest’s ongoing creative review, according

to the request for proposals that the company sent to interested agencies. The RFP

—a copy of which Ad week has obtained—lays out the rationale for the search, the

nature of the assignment and Southwest’s timetable for completing the process.

Beyond business growth, other factors that triggered the review included a

“proliferation of ‘me too’ low-fare players,” industry consolidation and increased

differentiation by rivals, the RFP notes.

The assignment up for grabs is to provide “thought leadership in refining its brand

positioning and to develop an associated campaign for a national fall 2012

campaign,” the document explains. “The winning agency will become an

additional agency resource for Southwest Airlines and its assistance may also be

requested for other select local and national campaigns.”

So, GSD&M isn’t being replaced per se, but may get company and consequently

cede its lead strategic role to another shop. The RFP notes that the Austin, Texas-

based agency—which has been invited to participate in the process—“will

continue to focus on consumer marketing opportunities and the integration of

AirTran. These efforts include a variety of tactics with the core messages of low

fares, great customer service, bags fly free and no change fees.”

Based on responses to the RFP, Southwest will select about a half-dozen shops to

meet early next month at the company’s headquarters in Dallas. The airline will

then narrow the field to three or four finalists. Final presentations are slated for

early May.

Among the key decision-makers are chief marketing officer Dave Ridley; Kevin

Krone, vp of marketing, sales and distribution; and Michael Van Houweling,

senior director of product and brand marketing.



Southwest and AirTran collectively spend about $200 million in media each year.

That was the combined total in 2010, with $190 million coming from Southwest,

according to Nielsen. In the first nine months of 2011, the combined spending was

$176 million: $168 million from Southwest and $8 million from AirTran. Those

figures don’t include online outlays.

Not in play are Southwest's media planning and buying business, digital marketing

and multicultural advertising. Select Resources International in Santa Monica,

Calif. is managing the search.

Company Overview

Southwest Airlines Co. (the “Company”) operates Southwest Airlines, a major

passenger airline that provides scheduled air transportation

in the United States. Southwest commenced service on June 18, 1971, with three

Boeing 737 aircraft serving three Texas cities: Dallas, Houston,

and San Antonio. Southwest ended 2011 serving 72 cities in 37 states throughout

the United States, which included the addition of service in

2011 to two new states and three new cities: Charleston, South Carolina;

Greenville-Spartanburg, South Carolina; and Newark, New Jersey. The

Company has also announced its plan to expand Southwest service to its 38 state

and 73 city in February 2012, with the commencement of Service to Atlanta,

Georgia. Based on the most recent data available from the U.S. Department of

Transportation, as of June 30, 2011, Southwest was the largest domestic air carrier

in the United States, as measured by the number of originating passengers boarded.



Southwest principally provides point-to-point, rather than hub-and-spoke, service.

This has enabled it to maximize the use of key assets, including aircraft, gates, and

Employees, and has also facilitated its ability to provide its markets with frequent,

conveniently timed flights and low fares. Point-to-point service is discussed in

more detail below under “Company Operations — Route Structure.”

On May 2, 2011, the Company acquired all of the outstanding equity of AirTran

Holdings, Inc. in exchange for common stock of the Company and cash. Each

outstanding share of common stock of AirTran Holdings, Inc. was converted into

the right to receive 0.321 shares of the Company’s common stock and $3.75 in

cash, without interest. In connection with the acquisition, the Company also

acquired AirTran Airways, Inc., which operates the passenger airline AirTran

Airways. In addition to providing scheduled air transportation in the United States,

AirTran provides service to selected international locations. The acquisition of

AirTran allowed the Company to immediately and significantly expand and

diversify its overall route network and thereby provide a near-term growth

opportunity not otherwise available to the Company.

These and other benefits of the acquisition are discussed further below under

“Operating Strategies and Initiatives – Integration of AirTran” and

“Operating Strategies and Initiatives — Network Optimization and Revenue

Management.”



The Company believes the acquisition of AirTran has positioned it

to better respond to the economic and competitive challenges of the

industry because:

• it grows the Company’s presence in key markets Southwest did not previously

serve and represents a significant step toward positioning the Company for future

growth;

• it allows the Company to offer more low-fare destinations by extending its

network and diversifying into new markets, including significant opportunities to

and from Atlanta, the largest domestic market Southwest has not served;

• it expands the Company’s presence in slot-controlled markets where Southwest

previously had little (New York LaGuardia) or no (Ronald Reagan Washington

National Airport) service;

• it expands the Company’s service in other key domestic markets, including

Boston and Baltimore, and adds destinations to its route system;

• it increases the Company’s share of current domestic market share capacity (as

measured by available seat miles or passengers); and

• it provides access to near-international leisure markets in the Caribbean and

Mexico, as well as smaller cities, and provides firsthand and meaningful insight

into these new expansion opportunities.

Documents

Case Study on Sw Airlines