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Presented by –

Delix Thomas
Devesh Sharma
Ekta Sanghvi
Eeshani Nautiyal
Geostany Jose
Gia D’Cunha
About Southwest Airlines
• Originally incorporated to serve three cities in
Texas as Air Southwest on March 15, 1967, by
Rollin King and Herbert Kelleher.
• Commenced service on June 18, 1971 with 3
Boeing 737 aircrafts serving 3 cities – Dallas,
Houston, and San Antonio.
• Changed its name to Southwest Airlines.
• Its first flights were from Love Field in Dallas to
Houston and San Antonio.
Known for…
• The first and most successful low cost airline.
• The only major US air carrier that was consistently profitable
for 35 years.
• Short hops with no-frills service and a simple fare structure.
• U.S. leader in number of passengers carried annually.
• #1 in Business Week’s list “Customer Service Champs”
• Named by Fortune as the best company to work for in
America and the most admired airline company in the USA.
Vision
To have a conservative increase
growth, capitalize and cutback
schedules of other airlines. To continue
expanding conservatively in long-haul
success.
Vision Statement
To provide the most affordable,
reliable, and comfortable air
transportation in the world.
New Vision Statement
Our vision is to expand our locations both
domestic and overseas by being the
largest and most profitable airline
company to achieve both short and long-
haul carriers efficiently and with low cost.
Also to be an airline carrier that has the
most productive workforce to
guarantee the best flight possible for
each and every passenger.
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. To give ordinary people the opportunity
to fly.

• To the employees –
We are committed to provide our Employees 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.
Mission Statement
The mission of Southwest Airlines is to provide
excellent customer service and timely air travel at
an affordable price for markets in the United States.
We commit ourselves to the highest standards of
integrity in doing what is best for our passengers,
the airline industry, our employees and our
stockholders. By using the latest technology in
engine maintenance, we ensure safety,
efficiency, and keep fuel emissions below
governmental regulations. Through this mission,
we at Southwest ensure high company spirit and
long term financial prosperity.
The Southwest Effect
• The success and profitability of Southwest's business
model led to a common trend being named after the
company.
• The key concept is that when a low-fare carrier (or
any aggressive and innovative company) enters a
market, the market itself changes, and usually grows
dramatically.
• For example, when fares drop by 50% from their
historical averages, the number of new customers in
that market may not just double, but actually
quadruple, or more.
• Has been a major inspiration to other low-cost airlines,
and its business model has been repeated many times
around the world.
Goals and Objectives
• Ensure highest quality customer service in
the air or on the ground.
• Ready to help customers under any
circumstances.
• Are there to ensure that you make it from
point A to point B safely.
• To stay the most successful with low-fare,
high frequency point-to-point carrier.
The “Right” People or the “Right” Organization?
A Values-Based Organization View of Strategy

Fundamental Values or Beliefs • What are our basic Principles, Philosophies


and Core Values?
• What do we believe in?

Design Management Practices • What policies and practices are consistent


That Reflect and Embody with these Values and Philosophies?
These Values

Use These to Build Core •What can we do for the customer better
Capabilities than our competitors?

Invent a Strategy That is Consistent • Given our capabilities, how can we deliver
with the Values and Uses the value (EVA) to customers in a way our
Talents & Capabilities of People/ competitors cannot easily imitate?
Organization to Compete in
New and Unusual Ways
• Senior management “manages” the values
and culture of the firm.
Senior Management’s Role
Southwest Culture
• Has been developed from the very
beginning – the firm having faced
many difficulties.

• This has strengthened the culture.


Requirements for the
employees

• To work hard
• To have the desire to be the best
• To be courageous, to persevere and to innovate
• To display a sense of urgency
• Adhere to the Basic Principles
• To treat others with respect
• To put others first
• Be egalitarian
• To demonstrate proactive customer service
• To embrace the SWA Family
• The Fun-LUVing Attitude:

1.To have fun


2.To celebrate successes
3.To enjoy the work
4.To be a passionate team player
Basic Values or
Philosophical Pillars
• Value 1: Work should be fun ...it can
be play… Enjoy it.

• Value 2: Work is important ...don’t


spoil it with seriousness.

• Value 3: People are important...each


one makes a difference.
People Management
• The company’s motto: The employees come first, the customers come
after them.
• One thesis: Keep employees happy‐ then they will keep customers happy.
• The employees represent the greatest asset of the firm.
• Give people the freedom to be themselves.
• Provide a learning environment.
• Career development and Growth opportunities.
• Communicate.
• Forgive mistakes.
• Encourage people to act like owners.
• Trust and confidence in employees (No HR department - “People
Department”)
Principles and Philosophies
• No layoffs
• Equal opportunities for learning and personal growth
• Flat/ lean Org. Structure (only four levels)
• Employees have important inputs - listen to them
• High participative work environment
• Care, concern, respect within the organization for
employees
• Catastrophe fund for Employees + Families
• Hire and we will train/ develop/ mentor
• Celebrate achievements
• Have Employees Contests (financial rewards)
Innovation
• 1st airline to offer a profit-sharing plan
to employees beginning in 1979,
employees now own about 10% of
company stock.
• 1st major airline to offer “ticketless”
travel system-wide.
• 1st airline to offer online booking.
Focus on Employees -
A comparative advantage
Key Performance South West Airlines Industry
Indicator
Employees come 1st Yes No

Motivation Very High Average

Job Satisfaction Very High (85%) Below Average to


Average (50%)
Employment Security Never had a lay-off Very frequent lay-offs

Labor Agreement 10 years 1-3 years

Internal Customer Yes No


Key Performance South West Airlines Industry
Indicator

Families Caring Questionable

Trust and Confidence Yes No

Work Fun Not Challenging/Boring

Catastrophe Fund Yes No

Number of Employees Few Lots


At the top
• Gary C. Kelly –
- CEO since 2004.
- Chairman since May 21, 2008
- President since July 15, 2008
Herbert D. Kelleher
• Gave Southwest Airlines its wings.
• The initial battles helped shape
Southwest's celebrated culture, one
marked by humour, loyalty, and a fierce
resistance to corporate bureaucracy.
• Persistence was very important.
• Focused on ‘out-of-the-box’ thinking
and not conventional methods.
• “If it's conventional, it ain't
wisdom, and if it's wisdom, it's not
conventional.”
• Kelleher rejected the conventional notion of
putting the customer first.
• Style – Listen, observe and encourage.
• Knew the names of thousands of employees
who held him in the highest regard.
• “Clown prince” of the airline industry – loved
to make jokes, engage in pranks and
corporate antics.
• Known for his combativeness.
• “If someone says they’re going to smack
us in the face – knock them out, stomp
them out, boot them in the ditch, cover
them over, and move onto the next thing.
That’s the Southwest spirit at work”
• “War is hell and I love it so. That’s how I
feel. I’ve never gotten tired of fighting.”
Colleen Barrett
• President
• Kelleher’s legal secretary
• Listed on “100 most powerful women”
• Success Tactics:
- Commitment to excellence
- Initiative
- “Do the right thing”
• "We've always seen our competition
as the car. We've got to offer better,
more convenient service at a price
that makes it worthwhile to leave
your car at home and fly with us
instead.”
Southwest Leadership
Expectations
• Live the Southwest way
• Develop People:
- Know your people
- Set clear expectations
- Communicate consistently
- Delegate responsibility; hold people
accountable
- Encourage strengths; address weaknesses
- Provide timely, candid feedback
- Build a bench
Continued..
• Build Great Teams:
- Identify the right people for the right job
- Build and maintain trust among team members.
- Encourage vigorous debate and dialogue
- Gain commitment to shared goals
- Seek diversity
- Always be on the lookout for great people.
Continued..
• Think strategically:
- See beyond today’s activities
- Act like an owner
- Strive for continuous improvement
- Understand the relationship between current actions and future
consequences.
- Embrace problem solving
- Translate broad objectives into specific plans

• Get Excellent Results:


- Focus on safety, low cost and high customer delivery.
- Meet operational objectives
- Complete projects on time and on budget
- Adhere to all internal controls
- Demonstrate integrity in all actions
- Be honest
- Be ethical
- Be trustworthy
“Our People are our single greatest strength
and our most enduring long term competitive
advantage”- Gary Kelly, CEO, Southwest
Airlines
Southwest Airlines Hires the Right
People
Organization
Task Flexibility

Job
Requirements HR Outcomes
Rewards
Career Progression Performance
er utl u C/ s e ul a V Extra Effort
Match Retention
Impact Satisfaction
Person Commitment
KSA’s
Motivation
ATTITUDE
SOUTHWEST
SOUTHWEST AIRLINES
AIRLINES
EMPLOYEE
EMPLOYEE PROFILE
PROFILE

Customer Focused
Team Player
Self Motivated
Takes Initiative
Open and Flexible to Change
Sense of Humor
Takes Pride in Work
Recruitment & Selection
•Innovative Recruitment Ads – “You can have a job if you
measure up”, “it helps to be outgoing”.
•Recruitment processes focused more on attitude than on
skills.
•Team spirit was considered a must skill.
•Panel included customers too.
•Peer Hiring
•People oriented applicants with extroversion and good
sense of humour.
• The interview process is based on
examining how people have handled
various situations in their experience and
how they would address current situations.
• From these in depth interviews, the true
character of the person emerges, and the
selection team can determine the degree
of fit with the organization.
• Every hiring decision is a commitment to
the person and a statement about the
company’s culture.
Typical Ten Step Targeted Recruitment and Selection Process

1 Job Fair

Orientation/Application/Testing
2
Screening Interviews
3
4 Assessment Center (COBRA & Team Decision Exercise)

5
Final Interviews

6 Background/Reference Check

7 Pre-Employment Orientation

Job Preview/Offer
8
Med/Drug/Prework
9
Confirm Job
10
Offer
Southwest Can Choose the
Best
• Southwest received 199,200 resumes and hired 3,350 new
Employees in 2008.
• Southwest has 1,328 married couples. In other words, 2,656
Southwest Employees have spouses who also work for the
Company.
• Progressive on diversity recruitment
– Southwest Airlines was included in Hispanic Business
Magazine’s Top 60 Diversity Elite for 2007.
– Most admired companies among women
– Fortune’s “Best Companies” list
– Southwest Airlines ranked no.1 for being the Friendliest
Airlines in 2008 Times.com survey.
Training
• The purpose is not to train people to just do their jobs, but to
“color outside the lines” and to use their initiative to fill the
gaps in functions, departments, and operations to better serve
the customer.
• In the training process, the culture of involvement, action, and
customer service is reinforced.
• Leadership and various other training programs. Emphasis on
management style based on coaching and encouraging.
• Southwest uses an engaging  business game for
business acumen training to their managers.
• Courses for new recruits and employees.
• Financial literacy programs have been implemented to
Southwest employees to ensure that all employees, at all
levels, understand not only the company’s business and
financial objectives but also how their individual jobs impact
the bottom line.
Promotions
• Supervisory positions are filled
internally.
• Training provided to employees for
managerial positions over six month
period.
• At the end of six month
period,procedure for 360 degree
feedback and analysis by people
department.
Compensation
• The wages and salaries of the employees are
covered by union contracts.
• For most people this means that pay is
related to seniority. This is important because
Southwest values retention and long-term
commitment to the organization.
• Pay levels are either consistent with or
slightly below the wages for various markets.
• In fact, starting rates are low relative to the
market, but they progress more rapidly than
others to desired market levels. This keeps
the salary costs in line with the low-cost
provider philosophy of the company.
• Pilots and flight attendants are paid by the “trip”.
• Southwest makes limited use of team or unit-based
incentive programs.
• There are limited variable pay programs, the most
inclusive being corporate wide profit-sharing
program.
• This program was started in 1973 and encourages
everyone to keep costs as low as possible.
• The retirement plans offer a variety of investment
options, including Southwest stock. The employees
currently hold between 9% and 10% of the
company.
• The CEO is compensated at below the median of the
market for executives in companies of similar size.
• Other senior managers are paid slightly higher
relative to the market, but they retain a smaller
portion of the company’s stock.
• The philosophy is to underpay the executives for
cash compensation but let them share in creating
greater value for the shareholders by building a
stronger, more competitive airline.
• The stock options are not discounted, and
executives have the same opportunities for stock
purchases as other employees. The emphasis is on
long-term growth and development of the
corporation.
Awards and Recognition
• There are a wide variety of both corporate and local-
unit based recognition programs.
• Example: “Heroes of the Heart” is a way to recognize
teams of individuals whose behind-the scenes work
make a major impact on customer service.
• They may be groups from maintenance, service, or
support roles. They are selected through an
extensive nomination and review process.
• They are honoured by having the group’s name
painted on an airplane for one year.
• The award ceremony is one of the major events of
the company, and many people share in the
excitement of the presentation.
• There are numerous programs to recognize and
reward individuals, teams, and entire departments for
their contributions-

 Together We Make It Great


 Ticket to the Future
 Walk a Mile
 Helping Hands
 Stuck on Service
 Go See Do
 Winning Spirit
• Some of the awards are as creative as
the programs. These include:
 Joe Cool Award
 President’s Award
 Top Wrench Award
 Superstars
 A Shining Star
 Voice Award
Employee Relations &
Productivity
• Teamsters Union-Airline mechanics, stock clerks
and aircraft cleaners.
• Transport Worker Union-Flight attendants,
baggage handlers, ground crews.
• Southwest Airline Pilots Association- Sole
bargaining unit for the more than 5,900 pilots
of Southwest Airlines.
• Harmonious relationship with the unions.
• High labor productivity contributed to low labor
costs.
Southwest Marketing
A people first culture.
• Supported by Southwest's human
resource practices.
• Every aspect is dependant upon each
other.
• Each point of value addition -- in line
with with the core business strategy
• Few of their main competitors are
Continental Airlines and American
Airlines.
• Substitute products --
– train (Amtrak)
– bus (Greyhound)
– customers are attracted to the low
price)
Attack By Stratagem

• The skillful leader subdues the


enemy’s troops without fighting
-- Sun Tzu
• Product-cheap flights on
the Golden Triangle
• People-Organiztion • Customer
culture
Value(Product,
• Place-Dallas Love field
Physical Evidence,
• Process-Operational
Effifciency People)
• Price- two tier on-peak, • Cost to
off-peak pricing consumer(Price)
• Physical Evidence-The
planes and the
• Convenience
environment (Place,Process)
• Promotion • Communication
(Promotion)
• Promotion
– Leverages on
• People
• Place
• Produce
• Price
• Process
• Physical Evidence
STRATEGIES
SOUTHWEST AIRLINES REACH
Key Internal Factors IFE matrix Weight Rating Weighted
Score
Strengths
1. High capacity usage 0.08 4 0.32
2. Named the best low cost airline leader for the last three consecutive 0.10 4 0.40
years
3. Diversity in upper management 0.04 3 0.12
4. Revenues increase by 8 percent to 5.94 billion in fiscal year 2003 0.05 3 0.15

5. Net income increased 83 percent to $402 million in fiscal year 2003 0.08 4 0.32

6. Dominates the short haul segment of airline industry 0.10 4 0.40


7. Fourth largest domestic airline 0.03 3 0.09
8. In 2008 Southwest posted a profit for the 36th consecutive year 0.10 4 0.40

Weaknesses
1. No international flights 0.09 1 0.09
2. No segmented seating 0.03 2 0.06
3. Dependent on a single producer 0.05 2 0.10
4. Lack of exposure towards online booking agencies 0.05 2 0.10
5. Four out of five employees are members of the union 0.02 1 0.02

6. Carry a small amount of freight and cargo 0.02 2 0.04


7. Do not use chat communication such as e-mail 0.03 2 0.06
8. Do not offer morning flights 0.03 2 0.06
TOTAL 1.00 2.73
Key External Factors
EFE Matrix Weight Rating Weighted Score

Opportunities

1. National and international markets 0.03 2 0.06

2. Growth of older generation 0.05 2 0.10

3. Industrial research and development 0.02 3 0.06

4. Growth of Hispanic population 0.05 3 0.15

5. New technology opens the door for new products/services 0.04 3 0.12

6. Increased Internet advertising 0.06 3 0.18

7. Familiarity of Generation X with air travel and technology 0.07 3 0.21

8. Growth of business travel 0.06 3 0.18

Threats

1. Decline of leisure travel due to economy and terrorism 0.10 3 0.30

2. Competing online ticket reservation systems 0.11 3 0.15

3. New government regulations that make operations costlier 0.03 4 0.12

4. Demand for air travel has dropped sharply since September 11 0.10 2 0.32

5. Gas and oil price fluctuations 0.06 3 0.18

6. Terrorist attacks 0.15 3 0.45

7. Increased restrictions to limit noise (including restrictions on types of aircraft 0.03 2 0.06
used and limits on a number of operations)

8. Increasing annual airline security costs. 0.04 2 0.08

TOTALS 1.00 3.04


Competitive Profile Matrix
Southwest Delta American Airlines

Critical Success Weight Rating Weighted Rating Weighted Rating Weighted


Factors Score Score Score

Advertising .15 3 0.45 4 0.60 2 0.30


Product .11 3 0.33 4 0.44 4 0.44
Quality
.14 4 0.56 2 0.28 2 0.28
Price
Competitivenes .09 4 0.36 3 0.27 3 0.27
s
Management .14 4 0.56 2 0.28 1 0.14
Financial
Position .08 3 0.24 3 0.24 2 0.16
Customer
Loyalty
Global .06 1 0.06 4 0.24 3 0.18
Expansion .05 2 0.10 3 0.15 3 0.15
Market Share .05 2 0.10 4 0.20 2 0.10
Reward
Programs .13 3 0.39 3 0.39 3 0.39
Security

Total 1.00 3.15 3.52 2.41


Competitive (CA) Industry ( IS)
-1 5
-1 4
-2 4
-2 5

Financial (FS) Environmental (ES)


4 -2
4 -1
5 -2
5 -4
SPACE Matrix
Strategic Position & Action Evaluation matrix

• Y axis
• Financial strength +4.5 +1 worst
to + 6 best Y axis: 5 + (-3) = 2
• Environmental stability -2.25 -1 best
to –6 worst

• X axis
• Industry strength +4.5 1 worst to 6
best X axis: 3 + (-2) = 1
• Competitive advantage -1.5 -1 best to -6 worst
3, 2.25
IE Matrix
• Segment Revenue EFE
IFE
• Passenger $5.4 B 3.34
3.32
• Freight $1.1 M 3.20
3.80
Strong Average Weak

3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

High I II III

3.0 to 3.99
Grow and
Freight
Southwest
build
3.04
Medium IV V VI

The EFE Total 2.0 to 2.99 Passenger Hold and


Weighted Score
Maintain

Low VII VIII IX

1.0 to 1.99

Harvest and
Divest

Grow and Build 2.73

Segment Revenue EFE IFE


Passenger $5.4 B 3.34 3.32
Freight $1.1 M 3.20 3.80 IFE scores
No meals
No baggage
Focused transfer
passenger No connect-
service ions
No seating

Frequent,
Short,
reliable
direct routes
departures between midsize
Only
cities &
Boeing 737
aircraft
secondary
15-minute Low (base) airports
Limited gate turn- pay for all
specialization arounds employees
of tasks
Very low Limited use
prices of travel
Flexible agents
Employee High aircraft
union
contracts stock utilization
ownership
SOME OF THE IMPORTANT FACTS….

• Southwest Airlines announced it will start allowing


passengers to fly with dogs and cats in the cabin
for $75 each way.
• Southwest also took the opportunity to slap a new
fee — $25 one-way, $50 round trip — for children
age 5 to 11 flying without an adult.
• Charges for a third checked bag or overweight
luggage will jump from $25 to $50 each way.
• Southwest has 1,328 married couples. In other
words, 2,656 Southwest Employees have spouses
who also work for the Company.
MAJOR ACQUISITIONS

• Morris Air
Southwest Airlines purchased Morris Air and absorbed the
capital and routes into its inventory and service.
• Muse Air
Southwest acquired competitor Muse Air in 1985, which
operated McDonnell Douglas MD-80s
• ATA Airlines
Towards the end of November 2008, Southwest
announced it was buying the operating
certificate and the remaining assets of ATA
Airlines.
Failed Acquisitions

• On July 30, 2009, Southwest Airlines


publicly announced a $113.6 million
bid for Frontier Airlines Holdings,
the parent company  of Frontier
Airlines.
• On August 14, news reports
announced that Southwest had lost its
bid to Republic Airways Holdings.
OIL HEDGING
•  Between 1999 and 2008, Southwest
saved approximately $3.5 billion
through fuel hedging.
• Fuel Hedging is a contractual tool used
by airlines to stabilize jet fuel costs.
• If the price of jet fuel falls and the
airline hedged for a higher price, the
airline will be forced to pay an above-
market rate for jet fuel.
OIL HEDGING
SWA fuel hedging for future:
Fuel consumption and
cost

(In billions)
(in millions)
2008 2007 2006 2005 2004

Southwest 11,023.00 9,861.00 9,086.00 7,584.00 6,530.00 TOTAL REVEUE

Delta 22,697.00 19,154.00 17,532.00 16,480.00 15,235.00

American 23,766.00 22,935.00 22,563.00 20,712.00 18,645.00

         

Southwest 2,104.00 2,352.00 2,573.00 2,226.00 1,760.00 Gross Profit

Delta -433 1,162.00 281 -504 476

American 1,383.00 3,018.00 2,961.00 2,718.00 2,525.00

         

Southwest 449 791 934 725 404 Operating Income

Delta -8,314.00 2,311.00 -6,148.00 -2,885.00 -3,330.00

American -1,889.00 965 1,060.00 -89 -134


(in million)
Southwest 178 645 499 484 215 Net Income

Delta -8,922.00 1,612.00 -6,203.00 -3,818.00 -5,198.00

American -2,071.00 504 231 -857 -751

         

Southwest 0.242 0.852 0.628 0.613 0.275 EPS

Delta -7.36 1.81 -11.006 -16.62 -31.58

American -3.313 2.314 1.127 -5.194 -4.665


Particulars
Ratio Analysis
Southwest Delta American Industry Sector S&P 500

Price to Sales 0.65 0.22 0.09 0.71 0.48 2

Dividend Yield 0.2 NA NA 0 0.03 1.51

Quick Ratio 0.97 0.89 0.75 0.87 1.41 0.83

Current Ratio 1.03 0.92 0.82 0.94 1.75 0.98

Total Debt to Equity 69.96 1983 -- 258.3 93.33 202.25

Interest Coverage Ratio 7.14 -15.9 -3.06 0.01 0.24 30.98

Gross Margin 17.86 24.42 5.26 19.9 9.48 26.74

Operating Margin 1.59 -5.21 -3.99 4.15 1.48 --


Ratio Analysis(cont…)
Particulars Southwest Delta American Industry Sector S&P 500

Net Profit Margin -0.69 -9.47 -7.2 2.25 0.7 6.21

Return on Assets -0.45 -7.52 -5.56 1.94 0.29 3.62

Return on Investment -0.61 -9.8 -8.29 2.38 0.32 4.94

Return on Equity -1.17 -161.05 -- 9.32 0.35 8.71

Net revenue/Employee 292197 331764 2,41,665 79,987 4,35,09,782 4,70,222

Net Income/Employee -2028 -31432 -17,408 -7,850 28,83,776 30,316

Inventory Trrnover 34.27 61.9 28.16 25.54 2.94 5.32

Asset Turnover 0.64 0.79 0.77 0.45 0.26 0.45


Operations
Strategies
strategy
• “If you get your passengers to their
destinations when they want to get there, on
time, at the lowest possible fares, & make
sure they have a good time doing it, people will
fly your airline.”
• Operates only in the US market, unregulated
expansion kept it from facing the severe
financial difficulties all of the major airlines
suffered following 9/11.
Competitive Dimensions

• Operational Costs and Efficiency


• Customer Service
• Employee/Labor Relations
• Technology
Operating strategies.
• Practiced ‘PRICE ELASTICITY ’.
• Started services, if there is a potential for
at least 8 flights a day.
• Point -to-Point route system instead of Hub
& Spoke system to minimize connections,
delays, and total trip time.
• Helped the staff handle a steady work load
across the day, unlike Hub & Spoke.
• Concentrated on operating nonstop flights
between destinations.
How they achieved low
operating costs ?
• Operated only one type of aircraft
BOEING 737.It minimized the size of
spare parts inventories.
• It helped to improve the proficiency
and speed over maintenance,
making scheduling of aircrafts easier.
• Helped them to bargain with BOEING
for the best price.
• Avoided congested airports-to
achieve on time performance, avoid
higher fees & reduce fuel costs.
• Also helped passengers to minimize
total travel time for passengers.
• No first class & meals, helped
reprovisioning simple & quick.
TICKETING SYSTEM
• Customers had been encouraged to buy
tickets directly through companies
website.
• It reduced the number of personnel
needed to staff reservation center,
paper work & back office processing.
• They cut the commissions paid to travel
agents also.
• No baggage transfer services.
• Passengers were given just a card with ABCD,
not reservation on seats. If they are particular
about seats they have to push and catch.
• It helped them to reduce the checking in time.
• No separate cleaning crews .It was taken care
by Flight attendants.
• Used leather seats instead of clothes one, will
result in lower operational costs long term.
• Utilization rates of the planes were very high.
• The pilots average flying hours were 8.5 above
the industry’s 7.5 hours.
• Major Operational savings were on food,
commissions, Operating & maintenance
expenses, Rent and leasing fees.
• The company has also made great strides in
consolidating its database system, resulting
in greater efficiency and profitability for the
airline.
• Integration of Southwest's various software
platforms to a universal Oracle program
illustrates the company's ability to discover
cost-savings opportunities and devise a
means to achieve a goal.
• Shattered the standard hierarchical
framework used by many companies,
allowing employees to go around supervisors
for answers if necessary.
• SWABIZ, Southwest’s free online booking tool that
allows business travelers to plan, purchase, and track
business travel, increased sales 17% from 2007 to
2008.
• The “Southwest Shortcut” feature on helps
Customers find the lowest fare based on availability
over an entire month online.
• DING!, a downloadable desktop application, to notify
Customers of exclusive hot offers. Southwest was the
first airline to implement this type of tool.
• Bar codes in Boarding Passes, Software Upgrades, RFID.
CHALLENGES

• Reserved Seating- large technology


investments and may impact its gate
operations negatively.
• Passenger Demand- challenge is doing
scaling without losing the customer touch.
• Pursuing CRM techniques and has
applications to get insight into customer’s
wants and dislikes.
• In-Flight Entertainment- has 415
airplanes to consider and that
represents an investment decision at
a whole new dimension.
THANK YOU