Southwest Airlines is the largest airline in the United States each year. It is also known as a & # 145; Discount airlines & # 146; Contrary to its big rival in the industry. Rollin King and Herb Kelleher founded Southwest Airlines on June 18, 1971. His first flights are from Dallas Love Field to Houston and San Antonio, for short hops and light fare. The airline started with a simple strategy: If you get to your passengers to their destination when they want to go in time on the lowest possible fare and make sure they feel good, people fly away from your airline. & # 148; This approach was key to the southwestern success. Currently, Southwest serves about 60 cities (31 states), delivering 71 million full passengers (in 2004) and total operating revenue of $ 6.5 billion. The Southwest is publicly "LUV" The first major airline to fly a single type of aircraft (Boeing 737s)
* The first major airline to offer unprompted travel system extended The latest information The latest information from a
Among them is a frequent travel program based on the number of trips and not the number of miles achieved.
* The first airline, established in 1973, Sharing program for its employees
The first major airline to develop a website and online booking. In 2001, about 40 percent ($ 2.1 billion) of passenger revenue was generated through online bookings [http://www.southwest.com]. The Southwest Internet booking costs around $ 1, compared to $ 6 to $ 8 (19459003)
* Award Winning Customer Service
* Human Resource Exercises / High Performance
Analysis of Operations & # 150; Versatile sizes:
Southwest has a distinct advantage over other airlines in the industry by implementing an effective and efficient operational strategy that is an important pillar of overall corporate strategy. Below are some of the competitive dimensions that will be studied in this study
1. Operational Costs and Efficiency
2. Customer Service
3. Employee / Labor Relations
1. Operational Costs and Efficiency
After all, airlines are generally confused. But how is Southwest Airlines profitable? Southwest Airlines represents the industry's lowest cost and strongest balance, according to Kelleher. The two largest airlines operating at # 150; Labor costs (about 40%), followed by fuel costs (about 18%). There are some other ways Southwest can keep operating costs low – flying point-to-point routes, secondary (smaller) airports, delivering consistent aircraft, maintaining high aircraft utilization, promoting e-ticketing, etc.
Southwestern employment costs typically account for about 37% of operating costs. Perhaps the most important element in the business model of successful low-cost airlines is significantly higher labor productivity. According to the latest HBS case study, Southwest Airlines is the most "The American Airline (approximately 81% of employees belong to a trade union) and their average pay rate is higher than the US airline. The advantage of low-priced carriers is more flexible working methods that Virtually every employee is allowed to cross-use (unless licensing and safety standards allow) .These cross-use and long-term collaboration culture between workgroups result in lower unit labor costs.In 2000, the available quarter mile in the southwest of the fourth quarter (ASM) was more than 25% less than the United States and 58% less than US Airways.
Advantages of network airlines In 2001, the productivity of southwestern employees was more than 45% higher than US and US, despite the fact that these network operators were significantly longer and larger Average flight size. Therefore, continuing efforts with the worst labor costs, Southwest can positively influence the core revenues
Fuel costs are the second largest expense after airlines, about 18 percent of the carrier's operating costs. Airlines that want to stop huge fluctuations in operating costs and choose low profitability to cover fuel prices. If airlines are able to control fuel costs, they will more accurately estimate the budget and forecast revenue. As rising competition and aviation as commodities, price competitiveness was key to the survival and success of airlines. It was difficult to pay more fuel costs to passengers by raising ticket prices due to the highly competitive nature of the industry.
Southwest has successfully implemented its fuel-saving strategy to save fuel costs over a large And has the largest hedge position among the other carriers. In the second quarter of 2005, Southwest unit costs fell by 3.5% despite the fact that jet fuel costs increased by 25%. During the financial year 2003, Southwest has much lower fuel costs (0.012 ASMs) compared to other airlines except JetBlue, as shown in Exhibit 1. In 2005, 85 percent of airlines' fuel needs were $ 26 a barrel. The world's oil reached $ 68 per barrel in August 2005. In the second quarter of 2005, Southwest only achieved $ 196 million fuel savings. The state of the industry also suggests that covered airlines benefit from a competitive advantage over non-covered airlines. Southwest announced in 2003 that it will increase power-enhancing Blended Winglets for the current and future fleet of Boeing 737-700 & # 146; s. The visually distinctive Winglets improve performance, increase flight distance, save fuel, reduce engine maintenance costs and reduce take-off noise
Southwest operates Flight Point- Point service in order to maximize its operational efficiency and cost-effectiveness. Most flights are short-term, on average about 590 miles. It uses a strategy to keep your airways more frequent and to achieve better capacity utilization.
Southwest travels to secondary / smaller airports to reduce travel delays, providing excellent service to its customers. This led the industry to the exact performance. Southwest also had the ability to reduce the cost of airport operations relatively better than rival airlines.
Southwest's success is the only airplane strategy: its fleet is exclusively Boeing 737 jets. The common fleet significantly simplifies scheduling, operations and maintenance of the flight. Training costs for pilots, ground crew and mechanics are lower because only one aircraft is allowed to study. Purchasing, purchasing and other operations are also considerably simplified, thus reducing costs. Consistent aircraft will allow Southwest to better utilize the pilot's crew.
The idea of a ticketless journey was a great advantage to southwest because it could reduce its allocation costs. From the southwest to the mid-1990s it was electronic or airless and today 90-95% unattended. Customers using credit cards are eligible for online transactions and today's Southwest.com bookings account for 65% of all revenue. CEO Gary Kelly believes that this idea will continue to grow and will not be surprised if e-ticketing reaches 75% of South-South South American revenue by the end of 2005. In the past, when you paid a 10% Agency fee, your booking was about $ 8. De Southwest currently pays 50 cents and $ 1 for booking for electronic transactions, resulting in huge cost savings
. Employee and Labor Relations
Southwest was highly valued by the innovative management style. It maintains a strong emphasis on high-performance relationships, and its folk practices are key to the unmatched success of airlines.
For Our Colleagues
& # 147; We are committed to providing our employees with a stable working environment that provides equal opportunities for learning and personal development. Creativity and innovation are encouraged to improve Southwest Airlines efficiency. First of all, employees receive the same concern, respect, and caring attitudes within the organization that they expect to share from each other with each and every southwest customer. The southwestern mission has shown that the company is a strong commitment to its employees. The company gives its employees the same respect as their customers. The South West Mission Statement is unique as it recognizes the importance of its employees in the broader business strategy, which highlights excellent customer service and operational efficiency. Employees return the respect, loyalty and confidence shown by Southwest. Southwestern employees are known for their loyalty, commitment, attitude and innovation. Employees differ in the rest of the Southwest and in the rest of the aviation.
The southwestern recruitment policy is not only unique within the airlines but also more widely, The right people who grow in the southwestern culture. There are wide-ranging procedures for positive attitude and commitment. Those who do not have these qualities will die. Colleen Barrett, an operational officer outside the Southwest, states that recording is critical because it can not institutionalize behavior. Instead, you need to identify people who are already practicing the behaviors you are looking for. Then you can allow your employees to have themselves and decide on Customer Service based on common sense and natural willingness. & # 148; 1
Southwest recruiting and interviewing is a two-step process. The first step is a group interview conducted by staff assessing potential candidates' communication capability. The next steps in the process are in an interview where they evaluate the attitudes and orientation of the candidates in the service of others. These admission criteria apply to all job functions, as all Southwest employees have a customer service role. A critical part of the southwest operational strategy is that every southwestern job is a customer service position, regardless of whether it is directly related to the customer or internal.
The following table shows that, although Southwest is the most seriously, contractual negotiations between trade unions and southwest are much shorter than other carriers. This shows how Southwest relies on its colleagues and unions representing them.
Southwest was another type of company and was a culture that was unique to its beginnings. In 1990, Colleen Barrett formed the Southwestern Culture Committee. This is unique in the industry and among all major companies. The committee also has a mission:
& # 147; This group aims to help the southwestern spirit and culture as needed; Enrich and improve if it already exists; And to live in places where "floating" can be. In short, this group seeks "whatever it is" to create, strengthen and enrich the special spirit and culture that created such a wonderful company / family. "
This is a unique approach to corporate values that has created a culture that differentiates itself from others. Southwestern culture is the reason for being successful
Southwest Airlines mission
Southwest Airlines' mission is the highest level of customer service commitment, warmth, friendship, individual pride, and corporate spirit.
Herb Kelleher, founder of Southwest, quoted her as saying, "We are the Customer Service business, only what's happening in aviation." 2 Award-winning customer service is a distinctive feature of Southwest, and referenced internally & # 147; Positively outrageous service. # 148;. This means that from top to bottom everyone will do whatever they can to satisfy the customer. This includes Herb Kelleher, who is assisting baggage managers during Thanksgiving. By emphasizing the buyer and employee, Southwest can differentiate airlines from others. At the technical level, every employee or group within the Southwest has its own client. This means that every employee # 146; In such a way that the passenger is not directly involved. The mechanical client is the pilot and the host of the flight attendant.
It can be said that "positively outrageous service" Southwest is not a department or program or a management mandate. This is not a secondary product; This product. & # 148; This approach creates the conditions in which employees are more likely to handle clients in a way that differentiates the company from others. There are a number of accounts for passengers who received extraordinary treatment from Southwestern employees.
The question is to answer that the southwest customer service is different and why? Is it common for customers of other airlines to provide a special service? The answer is no. While Southwest does not have a monopoly on the kind people who are willing to satisfy the customer and beyond satisfying the client, such behavior is much more fueled by Southwestern nutrition.
Part of the culture of customer service typical of the southwest. This culture is supported by encouraging employees to satisfy the client. This approach encourages people who usually just go away on their way to help someone permanently perform, who always provide exceptional service. Southwestern employees distinguish their customer service from other airlines
Southwest uses technology in many ways to achieve its business goals and maintain effective operation. According to the CEO, technology is equal to productivity. Started in 1996, the ticketless trip was first introduced in Southwest. On May 1, 2000, Southwest Airlines introduced SWABIZ, a portal that helps corporate travel executives to travel and track trips on their website [http://www.southwest.com]. A number of new technology initiatives are currently underway, and some are already underway.
Southwest Airlines has invested $ 12 million over the past three years to unify corporate and terminal operations on approximately 10,000 Dell OptiPlex desktop and Latitude notebooks, according to the company's executives. Southwest wanted to replace the well-known bright color plastic board passageways with an electronic system of barcode paper boarding cards. Thus, approximately 350 touchscreen readers are installed on Dell OptiPlex desktops. The bar code gives Southwest more information to automatically coordinate the number of boarding passes with the number of passengers who actually boarded the aircraft.
Although technology will help Southwest Airlines effectively consolidate passenger information, the company's 3,000-Day Concerns can extend travel time for travelers. However, it was found that scanning each barcode for boarding cards did not increase or decrease the boarding schedule, but took minutes from administrative processes, for example, by searching for customers. With the new paper barcode system, southwestern ticket collectors are able to meet customer records after having to scroll through and sign up for multiple software screens. The process is much more automated. Once the bar code on the boarding card is read at the terminal gateway, the list of passengers is scanned in real time.
The old process was manual by finding information, scrolling from multiple software screens Reservation to login to boarding. Barcode hardware for embarkation cards has been installed. The company deals with the replacement of customer service mass storage devices at airports, including the Dallas Center.
Software applications, such as passengers used by officers, are overwhelmed. Southwest Airlines' internally posted "Airport Application Suite" is expected to be launched next year when the company switches from the green screen to the Window-based user interface. Like Wal-Mart Stores Inc., Southwest Airlines is convinced of developing its own developed software. The company uses very few off-the-shelf software. Between the works there are about 75 projects per year, about 900 IT employees.
Radio Frequency Identification Technology, which is a viable alternative to bar coding for packet identification on the Southwest radar. Try to test RFID technology in 2006. Although Southwest is catching up with other airlines, such as Air Tran, Alaska and Champion Airlines, many are able to easily transfer to more sophisticated applications.
The southwest proved to be very successful, despite the most troublesome times of airlines. However, it faces new challenges, as other low-cost airlines, such as JetBlue, ATA airlines, America West increase competition.
Southwest must be prepared for designated (reserved) seats to track post-flight passengers. This change involves large-scale technological investments and can negatively affect gate operations as the current way of non-assigning seats has helped to quickly turn door traffic.
The ever-preserved philosophy served in the southwestern direction. But as its business becomes increasingly complex and plans to buy dozens of new aircraft and passenger traffic is expected to rise to about 80 million years of entry, the simplification strategy that is reflected in the airline's IT philosophy is Developing. CIO Tom Nealon says: "It's time to apply the efficiency of our business processes, as our airline is considering us to provide the same high-quality customer service, so many things need to be automated, without technology being in the past." Southwest also follows aggressively Customer Relationship Management (CRM) techniques and applications to gain insight into customer desires and non-love. "According to an interview with CEO Gary Keller, Southwest focuses primarily on two areas: customer experience and experience in flight
The Aviation Entertainment
The Complete Effort to Develop Customer Aviation Experience, Aviation Entertainment is something that Southwest is currently evaluating and JetBlue has been very successful R for the introduction of long-haul flights. For comparison, Southwest needs to consider 415 airplanes, and this is an investment decision in a completely new dimension. In addition, Southwest needs to consider how things can fit into the environment. At this point, 60% of its service is still very short. Southwest must be aware of the fact that a certain approach that has been successful for a competitor does not necessarily work for it.
In the industry for operational excellence. Southwest Airlines is a good example of a company that is committed to its core competencies – efficient operations to manage the low cost structure, customer service, and innovative HR management practices. We hope this article has provided a good overview of southwest operations as part of a comprehensive strategy to achieve success and reach a competitive advantage.
1. [http://www.southwest.com] (South West Airline's Official Website)
2. Southwest Simplifies & # 148; – Air Transport World, April 2005, p. 36
3. About $ 48 (or So) around the world: how high are low-cost residential flights? Strategic Management Knowledge @ Wharton Newsletter Oct. 2005 5
4. TechWeb – [http://www.techweb.com/wire/ebiz/173601227]
5. Southwest: Success of Success: Consolidate! & # 148; – Oracle Magazine (September / October 2004) http://www.oracle.com/technology/oramag/oracle/04-sep/o54swest.html
6. Southwest Airlines: High Tech, Low Costs & # 148; – Eweek.com, April 2005
7. Jet Fuel Fueling Strategies: Opportunities for Airline and Industry Exercise # 148; & # 150; Kellogg Management Research Paper, Spring 2004
8. Winning Behavior: What Differed Among the Wondrous and Earnest Companies Terry R. Bacon and David G. Pugh, 2003
9. Time Magazine, 2002 October 28, edition, Vol. 160, p. 45
10. Wings of Change # 148; Information Week, March 28, 2005
11. Labor contract negotiations in the aviation sector, Monthly Labor Review, July 2003, page 24
Source by Mukund Srinivasan