Background:
Southwest Airlines is the largest airline measured by amount of passengers carried each year within the United States. It is also known as a ‘discount airline’ compared with its large rivals in the industry. Rollin King and Herb Kelleher founded Southwest Airlines on June 18, 1971. Its first flights were from Love Field in Dallas to Houston and San Antonio, short hops with no-frills assistance and a easy fare structure. The airline began with one easy strategy: “If you get your passengers to their destinations when they want to get there, on time, at the lowest potential fares, and make darn sure they have a good time doing it, population will fly your airline.” This advent has been the key to Southwest’s success. Currently, Southwest serves about 60 cities (in 31 states) with 71 million total passengers carried (in 2004) and with a total operating wage of .5 billion. Southwest is traded publicly under the symbol “Luv” on Nyse.
Air Travel Card
Facts:
* The first major airline to fly a particular type of aircraft (Boeing 737s)
* The first major airline to offer ticketless trip principles wide including a frequent flier program based on amount of trips and not amount of miles flown.
* The first airline to offer a profit-sharing program to its Employees (instituted in 1973).
* The first major airline to organize a Web site and offer online booking. In 2001, about 40 percent (.1 billion) of its passenger wage was generated straight through online bookings at [http://www.southwest.com]. Southwest's cost per booking via the Internet is about , compared to a cost per booking straight through trip agents of to .
Key competing advantages:
* Low Operational costs / High Operational Efficiency
* Award winning customer service
* Human reserved supply practices / Work culture
Operations prognosis – competing Dimensions:
Southwest clearly has a definite advantage compared to other airlines in the manufactures by executing an effective and effective operations strategy that forms an important pillar of its overall corporate strategy. Given below are some competing dimensions that will be studied in this paper.
1. Operational Costs and Efficiency
2. Customer Service
3. Employee/Labor Relations
4. Technology
1. Operational Costs and Efficiency
After all, the airline manufactures overall is in shambles. But, how does Southwest Airlines stay profitable? Southwest Airlines has the lowest costs and strongest equilibrium sheet in its industry, agreeing to its chairman Kelleher. The two biggest operating costs for any airline are – labor costs (approx 40%) followed by fuel costs (approx 18%). Some other ways that Southwest is able to keep their operational costs low is - flying point-to-point routes, selecting secondary (smaller) airports, carrying consistent aircrafts, maintaining high aircraft utilization, encouraging e-ticketing etc.
Labor Costs
The labor costs for Southwest typically accounts for about 37% of its operating costs. Perhaps the most primary element of the victorious low-fare airline enterprise model is achieving significantly higher labor productivity. agreeing to a new Hbs Case Study, southwest airlines is the “most heavily unionized” Us airline (about 81% of its employees belong to an union) and its salary rates are thought about to be at or above midpoint compared to the Us airline industry. The low-fare carrier labor advantage is in much more flexible work rules that allow cross-utilization of virtually all employees (except where disallowed by licensing and security standards). Such cross-utilization and a long-standing culture of cooperation among labor groups translate into lower unit labor costs. At Southwest in 4th quarter 2000, total labor expense per available seat mile (Asm) was more than 25% below that of United and American, and 58% less than Us Airways.
Carriers like Southwest have a titanic cost advantage over network airlines simply because their workforce generates more production per employee. In a study in 2001, the productivity of Southwest employees was over 45% higher than at American and United, despite the substantially longer flight lengths and larger midpoint aircraft size of these network carriers. Therefore by its relentless race for lowest labor costs, Southwest is able to easily impact its lowest line revenues.
Fuel Costs
Fuel costs is the second-largest expense for airlines after labor and accounts for about 18 percent of the carrier's operating costs. Airlines that want to prevent huge swings in operating expenses and lowest line profitability select to hedge fuel prices. If airlines can operate the cost of fuel, they can more accurately evaluation budgets and forecast earnings. With growing competition and air trip becoming a commodity business, being competing on price was key to any airline’s survival and success. It became hard to pass higher fuel costs on to passengers by raising marker prices due to the very competing nature of the industry.
Southwest has been able to successfully implement its fuel hedging strategy to save on fuel expenses in a big way and has the largest hedging position among other carriers. In the second quarter of 2005, Southwest’s unit costs fell by 3.5% despite a 25% increase in jet fuel costs. During Fiscal year 2003, Southwest had much lower fuel expense (0.012 per Asm) compared to the other airlines with the exception of JetBlue as illustrated in exhibit 1 below. In 2005, 85 per cent of the airline’s fuel needs has been hedged at per barrel. World oil prices in August 2005 reached per barrel. In the second quarter of 2005 alone, Southwest achieved fuel savings of 6 million. The state of the manufactures also suggests that airlines that are hedged have a competing advantage over the non-hedging airlines. Southwest announced in 2003 that it would add performance-enhancing Blended Winglets to its current and time to come fleet of Boeing 737-700’s. The visually distinctive Winglets will improve carrying out by extending the airplane’s range, recovery fuel, lowering machine maintenance costs, and reducing takeoff noise.
Point-to-Point Service
Southwest operates its flight point-to-point assistance to maximize its operational efficiency and stay cost-effective. Most of its flights are short hauls averaging about 590 miles. It uses the strategy to keep its flights in the air more often and therefore perform better capacity utilization.
Secondary Airports
Southwest flies to secondary/smaller airports in an exertion to reduce trip delays and therefore furnish exquisite assistance to its customers. It has led the manufactures in on-time performance. Southwest has also been able to trim down its airport operations costs relatively better than its rival airlines.
Consistent aircrafts
At the heart of Southwest's success is its particular aircraft strategy: Its fleet consists exclusively of Boeing 737 jets. Having coarse fleet significantly simplifies scheduling, operations and flight maintenance. The training costs for pilots, ground crew and mechanics are lower, because there's only a particular aircraft to learn. Purchasing, provisioning, and other operations are also vastly simplified, thereby lowering costs. Consistent aircrafts also enables Southwest to use its pilot crew more efficiently.
E-Ticketing
The idea of ticketless trip was a major advantage to Southwest because it could lower its distribution costs. Southwest became electronic or ticketless back in the mid-1990s, and today they are about 90-95% ticketless. Customers who use reputation cards are eligible for online transactions, and today Southwest.com bookings account for about 65% of total revenue. The Ceo Gary Kelly thinks that this idea would grow further and that he wouldn't be surprised if e-ticketing accounted for 75% of Southwest’s revenues by end of 2005. In the past, when there was a 10% trip group commission paid, it used to cost about a booking. But currently, Southwest is paying between 50 cents and per booking for electronic transactions that translate to huge cost savings.
2. Employee and Labor Relations
Southwest has been very regarded for its innovative supervision style. It maintains a relentless focus on high-performance relationships and its people-management practices have been the key to its unparalleled success in the airline industry.
Mission Statement
To Our Employees
“We are committed to furnish our Employees a garage work environment with equal occasion for learning and personal growth. Creativity and innovation are encouraged for enhancing the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the society that they are improbable to share externally with every Southwest Customer.”
The Southwest mission statement shows that the enterprise has a strong commitment to its employees. The enterprise affords the same respect to its employees that is provided to its customers. The Southwest mission statement is unique in that it recognizes the point of its employees within the broader enterprise strategy, which emphasizes superb customer assistance and operational efficiency. The employees reciprocate the respect, loyalty and trust that Southwest demonstrates. Southwest employees are known for their loyalty, dedication, attitude and innovation. The employees are the distinguishing factor between Southwest and the rest of the airline industry.
Hiring
Southwest hiring policy is unique not only within the airline industry, but also more broadly, and revolves around finding population with the right attitude that will thrive in the Southwest culture. overall procedures are employed to hire for definite attitude and dedication. Those who do not posses those qualities are weeded out. Colleen Barrett, a non-operational officer at Southwest, states that
“Hiring is critical, because you cannot institutionalize behavior. Instead, you must recognize those population who already custom the behaviors you are finding for. Then you can allow Employees to be themselves and make decisions about customer assistance based on coarse sense and their natural inclinations.” 1
Recruiting and interviewing at Southwest is a two-step process. The first step is a group interview, conducted by employees, where communication skills of potential candidates are evaluated. The next steps in this process are one on one interview, where the candidates' attitudes and orientation toward serving others are evaluated. These hiring criteria apply to all job functions since all Employees at Southwest play a customer assistance role. A primary part of Southwest operational strategy is that every job at Southwest is a customer assistance position, whether it directly applies to the customer or whether it is internal.
The table below shows that even though Southwest is the most heavily unionized airline, at practically 80%, that contract negotiations between the unions and Southwest are much shorter in period than of the other major carriers. This shows the potential of association that Southwest has with its employees and with the unions that relate them.
Culture
Southwest was created as a distinct kind of enterprise and from its beginnings a unique culture was nurtured. In 1990 Colleen Barrett formed the Southwest Culture Committee. This is unique within the manufactures and among all large companies. The committee also has a mission statement:
“This group's goal is to help originate the Southwest spirit and culture where needed; to enrich it and make it better where it already exists; and to liven it up in places where it might be "floundering". In short, this group's goal is to do "whatever it takes" to create, enhance, and enrich the extra Southwest spirit and culture that has made this such a overwhelming Company/Family.”
It is this unique advent to enterprise values that has created a culture that differentiates itself from others. Southwest’s culture is the reckon why it is successful.
3. customer Service
The Mission of Southwest Airlines
The mission of Southwest Airlines is dedication to the top potential of customer assistance delivered with a sense of warmth, friendliness, personel pride, and enterprise Spirit.
Approach
Herb Kelleher, founder of Southwest, has been quoted as saying that "We're in the customer assistance business; we just happen to furnish airline transportation".2 Award winning customer assistance is a distinguishing characteristic of Southwest and it is referred to internally as “Positively Outrageous Service”. It means that from the top to lowest everyone does anything he or she can to satisfy the customer. This includes Herb Kelleher, who has been known for helping out baggage handlers on Thanksgiving. It is straight through emphasizing the customer and Employee that Southwest is able to differentiate itself from others in the airline industry. On a more technical level, each Employee or group within Southwest has his or her own customer. This means that every Employee ‘serves’ in one way or someone else despite not being directly complicated with the passenger. The mechanic’s customer is the pilot and the caterer’s is the flight attendant.
Results
It can be said that the "Positively Outrageous Service" that is unique to Southwest “is not the succeed of a department, or a program, or a mandate from management. It is not secondary to the product; it is the product.” This advent creates the conditions where Employees are more likely to treat customers in ways that distinguish the enterprise from others. There are numerous accounts of passengers who have received exceptional rehabilitation from Southwest employees.
The interrogate that needs to be answered is how Southwest’s customer assistance is distinct and why? Is it coarse for customers of other airlines to rave about their extra service? The riposte is that it is not. While Southwest does not have a monopoly on population who are kind and who are willing to go above and beyond to satisfy a customer, such behavior is nurtured at Southwest to a much greater extent.
It can then be accomplished that the customer assistance that is potential to Southwest is a part of its culture. This culture is supported straight through Employee encouragement to do the extra to satisfy the customer. This advent inspires population who would commonly only on occasion go out of their way to help someone, to come to be consistent performers that offer exceptional assistance all the time. Southwest employees are what differentiate its customer assistance from the other airlines.
4. Technology
Southwest utilizes technology in many ways to fulfill its enterprise objectives and claim its effective operations. agreeing to its Ceo, technology equals productivity. Launched in 1996, ticketless trip was first introduced by Southwest. On May 1st 2000, Southwest Airlines introduces "Swabiz," a portal that assists enterprise trip managers in booking and tracking trips made straight through its web site [http://www.southwest.com]. There are many new technology initiatives being undertaken currently and some are in the pipeline.
Bar codes in Boarding Passes
Southwest Airlines has invested million During the past three years to standardize corporate and terminal operations on about 10,000 Dell OptiPlex desktop and Latitude notebook computers agreeing to its enterprise executives. Southwest wanted to replace its well known, brightly colored plastic boarding passes with an electronic principles with bar-code paper boarding passes. So it installed about 350 touch screen marker readers powered by Dell OptiPlex desktops. The bar code gives Southwest more data to automatically reconcile the amount of boarding passes with the amount of passengers that easily board the plane.
Although the technology will help Southwest Airlines remain effective by consolidating passenger data for the company's 3,000 daily flights, there were concerns it could lengthen the time to get travelers on board. Any way it was found that scanning each bar code on the boarding passes didn't increase or shorten boarding schedules, but it did take minutes from menagerial processes, such as finding up customer records. The new paper bar code principles is giving Southwest marker agents the potential to match a customer narrative within having to scroll straight through and log into manifold software screens. The process is much more automated. Once the bar code on the boarding pass is scanned at the terminal gate it checks off the person from the passenger list in real time.
The old process was by hand that complicated finding the information, scrolling straight through several software screens from reservations to check-in to boarding. The bar code hardware to scan the boarding passes has been deployed. The enterprise is in the process of replacing customer assistance back-office equipment at airports including at its headquarters in Dallas.
Software Upgrades
Software applications, such as those used by clerks to check in passengers, are being replaced. Southwest Airlines' internally written "Airport Application Suite" is improbable to rollout next year as the enterprise transitions from green screens to Window-based user interface. Similar to Wal-Mart stores Inc., Southwest Airlines believes in developing in-house the software that runs its operations. The enterprise uses very diminutive off-the-shelf software. There are between 75 and 100 projects in the works each year supported by practically 900 It employees.
Rfid
Radio frequency identification technology, a convenient alternative to bar-coding for luggage identification, is also on Southwest's radar. It plans to test Rfid technology sometime in 2006. Even though, Southwest is playing a diminutive catch-up with other airlines such as Air Tran, Alaska and Champion Airlines, in many cases they are able leapfrog to more sophisticated applications easily having waited longer.
Challenges:
Southwest has emerged very successful, despite the most troubled times in the airline market. However, it faces new challenges in the face of expanding competition from other low fare airlines such as JetBlue, Ata airlines, America West.
Reserved Seating
Due to expanding security guidelines since September 2001, Southwest would need to get ready for assigned (reserved) seating to track its in-flight passengers. This convert will involve large technology investments and may impact its gate operations negatively since the current way of unassigned seating has helped in quick gate turnarounds.
Passenger Demand
The keep-it-simple religious doctrine has served Southwest well. But as its own enterprise grows and grows more complex, with plans to purchase dozens of new aircraft and an improbable upsurge in passenger traffic to about 80 million boarding’s a year, the simplicity strategy that has been reflected in the airline's It religious doctrine is evolving. The Cio Tom Nealon says that "It's time to adapt our enterprise processes for efficiency. As our airline scales for us to furnish the same kind of high-touch customer service, we have to automate a lot of things we've been able to do without technology previously. The challenge is doing that without conceding the customer touch." Southwest is also aggressively pursuing customer association supervision (Crm) techniques and has applications to get comprehension into customer’s wants and dislikes. agreeing to an interview with its Ceo Gary Keller, Southwest has its focus on enhancing in two areas - customer’s airport palpate and in-flight experience.
In-Flight Entertainment
In an overall exertion to improve customer’s in-flight experience, in-flight entertainment is something that Southwest is currently evaluating and which JetBlue has been very victorious at already because of its introduction in its long-haul flights. In comparison, Southwest has 415 airplanes to reconsider and that represents an venture decision at a whole new dimension. Additionally, Southwest has to reconsider how things may fit into their environment. At this point, 60% of its assistance is still very short haul. Southwest needs to be mindful of the fact that a definite advent that has been victorious for its competitor may not be necessarily work to its advantage.
Summary:
Southwest has long been regarded as a benchmark in its manufactures for operational excellence. Southwest Airlines is a fine example of a enterprise that is committed to its core competencies - effective operations to drive its low cost structure, outstanding delivery of customer assistance and innovative Hr supervision practices. We hope this paper provided a good comprehension into Southwest operations, as part of its overall strategy, to perform success and gain competing advantage.
References:
1. [http://www.southwest.com] (Southwest airlines valid web site)
2. “Southwest keeps it simple” - Air converyance World, April 2005, Pg 36
3. “Around the World on (or So): How High Can reduction Airlines Fly?“ Strategy supervision - Knowledge@ Wharton Newsletter Oct 5, 2005
4. TechWeb - [http://www.techweb.com/wire/ebiz/173601227]
5. “Southwest's Strategy for Success: Consolidate!” - Oracle Magazine (Sept/Oct 2004 edition) http://www.oracle.com/technology/oramag/oracle/04-sep/o54swest.html
6. “Southwest Airlines: High Tech, Low Costs” - Eweek.com, April 2005
7. “Jet Fuel Hedging Strategies: Options available for Airlines and a witness of manufactures Practices” – Kellogg School of supervision explore Paper, Spring 2004
8. Winning Behavior: What the Smartest, Most victorious fellowships Do Differently, Terry R. Bacon and David G. Pugh, 2003
9. Time Magazine, Oct 28th 2002 issue, Vol. 160 Issue 18, p. 45
10. “Wings Of Change”,Information Week, March 28, 2005,
11. Labor contract Negotiations in the Airline Industry, Monthly Labor Review, July 2003, page 24
Southwest Airlines Operations - A Strategic PerspectiveBackground:
Southwest Airlines is the largest airline measured by amount of passengers carried each year within the United States. It is also known as a ‘discount airline’ compared with its large rivals in the industry. Rollin King and Herb Kelleher founded Southwest Airlines on June 18, 1971. Its first flights were from Love Field in Dallas to Houston and San Antonio, short hops with no-frills assistance and a easy fare structure. The airline began with one easy strategy: “If you get your passengers to their destinations when they want to get there, on time, at the lowest potential fares, and make darn sure they have a good time doing it, population will fly your airline.” This advent has been the key to Southwest’s success. Currently, Southwest serves about 60 cities (in 31 states) with 71 million total passengers carried (in 2004) and with a total operating wage of .5 billion. Southwest is traded publicly under the symbol “Luv” on Nyse.
Air Travel Card
Facts:
* The first major airline to fly a particular type of aircraft (Boeing 737s)
* The first major airline to offer ticketless trip principles wide including a frequent flier program based on amount of trips and not amount of miles flown.
* The first airline to offer a profit-sharing program to its Employees (instituted in 1973).
* The first major airline to organize a Web site and offer online booking. In 2001, about 40 percent (.1 billion) of its passenger wage was generated straight through online bookings at [http://www.southwest.com]. Southwest's cost per booking via the Internet is about , compared to a cost per booking straight through trip agents of to .
Key competing advantages:
* Low Operational costs / High Operational Efficiency
* Award winning customer service
* Human reserved supply practices / Work culture
Operations prognosis – competing Dimensions:
Southwest clearly has a definite advantage compared to other airlines in the manufactures by executing an effective and effective operations strategy that forms an important pillar of its overall corporate strategy. Given below are some competing dimensions that will be studied in this paper.
1. Operational Costs and Efficiency
2. Customer Service
3. Employee/Labor Relations
4. Technology
1. Operational Costs and Efficiency
After all, the airline manufactures overall is in shambles. But, how does Southwest Airlines stay profitable? Southwest Airlines has the lowest costs and strongest equilibrium sheet in its industry, agreeing to its chairman Kelleher. The two biggest operating costs for any airline are – labor costs (approx 40%) followed by fuel costs (approx 18%). Some other ways that Southwest is able to keep their operational costs low is - flying point-to-point routes, selecting secondary (smaller) airports, carrying consistent aircrafts, maintaining high aircraft utilization, encouraging e-ticketing etc.
Labor Costs
The labor costs for Southwest typically accounts for about 37% of its operating costs. Perhaps the most primary element of the victorious low-fare airline enterprise model is achieving significantly higher labor productivity. agreeing to a new Hbs Case Study, southwest airlines is the “most heavily unionized” Us airline (about 81% of its employees belong to an union) and its salary rates are thought about to be at or above midpoint compared to the Us airline industry. The low-fare carrier labor advantage is in much more flexible work rules that allow cross-utilization of virtually all employees (except where disallowed by licensing and security standards). Such cross-utilization and a long-standing culture of cooperation among labor groups translate into lower unit labor costs. At Southwest in 4th quarter 2000, total labor expense per available seat mile (Asm) was more than 25% below that of United and American, and 58% less than Us Airways.
Carriers like Southwest have a titanic cost advantage over network airlines simply because their workforce generates more production per employee. In a study in 2001, the productivity of Southwest employees was over 45% higher than at American and United, despite the substantially longer flight lengths and larger midpoint aircraft size of these network carriers. Therefore by its relentless race for lowest labor costs, Southwest is able to easily impact its lowest line revenues.
Fuel Costs
Fuel costs is the second-largest expense for airlines after labor and accounts for about 18 percent of the carrier's operating costs. Airlines that want to prevent huge swings in operating expenses and lowest line profitability select to hedge fuel prices. If airlines can operate the cost of fuel, they can more accurately evaluation budgets and forecast earnings. With growing competition and air trip becoming a commodity business, being competing on price was key to any airline’s survival and success. It became hard to pass higher fuel costs on to passengers by raising marker prices due to the very competing nature of the industry.
Southwest has been able to successfully implement its fuel hedging strategy to save on fuel expenses in a big way and has the largest hedging position among other carriers. In the second quarter of 2005, Southwest’s unit costs fell by 3.5% despite a 25% increase in jet fuel costs. During Fiscal year 2003, Southwest had much lower fuel expense (0.012 per Asm) compared to the other airlines with the exception of JetBlue as illustrated in exhibit 1 below. In 2005, 85 per cent of the airline’s fuel needs has been hedged at per barrel. World oil prices in August 2005 reached per barrel. In the second quarter of 2005 alone, Southwest achieved fuel savings of 6 million. The state of the manufactures also suggests that airlines that are hedged have a competing advantage over the non-hedging airlines. Southwest announced in 2003 that it would add performance-enhancing Blended Winglets to its current and time to come fleet of Boeing 737-700’s. The visually distinctive Winglets will improve carrying out by extending the airplane’s range, recovery fuel, lowering machine maintenance costs, and reducing takeoff noise.
Point-to-Point Service
Southwest operates its flight point-to-point assistance to maximize its operational efficiency and stay cost-effective. Most of its flights are short hauls averaging about 590 miles. It uses the strategy to keep its flights in the air more often and therefore perform better capacity utilization.
Secondary Airports
Southwest flies to secondary/smaller airports in an exertion to reduce trip delays and therefore furnish exquisite assistance to its customers. It has led the manufactures in on-time performance. Southwest has also been able to trim down its airport operations costs relatively better than its rival airlines.
Consistent aircrafts
At the heart of Southwest's success is its particular aircraft strategy: Its fleet consists exclusively of Boeing 737 jets. Having coarse fleet significantly simplifies scheduling, operations and flight maintenance. The training costs for pilots, ground crew and mechanics are lower, because there's only a particular aircraft to learn. Purchasing, provisioning, and other operations are also vastly simplified, thereby lowering costs. Consistent aircrafts also enables Southwest to use its pilot crew more efficiently.
E-Ticketing
The idea of ticketless trip was a major advantage to Southwest because it could lower its distribution costs. Southwest became electronic or ticketless back in the mid-1990s, and today they are about 90-95% ticketless. Customers who use reputation cards are eligible for online transactions, and today Southwest.com bookings account for about 65% of total revenue. The Ceo Gary Kelly thinks that this idea would grow further and that he wouldn't be surprised if e-ticketing accounted for 75% of Southwest’s revenues by end of 2005. In the past, when there was a 10% trip group commission paid, it used to cost about a booking. But currently, Southwest is paying between 50 cents and per booking for electronic transactions that translate to huge cost savings.
2. Employee and Labor Relations
Southwest has been very regarded for its innovative supervision style. It maintains a relentless focus on high-performance relationships and its people-management practices have been the key to its unparalleled success in the airline industry.
Mission Statement
To Our Employees
“We are committed to furnish our Employees a garage work environment with equal occasion for learning and personal growth. Creativity and innovation are encouraged for enhancing the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the society that they are improbable to share externally with every Southwest Customer.”
The Southwest mission statement shows that the enterprise has a strong commitment to its employees. The enterprise affords the same respect to its employees that is provided to its customers. The Southwest mission statement is unique in that it recognizes the point of its employees within the broader enterprise strategy, which emphasizes superb customer assistance and operational efficiency. The employees reciprocate the respect, loyalty and trust that Southwest demonstrates. Southwest employees are known for their loyalty, dedication, attitude and innovation. The employees are the distinguishing factor between Southwest and the rest of the airline industry.
Hiring
Southwest hiring policy is unique not only within the airline industry, but also more broadly, and revolves around finding population with the right attitude that will thrive in the Southwest culture. overall procedures are employed to hire for definite attitude and dedication. Those who do not posses those qualities are weeded out. Colleen Barrett, a non-operational officer at Southwest, states that
“Hiring is critical, because you cannot institutionalize behavior. Instead, you must recognize those population who already custom the behaviors you are finding for. Then you can allow Employees to be themselves and make decisions about customer assistance based on coarse sense and their natural inclinations.” 1
Recruiting and interviewing at Southwest is a two-step process. The first step is a group interview, conducted by employees, where communication skills of potential candidates are evaluated. The next steps in this process are one on one interview, where the candidates' attitudes and orientation toward serving others are evaluated. These hiring criteria apply to all job functions since all Employees at Southwest play a customer assistance role. A primary part of Southwest operational strategy is that every job at Southwest is a customer assistance position, whether it directly applies to the customer or whether it is internal.
The table below shows that even though Southwest is the most heavily unionized airline, at practically 80%, that contract negotiations between the unions and Southwest are much shorter in period than of the other major carriers. This shows the potential of association that Southwest has with its employees and with the unions that relate them.
Culture
Southwest was created as a distinct kind of enterprise and from its beginnings a unique culture was nurtured. In 1990 Colleen Barrett formed the Southwest Culture Committee. This is unique within the manufactures and among all large companies. The committee also has a mission statement:
“This group's goal is to help originate the Southwest spirit and culture where needed; to enrich it and make it better where it already exists; and to liven it up in places where it might be "floundering". In short, this group's goal is to do "whatever it takes" to create, enhance, and enrich the extra Southwest spirit and culture that has made this such a overwhelming Company/Family.”
It is this unique advent to enterprise values that has created a culture that differentiates itself from others. Southwest’s culture is the reckon why it is successful.
3. customer Service
The Mission of Southwest Airlines
The mission of Southwest Airlines is dedication to the top potential of customer assistance delivered with a sense of warmth, friendliness, personel pride, and enterprise Spirit.
Approach
Herb Kelleher, founder of Southwest, has been quoted as saying that "We're in the customer assistance business; we just happen to furnish airline transportation".2 Award winning customer assistance is a distinguishing characteristic of Southwest and it is referred to internally as “Positively Outrageous Service”. It means that from the top to lowest everyone does anything he or she can to satisfy the customer. This includes Herb Kelleher, who has been known for helping out baggage handlers on Thanksgiving. It is straight through emphasizing the customer and Employee that Southwest is able to differentiate itself from others in the airline industry. On a more technical level, each Employee or group within Southwest has his or her own customer. This means that every Employee ‘serves’ in one way or someone else despite not being directly complicated with the passenger. The mechanic’s customer is the pilot and the caterer’s is the flight attendant.
Results
It can be said that the "Positively Outrageous Service" that is unique to Southwest “is not the succeed of a department, or a program, or a mandate from management. It is not secondary to the product; it is the product.” This advent creates the conditions where Employees are more likely to treat customers in ways that distinguish the enterprise from others. There are numerous accounts of passengers who have received exceptional rehabilitation from Southwest employees.
The interrogate that needs to be answered is how Southwest’s customer assistance is distinct and why? Is it coarse for customers of other airlines to rave about their extra service? The riposte is that it is not. While Southwest does not have a monopoly on population who are kind and who are willing to go above and beyond to satisfy a customer, such behavior is nurtured at Southwest to a much greater extent.
It can then be accomplished that the customer assistance that is potential to Southwest is a part of its culture. This culture is supported straight through Employee encouragement to do the extra to satisfy the customer. This advent inspires population who would commonly only on occasion go out of their way to help someone, to come to be consistent performers that offer exceptional assistance all the time. Southwest employees are what differentiate its customer assistance from the other airlines.
4. Technology
Southwest utilizes technology in many ways to fulfill its enterprise objectives and claim its effective operations. agreeing to its Ceo, technology equals productivity. Launched in 1996, ticketless trip was first introduced by Southwest. On May 1st 2000, Southwest Airlines introduces "Swabiz," a portal that assists enterprise trip managers in booking and tracking trips made straight through its web site [http://www.southwest.com]. There are many new technology initiatives being undertaken currently and some are in the pipeline.
Bar codes in Boarding Passes
Southwest Airlines has invested million During the past three years to standardize corporate and terminal operations on about 10,000 Dell OptiPlex desktop and Latitude notebook computers agreeing to its enterprise executives. Southwest wanted to replace its well known, brightly colored plastic boarding passes with an electronic principles with bar-code paper boarding passes. So it installed about 350 touch screen marker readers powered by Dell OptiPlex desktops. The bar code gives Southwest more data to automatically reconcile the amount of boarding passes with the amount of passengers that easily board the plane.
Although the technology will help Southwest Airlines remain effective by consolidating passenger data for the company's 3,000 daily flights, there were concerns it could lengthen the time to get travelers on board. Any way it was found that scanning each bar code on the boarding passes didn't increase or shorten boarding schedules, but it did take minutes from menagerial processes, such as finding up customer records. The new paper bar code principles is giving Southwest marker agents the potential to match a customer narrative within having to scroll straight through and log into manifold software screens. The process is much more automated. Once the bar code on the boarding pass is scanned at the terminal gate it checks off the person from the passenger list in real time.
The old process was by hand that complicated finding the information, scrolling straight through several software screens from reservations to check-in to boarding. The bar code hardware to scan the boarding passes has been deployed. The enterprise is in the process of replacing customer assistance back-office equipment at airports including at its headquarters in Dallas.
Software Upgrades
Software applications, such as those used by clerks to check in passengers, are being replaced. Southwest Airlines' internally written "Airport Application Suite" is improbable to rollout next year as the enterprise transitions from green screens to Window-based user interface. Similar to Wal-Mart stores Inc., Southwest Airlines believes in developing in-house the software that runs its operations. The enterprise uses very diminutive off-the-shelf software. There are between 75 and 100 projects in the works each year supported by practically 900 It employees.
Rfid
Radio frequency identification technology, a convenient alternative to bar-coding for luggage identification, is also on Southwest's radar. It plans to test Rfid technology sometime in 2006. Even though, Southwest is playing a diminutive catch-up with other airlines such as Air Tran, Alaska and Champion Airlines, in many cases they are able leapfrog to more sophisticated applications easily having waited longer.
Challenges:
Southwest has emerged very successful, despite the most troubled times in the airline market. However, it faces new challenges in the face of expanding competition from other low fare airlines such as JetBlue, Ata airlines, America West.
Reserved Seating
Due to expanding security guidelines since September 2001, Southwest would need to get ready for assigned (reserved) seating to track its in-flight passengers. This convert will involve large technology investments and may impact its gate operations negatively since the current way of unassigned seating has helped in quick gate turnarounds.
Passenger Demand
The keep-it-simple religious doctrine has served Southwest well. But as its own enterprise grows and grows more complex, with plans to purchase dozens of new aircraft and an improbable upsurge in passenger traffic to about 80 million boarding’s a year, the simplicity strategy that has been reflected in the airline's It religious doctrine is evolving. The Cio Tom Nealon says that "It's time to adapt our enterprise processes for efficiency. As our airline scales for us to furnish the same kind of high-touch customer service, we have to automate a lot of things we've been able to do without technology previously. The challenge is doing that without conceding the customer touch." Southwest is also aggressively pursuing customer association supervision (Crm) techniques and has applications to get comprehension into customer’s wants and dislikes. agreeing to an interview with its Ceo Gary Keller, Southwest has its focus on enhancing in two areas - customer’s airport palpate and in-flight experience.
In-Flight Entertainment
In an overall exertion to improve customer’s in-flight experience, in-flight entertainment is something that Southwest is currently evaluating and which JetBlue has been very victorious at already because of its introduction in its long-haul flights. In comparison, Southwest has 415 airplanes to reconsider and that represents an venture decision at a whole new dimension. Additionally, Southwest has to reconsider how things may fit into their environment. At this point, 60% of its assistance is still very short haul. Southwest needs to be mindful of the fact that a definite advent that has been victorious for its competitor may not be necessarily work to its advantage.
Summary:
Southwest has long been regarded as a benchmark in its manufactures for operational excellence. Southwest Airlines is a fine example of a enterprise that is committed to its core competencies - effective operations to drive its low cost structure, outstanding delivery of customer assistance and innovative Hr supervision practices. We hope this paper provided a good comprehension into Southwest operations, as part of its overall strategy, to perform success and gain competing advantage.
References:
1. [http://www.southwest.com] (Southwest airlines valid web site)
2. “Southwest keeps it simple” - Air converyance World, April 2005, Pg 36
3. “Around the World on (or So): How High Can reduction Airlines Fly?“ Strategy supervision - Knowledge@ Wharton Newsletter Oct 5, 2005
4. TechWeb - [http://www.techweb.com/wire/ebiz/173601227]
5. “Southwest's Strategy for Success: Consolidate!” - Oracle Magazine (Sept/Oct 2004 edition) http://www.oracle.com/technology/oramag/oracle/04-sep/o54swest.html
6. “Southwest Airlines: High Tech, Low Costs” - Eweek.com, April 2005
7. “Jet Fuel Hedging Strategies: Options available for Airlines and a witness of manufactures Practices” – Kellogg School of supervision explore Paper, Spring 2004
8. Winning Behavior: What the Smartest, Most victorious fellowships Do Differently, Terry R. Bacon and David G. Pugh, 2003
9. Time Magazine, Oct 28th 2002 issue, Vol. 160 Issue 18, p. 45
10. “Wings Of Change”,Information Week, March 28, 2005,
11. Labor contract Negotiations in the Airline Industry, Monthly Labor Review, July 2003, page 24
Southwest Airlines Operations - A Strategic Perspective
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