Operations Management At Southwest Airlines

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Background
In 1967,Rolling King and Herb Kelleher founded

Southwest an intrastate airlines. In 1982, Just Say When campaign In 1987,Frequent flier programme,no. of flights taken. In 1992,Southwest won the annual Triple Crown Award. In 1996,SW started selling through Website www.southwest.com

Cont.
In 2000,SW placed biggest aircraft order ever,

delivery of 94 Boeing737. In 2001,sept terrorist attacks,SW managed to post a profit. In 2002,the worst year ever for the airlines industry ,SW posted its 30th consecutive profit. In 2003,SWAirlines was the 4th largest US airlines in terms of domestic customers carried.

Southwests Business Model

Providing safe

Reliable
Short duration air service Lowest possible fair Quality service Point to Point Blanketing stratgy

Key operation parameters of sw

Passenger Load factor-

is the percentage of a plane filled with paying passengers. Revenue passenger milesOne paying passenger flown one line

Passenger Load Factor

72 70 68 66 64 62 1998 1999 2000 2001 2002

Revenue passenger miles

60000 40000 20000 0 1998 1999 2000 2001 2002 million

Source:www.southwest.co m

Cont

Aircraft Utilization-in hours and minutes in a day a plane is used

Average Daily Passengers

3,000 2,000 1,000 0

passengers

Aircraft Utilizatin
11:24 11:16 11:09 11:02
1998 1999 2000 2001 2002 hr:min

Contd.
In2002,Sluggish

economy High energy prices Tension in Gulf spelled

SW's Revenue & NI(in $mn)

6000 4000 1000

2000
0 1998 1999 2000 2001 2002

500
0

Revenue

NI

SWs Top Ten Airport-Daily Departure

Southwest avoided

congested airport. High employee productivity. Reliable on time performance.

Daily Departure
200 180 160 140 120 100 80 60 40 20 0
No. of Daily Flights

150 130 141 117 122

171 180

80

86

No od Daily flights

Airports

SW:Anatomy of a 15-minute Turnaround

7:55 Ground crew chat around gate position 8:03:30 Ground crew move to their vehicles 8:04 crew moves towards gate 8:06:30 Baggage unloaded, refueling

8:15 Jet way retracts

8:10 Boarding complete. ground crew leaves

8:08 Boarding call ,baggage loading, refueling complete

8:07 Passenger off plane

8:15:30 Pushback from backs

8:18 Pushback
disengages plane leaves for runway

How SW strategy is Implemented

No meals Limited Passeng er service No site assign ments

No baggag e transfer s

Short hual,poin t to point travel

No connectio n with other airlines

Passeng er related departur e

High aircraft utilizatin

Very low ticket prices

Activities
Standardized fleet of 737 aircrafts

Southwest the low fare airlines

High level of employee stock ownership Flexible union contracts High compensation of employees 15-minute gate turnaround Limited use travel agents

Looking Ahead
Increase more non stop flights

Enrich operation system

Include daily non stop flights in busy air traffic

route.

Thanks
Any Questions