Ankit Sutariya PGP13138Avadhesh Kumar PGP13076Gaurav Sikriwal PGP13088Jayesh Ruchandani PGP13135Sidharth Talukdar PGP13121Shankar Shethe PGP13136

Group 6

Southwest Airlines

• Concentrated on flying to airports that are underutilized and close to a metropolitan area.

• Low cost, low fare and frequent flights.• Love field in Dallas, Hobby in Houston, San Jose and Oakland in Bay

Area, Midway in Chicago

Background

• In mid 1980s, American Airlines had to cut down on its operations on some cities and shorter routes owing to losses.

• USAir too withdrew services on regional routes.• 40 percent of total capacity of the U.S. airline industry was seeking

bankruptcy or ceased operation completely.• However, in the same context, Southwest Airlines had been

profitable in every one of the last years and earned its stock earned highest returns.

Competitive Advantages and Industry Standard

Southwest Airline

• Costs:7.1 cents per mile• Turn-around time: 15 minutes• Pilot Salary:$100000, 70 hrs/

month• 81 employees/ aircraft• 2443 passengers/employee• 10.5 flights per gate• Aircraft spent 11 hours in air

daily

Industry Standards

• Costs:10 or more cents per mile

• Turn-around time: 35 minutes• Pilot salary: $200000, 50

hrs/month• 150 employees/ aircraft• 800 passengers/ employee• 4.5 flights per gate• Average 8 hours in air

Strategy

• 200 fuel efficient Boeing 737 aircraft

• Avoided hub and spoke system• Cost cutting

• Simple fares: Regular coach and off-peak fare• Only frills and beverages served to passengers• Reusable plastic boarding pass• Frequent flyer program based on number of trips• Less of use of computers and artificial intelligence

• Volume Pricing

Southwest Airlines - Culture and Values

Unconventional and Fun• Had flight attendants in hot pants in early days.• Refers itself as the “Love” (LUV) airline.• A small hear emblazoned on aircraft’s sides.

Teamwork• It is encouraged that employees identify with others at the

company.

Customer service• Employees routinely volunteered to help customers in

need• Word “Customer” was capitalized in all corporate

communications

The People department

• Has a staff of 100 people dedicated to deal with 18000 employees.

• Department’s mission statement “Recognizing that our people are the competitive advantage, we deliver the resources and services to prepare our people to be winners , to support the growth and profitability “

• Emphasis on less formal and more lively work culture

Recruiting

• Southwest was selective in its recruitment

In 1993 out of 98000 job applicants 16000 were interviewed and 2700 hired• To insure fit there was an emphasis on peer recruiting

Pilots hiring other pilots• Self-centered persons were not entertained, team players required• Even customers were involved in recruitment of flight attendants• They emphasized on right attitude than superior skills

As they said “we can change skill levels through training but cannot change attitude” • Prefer people with industry experience

40% pilots came with military experience, 20-30% from other airlines• Doesn’t have nepotism policy

Training• New flight attendants go through 4 weeks training (as low

as 5% attrition rate)• Customer oriented training • Hires are exposed to the history ,principles, values ,

mission , and culture of the company• Managers have course on leadership, pricing, revenue

management, and how business works• Training is 100% internal • Used internal customer feedback • Courses like “the climb “ to induce necessary behavior

which is further transferred to work settings• The front line forum for highly experienced employee to

explore the deliverability of the promises made

The southwest work force • 89 % unionized and 9 separate unions • Compensation program : “low pay at the beginning and

high pay after you get seniority” • Big difference : pilots and flight attendant are paid per trip. • Young work force with an average age of 34

The Southwest spirit • Culture : customer service, hard work, equality, cost

consciousness, dedication, fun and most important family.• No intra-union conflicts • Southwest’s success lies in its culture.

Threats

• United and continental airlines are continuously imitating the strategy of southwest airlines. There is constant threat of damage that can happen to southwest airlines.

• Southwest is a big firm now with 14000 employees and therefore become trickier to manage people in the same way they did all along.

Advantages

• The airline industry overall had been characterized by notoriously poor labor relations and authoritarian management.

• Southwest’s policies : labor peace, trust, non-adversarial relations, open sharing of information and high productivity.

Case analysisC

usto

mer

ser

vice

• Southwest Airlines is dedicated to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.

• Here they are consistent in the mission. There seems to be less power distance in the company.

Citi

zen

ship

beh

avio

r • Citizenship behavior is displayed and so are high motivation and job satisfaction

• Interestingly, even though the compensation is less as compared to other airlines yet the attrition rate is low.

Low

cos

t • Low Cost High Productivity by all standards. This was in part achieved because of overlapping roles – eg: pilots helping attendants

Case analysis contd..A

dh

ere

nce

to th

e m

issi

on • The recruitment

is done keeping in mind the mission and values of the company.

Se

rvic

e • Inseparability of production and consumption makes consumer part of service process so their active participation, employees’ enthusiasm, easy techniques make effective and efficient process.

Ma

rke

ting • Providing

physical evidence through website, brand name, colour, logo, uniform etc… help a service firm to overcome the problem of intangibility.