Are YouFlying Smart?

CASE STUDY

‘Our People Are Our Single Greatest Strength And Most Enduring Long-Term Competitive Advantage.’

Gary Kelly, CEO Southwest Airlines

Started in 1971 with little money but lots of personality.

Featured a bright RED HEART as its first logo.

Advertising showcased its focus on Low-Fares, Frequent flights, On-time arrivals, Top safety record and how Bags fly free.

Used humour to poke itself to convey its warm personality.

Personalized aircrafts such as a Flying Killer Whale, The Texas flag and the Slam Dunk One.

What did Southwest do differently?

United States’ MOST admired airline!Profitable for 37 years straight!One of Top 5 places to work!

BUSINESS MODEL

Southwest Airline streamlines operations which results in low fare and customer satisfaction. The airline takes several steps to save money and passes the savings to the customers through low fares!

Flies over 3100 short “point-to-point” trips daily.

Each flight makes an average of 6.25 flights daily.

Avoids traditional hub-and-spoke system.

Purchases fuel in advance to hedge fuel prices.

with fuel hedging!!!

Southwest saved more than

$2 Billion

Extremely fast turnaround service.

Follows a unique boarding system.

Enters new markets other airlines overprice.

Operates Boeing 737s for all its flights.

Makes sure that the planes are light with lighter models of seats and power washing the engine to remove the dirt.

in fuel cost over just 3 months!!!

Southwest saved more than$1.6

Billion

Advertisement by Southwest

Has pioneered services and programs such as same day freight service

Senior Discounts

Fun Fares & Ticketless Travel

• Southwest was the first airline with a web site.

• Ranks on top for customer service.• Receives the lowest ratio of

complaints per passenger.

Why don’t other airlines

copy Southwest’s model

Southwest focuses on fast, no-frill

service.

Southwest does not serve meals.

Southwest does not have

advanced seat reservations.

Southwest flies only Boeing airplanes.

Southwest consistently earned profits despite the various industrial problems.

With such stability, It makes decisions and adjusts policies which other burdened airlines may not be able to make.

• Other airline companies pride themselves more on service.

• Their ticket prices are not cheap.

• They generate huge revenues from the elite people.

Can Southwest continue to thrive as a low-

cost airline when tough economic times hit

Firstly, Southwest Airlines has to run their flights even if only half of the seats are full.In that case the airlines have a risk of earning really low revenue!

Secondly, South West Airlines is at constant price wars with its competitors.Sometimes South West is forced to keep the prices of tickets really low!

“Our fares can be matched; our airplanes and routes can be copied. But we pride on customer service.”-Sherry Phelps, Director of Corporate Employment

Let’s RECAP

Business Model Unique Model

Steps to Reduce Fares Future Prospects

Advertisements

DISCLAIMER

Created by Atulya Manuraj, IIT Kanpur during an internship by Professor Sameer Mathur, IIM Lucknow.