Southwest Airline In 2008: Culture, Values, And Operating Practices
Since its inception way back in 1971, Southwest airline has swerved along rugged terrain to become the largest commercial airline in U.S. At the outset, Southwest airline enjoys high reputation in the airline industry as it commands the largest market share in terms of passenger traffic in addition to being the sixth largest commercial airline in revenue earnings in the U.S. The airline has had to contend with stiff competition and rivals from its opponents such as Texas airline and Braniff airlines to survive in the market amid business pressures aforementioned. Southwest airline recorded steady rise in quarterly profits for the sixty ninth consecutive quarter since 1980 amid massive losses experienced by U.S airline industry during the same period as a result of increases in the price of crude oil as well as jet fuel. Moreover, Southwest airline had to overcome hurdles of economic recession, fare tussles, industry slump as well as legal and regulatory barriers to become the most preferred flight in the U.S. Besides, Southwest airline offers suitable working conditions for its employees as well as worthwhile contract decorated with lucrative allowances so as to motivate them in providing quality services to its customers. The airline swam against the tides of economic turbulence between 1990-1994 to retain its employees when the industry was experiencing money loss and had to lay off its 120000 workers. Generally, Southwest airline has vastly grown since the commencement of its operation to become a force to reckon with in the flight industry in U.S. Moreover, the airline continues to offer high quality and affordable services to its customers and is currently controlling the largest market share in U.S (Thompson, & Gamble, 2008).
Airline industry in the U.S. has faced a lot of hurdles including global economic downturn. Such slump in the economy has caused financial strain on the business leading to heightening in the jet fuel prices as well as crude oil. The jet fuel prices for instance increased tremendously from about fifteen percent of operating expenses to forty percent between 2000 and 2008. Such increases resulted into substantial increases in the fare charges by the airline companies in U.S. However, Southwest airline stood by its all-inclusive fare prices and never changed.
Besides, Southwest airline has to contend with other challenges in the industry including business pressures such as congestion in the air-traffic, merges of business rivals, stringent government regulations on aircraft safety and maintenance, and heightened customer demands concerning airline services. Moreover, the 9/11 attacks adversely affected the airline industry as fewer passengers opted to fly due to security concerns (Thompson, & Gamble, 2008).
Southwest airline also experienced a series of legal, regulatory as well as competitive tussles within the industry in the U.S. In the 1970s for instance, the airline had to fight the local officials in a court of law so as to remain situated in the Dallas love Field unlike the latter’s demands that it relocate to newly constructed airport at Dallas Fort Worth. Fortunately, the airline won the case and stayed at its former base where its headquarters were located. Worse still, Southwest airline rivals including Braniff and Texas airline intensified rivalries in the industry by planning to harass the airline and if possible eliminate from operation (Thompson, & Gamble, 2008). Moreover, the airline’s application to expand its services to many cities in Texas was also met by stiff opposition as rivals protested on the possibility of overcapacity costs that would be created by such an initiative. Southwest airline however won the battle by convincing the officials on its plans to expand the market share and also encourage many people to consider flying given the reduced fare charges.
Evaluation of findings
Southwest airline has been successful in implementing its management strategies. To begin with, the company has tremendously increased its capital base in addition to expanding its market share as afar as volume of passengers it handles is concerned. According to the company’s former president Herb Kelleher, Southwest airline treats its employees as its customers who in turn treat outsiders similarly. Moreover, Southwest airline prefers recruiting employees who have positive attitude even when they are unskilled compared to skilled employees with negative attitudes (Thompson, & Gamble, 2008). The company thereafter trains recruits in its institution of Southwest University for people where the companies curriculum is followed. This curriculum would encompass studies on the aircraft safety and maintenance. The aspiring personnel managers would be trained on the management issues. Such initiatives have yielded fruits as the airline’s customers enjoy one of the best and high quality services from the employees. Moreover, the employees have been empowered to make suitable decisions and go ahead to execute functions that they deem fit in certain situation.
Kelly foresaw various factors that would be fundamental to the success of the company. These factors include caring personally and warmly for its customers, offering reduced fares as well as lowering operational cost by enhancing efficiency, excellence and operational safety. These ambitions have so far realized as the company enjoys high reputation in the flight industry in the U.S. Customers are treated with the at most courtesy they deserve. Southwest company has recorded a steady increase in profitability for fourteen years of its twenty eight years since 1973 through to 2007 amid constant losses experienced by the industry as a result of economic downturn and increases in fuel and crude oil prices (Thompson, & Gamble, 2008).
Generally, Southwest Airline Company has achieved most of the goals it had earlier set due to the sound management strategies it had employed. The company has recorded improved performance in the market through increased revenues as well as passenger flights.
Alternatives in the Southwest management strategies
Despite the fact that Southwest airline has displayed high performance in the industry, alternative management strategies may be adopted by the airline to either overcome current or potential challenges or improve its performance in the market. To begin with, Southwest airline should consider improving networks through integration with other companies so as to share technologies as well as management styles in an attempt to improve its performance and counter potential challenges future (Thompson, & Gamble, 2008).
Southwest airline Company should clearly understand the feasibility of hub operations due to entry of low fare regional jets which have adopted point-to-point services. Unlike changing hub schedules which utilizes aircraft and employees, point-to-point services emphasize on the speedy connections for transfer passengers. Moreover, the airline company also needs to adopt a robust schedule plan that would take into consideration the disruptions in the flight schedules thereby enhancing reliability of such company to the high revenue passengers. Other alternatives may include pricing strategies as well as enhancing performance and productivity of the company (Thompson, & Gamble, 2008).
The aforementioned alternative management strategies would enhance the performance of the company in addition to expanding its market share. It also positions the company to tackle any future challenges as well as improving relations in the industry.
The best management alternative would be the improvement of networking and enlargement of market share. Proper networking would enhance relations as well as sharing of modern technologies in the industry. Moreover, it would enhance integration which is vital in confronting complicated challenges requiring heavy finances. Diversification of market share enhances capital base of the company hence increasing its chances of survival in a competitive market.
Southwest airline has displayed a commendable performance in the market. Having commenced its operation in the early 70s from scratch, the airline company has recorded steady annual profitability up to the first quarter of 2008 amid business barriers including economic recession, business rivalries as well as legal and regulatory tussles. In 2007 for instance, Southwest airline recorded a profit of $4999 up from $2283 in 1995. The positive performance of the firm is attributed to sound management strategies that were employed by the firm since its inception. Moreover, the warm and personal services offered by the firm’s employees as well as reduced fare prices have attracted many customers thereby enlarging the market share of the company. Generally, the company adopted sound management strategies including pricing strategies, enhancing productivity and performance as well as enlarging its market share. These strategies in addition to suitable human resource practices employed by the company have resulted into positive outcomes as exhibited in the increased revenues and market share of the firm (Thompson, & Gamble, 2008).
After implementation of the aforementioned management strategies, the firm would be expected to display improved performance as stated earlier. The follow-up may be done after a period of five years so as to provide ample time in establishing what has specifically caused the changes in case there will be any.
Thompson, A., & Gamble, J., (2008). Southwest airline in 2008: Culture, Values, and Operating