South West Airlines

South West Airlines had…

Excellent customer service (rated the best
for on-time performance, fewest lost bags;
fewest customer complaints – 13 years in a
row)
Safest airline in the world (never had a fatal
accident)
Profitable every year for 33 years in a row
4th Largest Domestic Airlines in USA
How did they do it???
 History
In 1967, Rolling King & Herb Kellher founded South West
Airlines
In 1971, With President Lamar Muse at the helm, Southwest
Airlines takes off on its maiden voyage and hence America’s
most unique airline is born.
Expanded through 1980`s to 1990`s and by 1993 could fly to 34
cities in 15 states
South west introduced ticketless travel in four cities in 1994
and then launches online website in 1996
In 2000, the company bought 94 boeing 737
In 2001, it recorded a profit even after the 9/11 attacks
In 2005, south west airlines recorded its 33th year of
continuous profitability
Vision & Mission
 Vision & Mission
Our Vision- Dedication to the highest quality of
customer service delivered with a sense of
warmth, friendliness, individual pride & company
spirit
Our Mission- Provide safe and comfortable air
transportation for commuter and short haul
markets from close in airports at prices
competitive with automobiles and buses and to
involve customers and employees in the product
in the process making the airline a fun, profitable
and quality experience.
 South West Business Model
Providing Safe
Reliable
Short Duration Air service
Lowest Possible fare
Quality Service
Point to Point
Blanketing Stratergy
Integrated Low Cost/Differentiation Strategy
Southwest Airlines
Low Cost Differentiation

Use a single aircraft model Focus on customer

(Boeing 737)
Use secondary airports
Fly short routes
No meals
15 minute turnaround time
No reserved seats
No travel agent reservations
satisfaction
High level of employee
dedication
New flight services for
business travelers
(phones and faxes)
S.W.A.’s Culture, Values,
Philosophies & Principles
• Strategies and Goals: Fly to airports that are
under-utilized and close to metropolitan areas

- One type of aircraft (367+ 737’s)

- 80% of customers fly non-stop (no hub necessary -

avoids delays and shorter turnaround times; 70%
of planes have 15 minute ground times)

- Planes average 11 hours in air (Industry average = 8.0)

- Planes average 10.5 flights per gate (Industry

average = 4.5)
• Strategies and Goals: (continued)

• Simplify the operations (no meals, no seat assignments;

frequent flyer awards are simple - no mileage)

• Low cost structure - - a competitive advantage

- Turnaround time

- Pilot spend more time in air than other airlines

($100,000 wage vs.. Delta’s $200,000)

- Flight attendants and pilots help clean planes, check

passengers in at the gate and load bags if needed
(people pull together to accomplish the mission
and goal)
 South West Campaign
South west indulged
in creative
advertising using
catchy slogans &
creating a different
image from its
competitors
 South West
Airlines created
its brand image
with Shamu
One, Texas one
& many more
 Pricing & Promotion
Two Tier Pricing System
10$ per ticket for the last light of the
week
10$ per ticket for every flight after 7pm
everyday
59$ for a roundtrip in the state of
California
Sweetheart Stamps
 •People at Southwest:
•- Hard-working (94 employees per plane vs.. Americans
160 and United 160 - Industry average of 130; serves
2,500 passengers per employee Vs. United and American
average less than 1,000)

- Motivated

- Have FUN - fun place to work

- Treat employees as internal customers

- Employees are comfortable

- Fundamental business philosophy is that employees

come first!

- Not a lot of employees! (per customer – Best in the Industry)

 Southwest’s Values, Philosophy, and Spirit

These are three basic values (“the culture”) or philosophical

pillars at Southwest Airlines:

Value 1: Work should be fun ...it can be play . . . Enjoy it.

Value 2: Work is important ...don’t spoil with seriousness.

Value 3: People are important...each one makes a different.

Beliefs:
•Organizations are transparent
• Family and “Hugs”
• Organization:
• Stable working environment (never had a layoff)
• People orientated culture (informal egalitarianism)
• Equal Opportunity for learning and personal growth
• Creativity and innovation encouraged and rewarded
• Same caring, concern, respect within the organization
as outside (with customers)
• Catastrophe fund for employees
• Targeted selection utilized
• Celebrations (for achievements)
• Contests
• “Walk a Mile in My Shoes”
• Lots of companies say “employees are important” - -
however, their behaviors speak louder than words!!
• Flat/Lean organization structure (only 4 total levels)
Changes in the environment
Competition( Jet Blue, United Airlines,
ATA, Delta etc)
Technology
More services to the customer
Labour and management
miscommunication at South West due to
increase in operations & control
Increase in Operating Costs
 South West Answers:
Corporate Restructuring
Aesthetic & Technological Improvements
Getting Better Technology to streamline
operations ( computer generated luggage
tags)
Check in & obtain boarding passes from
southwest.com
 Why was Southwest
Successful?
“NOT” because of:
 Only flies 737’s
 Only Small Airports All Results/
 Low Ticket Prices
 Quick Turnaround Outcomes/
 Low Cost
 Customer Loyalty Effects/
 Efficiency
 Profitable Symptoms
 Rate of Productivity
Why Southwest Successful?
Because of its Internal Business Environment
and/ or Execution Systems—the Causes:
 Culture, Core Values, Philosophies and
Principles (Vision Direction)
 Effective Management of its Workplace (Level
5 leadership)
 Effective Exemplar Structures, Systems and
Processes (fit between elements of the
Execution System)
 However
Needed to change due to the constantly
changing environment, developing
competition, increasing customer
demands and changing employees and
managements values
THANK YOU ! ! !