southwest airlines customer service case study

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Southwest Airlines: A Case Study in Great Customer Service

Table of Contents

Southwest Airlines serves over 126 million passengers each year, provides service to 121 airports across 11 countries and has maintained its nearly 72,000-employee roster with no involuntary furloughs or layoffs in its history. In addition to its commercial and financial success, Southwest Airlines is known for its excellent customer service. Southwest has built an impeccable reputation by putting customers first and ensuring its employees are content and financially secure.

This model of exceptional customer service can be extrapolated to fit the needs of almost any industry if you employ strategies that work for your business. We’ll explain why Southwest is so successful as a company and a customer service provider to help other businesses understand and implement its tenets. 

Southwest treats its employees well

Great customer service starts with happy employees. Southwest treats its employees well by backing individual employees’ decisions and providing everyone with quality employee benefits . For example, the company offers a 401(k) plan and matches contributions dollar-for-dollar up to 9.3 percent of the employee’s eligible earnings. It also offers a profit-sharing plan, an employee stock purchase plan, health and well-being rewards, as well as quality medical, vision and dental coverage.

In addition to benefits, Southwest also encourages professional development through in-person and online classes, mentorship programs, and even a Career Mobility Center that supports internal career advancement through advisement sessions and interview prep resources. The company also prioritizes community outreach, encouraging and incentivizing employees to give back to causes that matter to them.

Making employees brand advocates is your best defense against bad customer service.

Southwest makes excellent customer service its mission

According to a mission statement on Southwest’s website, “The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride and Company Spirit.” 

Southwest outperforms competitors in customer service

In its last survey of the airline industry from 2018, the Temkin Group compared nine U.S. airlines on the quality of their customer experience – the sum of all a customer’s experiences and interactions with a brand. The strategy of focusing on customer experience is built around the needs of the individual customer over the lifetime of the customer-brand relationship.

The Temkin Group’s survey ranked each airline on the criteria of functionality (how well experiences meet customer needs), accessibility (how easy it is for customers to do what they want to do) and emotion (how customers feel about the experience).

Southwest Airlines earned the highest score every year the Temkin Experience Ratings were published from 2011 to 2018, except for 2015. In the most recent rankings, the company received the highest score in the airline industry, 76 percent – 10 percentage points higher than the industry average score of 66 percent. 

Over the years, Southwest Airlines has maintained high ratings among customers, even amid a global pandemic and overall declines in passenger satisfaction. According to the 2023 J.D. Power North American Airline Satisfaction Study , Southwest ranked highest in customer satisfaction for a second consecutive year for the economy and basic economy segment.

How Southwest Airlines emphasizes the customer experience

Southwest Airlines takes the following crucial steps to prioritize the customer experience:

• Southwest offers multiple avenues for customer support. Customer experience is no longer just an in-person interaction or a phone call. It’s now online, in live chat and more. In addition to multiple phone numbers for different customer service issues, Southwest offers live chat (via mobile app), email and a self-help resource center, allowing multiple touch points and opportunities to delight customers .
• Southwest adapts to meet customers’ evolving expectations. The airline invested over $2 billion to improve the customer experience. From improved real-time travel communications to bag tracking to bolstered self-service options, Southwest proactively meets passenger needs to make traveling more convenient and comfortable.
• Southwest empowers employees. Southwest takes care of its employees, which, in turn, helps employees take care of its customers. Providing robust financial and wellness benefits and ongoing career development allows Southwest’s team to perform at its best and effectively support its customers.

Examining Southwest Airlines as a customer service case study can help other companies learn to provide a great customer experience and place customer service at the forefront of their mission and company culture.

How to provide excellent customer service

All businesses should strive to achieve Southwest’s exceptional customer service. However, many of its specific strategies are tailored to the airline industry and may not work for your organization. Here are a few additional methods any business can implement to give its customers the service they deserve.

1. Be responsive to issues.

Nothing is more frustrating than being put on hold for over an hour, especially if you’ve already paid for a product or service. Remember that your customer relationships don’t end after money has been exchanged. These relationships are long-term commitments that must be cultivated over time.

If you don’t have the time to answer calls all day, consider staffing your business with more agents or outsourcing customer service calls. Ensure all customer service reps and outsourced service agents use one of the best CRM software platforms to ensure consistency and informed help. You can also streamline your communication channels and preferences to accommodate as many customer inquiries as possible. For example, it’s easy to set up a chat feature or an FAQ page on your website to avoid being overwhelmed by calls. 

With so many options available to help your customers, there’s no excuse for leaving them in the dark when they have an issue.

2. Communicate beyond complaints.

Responding to problems swiftly is vital to maintaining a high level of customer service, but communicating with your audience shouldn’t stop there. Starting a weekly email newsletter or using X (formerly Twitter) as a customer support channel are great ways to stay in touch with your base.

A simple “thank you for thinking of us” when a customer tags your brand on social media can go a long way. It’s a simple, cost-free measure to set your business apart as one that truly cares about customer service.

Use proven customer service metrics and KPIs like customer satisfaction scores, net promoter scores and customer effort scores to improve your overall customer service.

3. Get to know your customers.

Customers love a personalized experience because it makes them feel heard. However, to ensure the personalized experience stays positive, you should understand the customer’s wants and needs. Maintaining this mindset will help ensure the customer trusts you and your company in the long run.

Almost every customer service representative has some kind of script they must stick to, but there are opportunities to veer off-book and personalize the experience. You could ask customers what they’ve been up to lately or why they chose your company, or just find a way to make them laugh. If you’re willing to go that extra mile, it can be the difference between keeping a customer and losing them.

4. Keep a positive attitude.

When trying to keep a positive attitude toward the customer, it can help to inhabit a service persona. How you speak to your customers can sometimes be more important than what you say. This approach allows you to connect with the customer on an emotional level. You’ll understand their explicit needs and better understand their overall attitude toward you and the company. If you focus on positive thinking and a positive attitude, customers will likely respond in kind.

Danielle Fallon-O’Leary contributed to this article. 

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A unique take on Southwest Airlines Strategy

Anyone who has studied business management either as a degree or as an elective would have definitely studied Michael Porter’s 5 Forces framework. This framework was first published in  Harvard Business Review  in 1979. The model is very much relevant in 21st-century business as well due to its deep 360-degree view of a business.

One of the 5 forces is called “Barriers to Entry” and more often than not either Oil & Gas or Airline industry would serve as an apt example of an industry with very high barriers to entry due to its high Capex and Opex requirements.

But wait, then with so many barriers to entry, why do airlines still bleed red? There are many reasons for this, but one of them is stiff competition with low-cost carriers, the 5th, and the framework’s central force (competition among the players).

Before we move on, the below is an interesting tweet response from Anand Mahindra, on being asked to buy the ailing “ Jet Airways ”.

Remember the quote: “If you want to be a millionaire, start with a Billion dollars and then start (buy) an airline!” https://t.co/dYRdwup3kK — anand mahindra (@anandmahindra) June 29, 2019

The US Airline Industry

Following the 9/11 attacks, the US airline industry has been through rough weather. 20+ airlines have filed for bankruptcy protection under Chapter 7. 60+ airlines have filed for bankruptcy protection under Chapter 11.  This list also includes the top 3 out of 4 airlines namely, American Airlines, United & Delta Air Lines, however they were able to exit the bankruptcy within a few years.

The landscape has been constantly changing with a high volume of mergers and acquisitions, resulting in changing market share statistics.

The graph above covering the period January to December 2020 showcases that the top 4 airlines constitute approx. 65% of the market share.

In this story, we are focusing on Southwest Airlines that was founded on the notions of the low-cost carrier but with its unique strategy has been profitable for the last 45 years in a row. 

The takeoff strategy of Southwest Airlines

Southwest Airlines Co. , typically referred to as Southwest, is one of the United States’ major airlines and the world’s largest low-cost carrier airline. The airline was established on March 15, 1967, by  Herb Kelleher  as Air Southwest Co. and adopted its current name, Southwest Airlines Co., in 1971, when it began operating as an intrastate airline wholly within the state of Texas first flying between Dallas, Houston and San Antonio. 

Most airlines back in the 1960s followed the most popular “Hub and Spoke” model for their operations.

Hub and Spoke model – As the name suggests, there is a defined hub from where the flights originate, and the destinations are the spokes.

The benefit of a hub and spoke model is that it has fewer routes, but the major drawback of this model is its rigidity, and if there is a slight change in the airline routing due to weather, etc., it can have cascading consequences to the other planned flights.

Point to Point model – Southwest, being a low-cost carrier, focused more on the point to point model and bought significant process improvements, in a way mastered it to achieve very high operational efficiency.

In the point-to-point model, each flight is a single journey. The origin and destination are connected via a single non-stop flight. The point-to-point model offers more travel options and flexibility as compared to the hub and spoke model.

For passengers undertaking further journeys, they will have to collect the baggage and recheck them for leg 2 of their journey. This model has considerably led to saved travel hours and done away with the necessity for connecting flights.

Key Differentiating Factors in Southwest Airlines Strategy

Southwest airlines is the third largest airline in the United States of America and arguably the biggest in the low-cost carrier segment across the globe.

So, was the operational efficiency gained due to the change in the flight operations model the only reason why Southwest airlines is the #1 low-cost carrier in the world?

NO, let’s understand what differentiated Southwest airlines strategy from its counterparts.

Customer Eccentricity

For Southwest, they keep the customers at the center of their business operations. They offer certain benefits to flyers which are not offered by other airlines, like

• Southwest allows two checked-in bags, free of cost, unlike many of its competitors.
• Flight change thirty minutes prior to the departure is allowed by Southwest.
• Southwest offers free in-flight entertainment like Live TV, Movies, use of whatsapp and imessage. It offers Wi-Fi services at very nominal rates.

All these have resulted in Southwest being the airline with the least number of complaints, according to the Department of Transportation of the United States of America.

Only one type of aircraft

Many airlines have different types of aircraft in their fleet, but not Southwest. Southwest operates by using only Boeing 737 aircraft. It saves a lot of money by:

• Training cabin crews and support staff on only one type of aircraft.
• Maintenance of inventory of spare parts for one aircraft type.
• In case of breakdown, alternate aircraft can be arranged immediately.
• Its policy of not assigning seats helps tremendously as customers can take any available seat when boarding the aircraft, thereby reducing the boarding time. In the case of alternate aircraft also, this policy hugely benefits the airline reducing the turnaround time.

Right recruitment policies

Southwest stresses a lot on the customer experience and hence it is very imperative for the airline to hire the right kind of people. Southwest focusses on hiring people who have an attitude for serving customers.

Employees undergo various pieces of training which also includes cross-training. Training is heavily centered around team building and collaboration.

The Southwest Airlines case study is a lesson in cultural strategy. An organization built on the fundamentals of customer eccentricity, effective processes, and a dedicated team is meant to achieve success and overcome challenges. This model of exceptional customer service can help a business earn an impeccable reputation in the industry. That’s what makes the Southwest model uniquely priced, yet one profitable in this cruel airline industry.

Southwest’s ability to be different and not follow the herd—not to mention becoming America’s largest airline—can be traced in large part to the Airline Deregulation Act. Thanks to this act, Herb and Rollin realized their Vision and the traveling public benefits on every flight, every day. Gary Kelly, Chairman & CEO, Southwest Airlines

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Case Study: Profitability Takes Flight, Southwest Airlines Unique Business Model Unveiled

Southwest Airlines is a renowned American low-cost airline established in 1967 and has since become one of the industry’s most successful and profitable carriers.

With its headquarters in Dallas, Texas, Southwest operates an extensive domestic network, serving more than 100 destinations across the United States.

Significance of Profitability in The Airline Industry

Profitability is a critical aspect of any business, and the airline industry is no exception. Achieving consistent profitability is a significant challenge in an industry characterized by intense competition, volatile fuel prices, and economic uncertainties.

However, Southwest Airlines has managed to stand out from its competitors with its unique and highly successful business model.

Southwest Airlines’ Unique Business Model

Southwest Airlines was founded on providing customers with low-cost, efficient, and reliable air travel.

From the outset, its founders aimed to differentiate Southwest from traditional carriers by implementing a business model that focused on simplicity, operational efficiency, and a strong emphasis on customer satisfaction.

Critical Elements of the Business Model

Here are the key elements of Southwest Airlines’ prestigious business model:

Low-cost operations

Southwest Airlines has distinguished itself as a low-cost carrier by implementing various cost-saving strategies.

These include utilizing a single aircraft type (Boeing 737) to simplify maintenance and training, operating from secondary airports to reduce fees, and minimizing unnecessary frills such as assigned seating and in-flight meals.

High Aircraft Utilization

Southwest maximizes the utilization of its aircraft by keeping them in the air for a significant portion of the day.

Quick turnarounds, efficient boarding processes, and high aircraft utilization rates contribute to cost savings and increased revenue potential.

Point-to-Point Routes

Unlike traditional hub-and-spoke models that many airlines employ, Southwest’s point-to-point route system allows direct flights between smaller airports, reducing transfer times and increasing operational efficiency.

This approach also enables Southwest to serve niche markets and respond quickly to changing demand.

Customer-Centric Approach

Southwest Airlines places a strong emphasis on customer service and satisfaction. Southwest has built a loyal customer base with its “Bags Fly Free” policy, no change fees, and friendly customer service.

The airline strives to provide a hassle-free and enjoyable flying experience, differentiating itself from competitors.

Efficient Workforce Management

Southwest focuses on building a stable and motivated workforce. The company’s employee-friendly policies and positive company culture have resulted in high employee satisfaction and productivity.

The airline’s efficient workforce management contributes to operational efficiency and cost control.

Case Study: Southwest Airlines’ Profitability

Southwest Airlines has consistently reported profits for several consecutive years, even during industry downturns and economic challenges.

This remarkable achievement sets Southwest apart from many other airlines struggling to maintain profitability.

Factors Contributing to Profitability:

Many different elements are responsible for the continuous progress of the airline. Some of the critical factors that played a crucial role in Southwest Airlines’ profitability include the following:

Strategic Route Planning

Southwest strategically selects routes that align with its business model, focusing on high-demand and high-frequency routes.

This approach allows the airline to optimize revenue potential while minimizing operational complexities.

Cost Leadership and Operational Efficiency

Southwest’s relentless focus on cost reduction and operational efficiency has significantly driven its profitability.

The airline maintains a competitive advantage in the industry by keeping costs low and implementing efficient operational practices.

Revenue Management Strategies

Southwest employs effective revenue management strategies, including dynamic pricing and capacity management.

These strategies ensure optimal seat utilization and maximize revenue per available seat mile (RASM).

Strong Customer Loyalty and Brand Reputation

Southwest’s commitment to customer satisfaction has resulted in a strong brand reputation and customer loyalty.

Repeat business and positive word-of-mouth recommendations contribute to sustained revenue and profitability.

Challenges and Limitations of Southwest’s Model

Here are some challenges and limitations faced by one of the most successful Airlines in the United States. 

Vulnerability to Fuel Price Fluctuations

Like any airline, Southwest is exposed to the volatility of fuel prices. Increases in fuel costs can significantly impact the airline’s profitability, as fuel represents a substantial portion of its operating expenses.

Fluctuations in fuel prices require Southwest to employ effective fuel hedging strategies and closely monitor its fuel efficiency to mitigate risks.

Limited International Presence

While Southwest has been highly successful in the domestic market, its international operations could be more extensive.

The airline primarily focuses on serving domestic destinations, which may pose challenges in expanding its market reach and tapping into lucrative international markets where competition may be fierce.

Potential Risks of Focusing On the Domestic Market

Relying heavily on the domestic market exposes Southwest to potential risks associated with economic fluctuations, regulatory changes, and geopolitical events that could impact domestic air travel demand.

Diversifying its operations to include more international destinations could mitigate these risks.

Southwest Airlines’ Response to Challenges

Fuel Hedging Strategies

Southwest employs fuel hedging strategies to mitigate the risks associated with fuel price fluctuations.

These strategies involve entering into contracts to secure future fuel purchases at predetermined prices, reducing the impact of sudden price increases.

Expansion of International Routes

Recognizing the growth potential in international markets, Southwest has gradually expanded its global operations.

By adding more international destinations to its network, the airline aims to diversify its revenue streams and reduce reliance on the domestic market.

Mitigation Plans for Market Risks

Southwest monitors market trends, economic indicators, and regulatory changes to adjust its operations and strategies proactively.

The airline maintains an elegant approach, quickly adapting to changing market conditions and mitigating potential risks.

If you want to know further, an inclusive case study solution can help you the right way.

Southwest Airlines case study solution , written by experts, lets you take a comprehensive look into the airline’s history, profitability model, challenges, how they tackled them, and many other aspects.

Conclusion:

Southwest Airlines has established a unique and highly successful business model that centers around low-cost operations, efficient utilization of resources, and a customer-centric approach.

Its focus on simplicity, operational efficiency, and customer satisfaction has contributed to its profitability and competitive advantage in the airline industry.

Southwest Airlines’ profitability stands out in an industry often plagued by financial challenges.

The airline’s ability to consistently generate profits can be attributed to its distinctive business model, which enables cost leadership, operational efficiency, and strong customer loyalty.

Southwest’s success serves as a valuable case study for the airline industry. It highlights the importance of innovation, adaptability, and a customer-centric approach in achieving profitability and sustainable growth.

Other airlines can learn from Southwest’s strategies and consider adopting elements of its business model to enhance their own competitiveness and financial performance.

Read more case studies here .

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Southwest Airlines

Lean-agile transformation with safe ®.

Southwest Airlines is famous for its employee-first culture, dedication to customer service, and sense of warmth, friendliness, and fun. And when it comes to meeting the urgent demands of technology development in a highly complex logistical environment, a thriving culture is just the start to meeting the challenge.

To live up to Southwest’s purpose of connecting people to what’s important in their lives through reliable, low-cost air travel, Southwest began its Agile transformation in 2018 in operations. The fantastic results led to SAFe ® adoption throughout Southwest.

Now four-plus years into their Agile transformation, more than 2,000 Southwest employees collaborate cross-functionally across the organization.

Quick Facts:

• Operates at more than 120 airports across 11 countries worldwide
• Carried 126 million customers in 2022
• Operates more than 4,000 flights per day during peak season
• Started SAFe transformation in 2018
• More than 2,000 employees involved in SAFe across reservations, customer experience, crews, scheduling, training, aircrafts, ground operations, maintenance, and more

Key Outcomes:

• Streamlined the number of steps and handoffs between business and technology and made them more predictable, saving time and money.
• By adopting SAFe at the portfolio level, Southwest went from 7–9 months of planning in 2017, plus variable building, testing, and deploying timeframes (see timeline below) to releasing every iteration in 2020 
• From 2018–2020, they saw increased deployment success and 5x faster time to market  (28 releases with 45% deployment success in 2018, to 349 releases and 93% deployment success in 2020)
• Experienced better alignment around business value while measuring greater than 80% of business value delivered

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Suggested case study: royal philips, privacy overview.

Southwest Airlines Democratizes Customer Insights With Bloomfire

Southwest Airlines is the largest domestic air carrier in the U.S and employs over 60,00 people. The company was founded in 1976 with the goal to “democratize the skies” and make air travel affordable for everyone. Today, the brand differentiates itself through its customer service and fare transparency. Because customer experience is central to Southwest’s value proposition, it’s essential for their marketing team to understand what their audience wants and needs.

The challenge.

Before 2018, it was challenging for Southwest Airlines’ marketing team members to find customer insights, often taking employees between 30 minutes and two hours to find the information they needed. Additionally, the different marketing teams were siloed, and employees were often hesitant to share ideas across teams. 

Southwest realized they needed to make it easier for team members to find and leverage customer insights so that they could continue innovating and delivering the exceptional experiences customers associate with their brand. They needed a tool that would allow them to centralize their customer insights so that their marketing team could easily find and leverage this information.

We had standing room only training. I think it just shows that people are clamoring to get their hands on a tool like this Sydney Leonard Associate Manager of Knowledge Management, Southwest Airlines

The Solution

Southwest Airlines’ first step in improving their insights and knowledge sharing was adopting Bloomfire, which they used to democratize research and insights across their marketing department. They identified a team of “Knowledge Ambassadors” to act as change agents as the company rolled out Bloomfire. These ambassadors were responsible for answering questions from marketing employees and identifying the knowledge from their team that should be included in the Bloomfire platform. 

The team also promoted a culture of knowledge and insights engagement by hosting a Bloomfire launch party, setting expectations for using the tool to achieve department goals, and modeling the knowledge engagement behavior they wanted to see across the department.

Bloomfire helped Southwest Airlines establish a single source of truth for their marketing department to find information related to customers. The platform also helped break down silos between teams and encouraged marketing team members to share their work and ask questions about others’ work. “It has people thinking in a new way and thinking outside the box,” said Sydney Leonard, Associate Manager of Knowledge Management.

What is a Knowledge Management System?

How to Choose the Right Knowledge Management System

The Importance of Knowledge Management in Customer Service

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Please note you do not have access to teaching notes, southwest airlines ‐ living total quality in a service organization.

Managing Service Quality: An International Journal

ISSN : 0960-4529

Article publication date: 1 April 1999

The foundation blocks for quality in a customer service organization are management commitment, customer focus, and employee involvement; operational and administrative aspects are built on these basic issues. This article presents a detailed analysis of how a major customer service organization was built to succeed and continues to improve by applying quality management principles. The example presented is Southwest Airlines, whose employees see themselves not as an airline with great customer service but as a great customer service organization that happens to be an airline. This case study is examined within the framework of the model used by the Canada Awards for Excellence, the internationally recognized quality award program in Canada for more than ten years.

• Service quality

Laszlo, G.P. (1999), "Southwest Airlines ‐ living total quality in a service organization", Managing Service Quality: An International Journal , Vol. 9 No. 2, pp. 90-95. https://doi.org/10.1108/09604529910257894

Copyright © 1999, MCB UP Limited

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Southwest Airlines Is Playing with Brand Fire

• Adam Richardson

Southwest Airlines is often used as a case study for a well-run business: it’s consistently more profitable than its competitors, it’s very disciplined about how it operates, and its customers are happy. It also has a strong brand, built on the promise of low prices, convenience, and a no-frills-but-pleasant experience. But recent actions are starting […]

Southwest Airlines is often used as a case study for a well-run business: it’s consistently more profitable than its competitors, it’s very disciplined about how it operates, and its customers are happy. It also has a strong brand, built on the promise of low prices, convenience, and a no-frills-but-pleasant experience. But recent actions are starting to erode the brand and customer happiness, potentially creating a long-term risk.

• Adam Richardson is a creative director at the global innovation firm frog design and the author of Innovation X: Why a Company’s Toughest Problems Are Its Greatest Advantage . His background combines experience in product development, product strategy, and customer research.

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Southwest Airlines: In a Different World

• Format: Print
• | Language: English
• | Pages: 16

About The Authors

James L. Heskett

W. Earl Sasser

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• Southwest Airlines: In a Different World  By: James L. Heskett and W. Earl Sasser Jr.

Southwest Airlines: Point-To-Point Business Strategy Case Study

A short description about the southwest airlines, main issues/problems of the case, situational analysis, answering the questions.

Southwest Airlines (initially known as Air Southwest) launched its first flight in 1971. Its founders were Herb Kelleher and Rollin King. By then, the company only served three cities within US (Houston, San Antonio, and Dallas) and had not expanded its operations beyond the country. Unfortunately, it incurred remarkable losses in the first two years of its operation. This forced it to vend one of its four aircrafts instead of sacking some of its employees.

After enacting viable business strategies, Southwest Airline managed to overcome such obstacles. It announced its first profits in 1973. By 1977, the company had expanded its operations. It served other additional cities like El Paso, Lubbock, and Corpus Christi among others. It later launched interstate destinations within US indicating its prospective growth.

Later in 1986, the firm established a training program to equip its flight crews with viable business etiquettes. This enabled it to enhance its competitiveness in the realms of customer services. It later won a monthly Triple Crown prize due to its exemplary services. Upon its rapid expansion, the company acquired Moris Air in 1994 and consequently enhanced its flights to other cities within US.

It introduced Ticketless Travel in various cities, a move that augmented its business’ prowess. As at 2006, Southwest Airlines had advanced both technologically, revenue acquisition, and business wise. It acquired ATA Airlines allowing it to attain boarding slots in LaGuardia Airport, New York. This move enabled it to handle international flights after partnering with WestJet Airlines (a prominent low-cost carrier).

The company had to increase its charges for both domestic and international services in order to survive in the industry. In order to overcome current challenges facing the airline industry, Southwest Airlines has embraced technological innovations, price adjustments, protocol reforms, and viable acquisitions and mergers.

Southwest Airlines is facing numerous problems within the aviation industry. Firstly, there is a constant increase in fuel prices. This leads to increased business costs and other relevant challenges engulfing the entire industry. Another problem is the increase in operational costs mentioned earlier. An airline business is costly to establish, ratify, and operate due to massive logistical issues involved in the entire context.

Southwest Airlines is also experiencing such problems despite the witnessed success. There is a considerable need to reduce costs and increase profits in numerous occasions. It is from this context that the entire problems facing the industry lie. Additionally, it is important to consider that some airline business slump due to higher operational costs and reduced profits. Another problem is the current security threats that face the company and other players in the airline industry.

Such security problems might force the company to cancel some of its flights leading to reduced revenues and consequent losses. The global economic crisis has equally contributed to the mentioned problems. Economic catastrophe affects market trends, travelling schedules, and reduces the influx of customers since most organizations and individuals strive to minimize expenditures. Fluctuating fuel prices is another problem facing the company due to unpredictability of fuel costs mentioned earlier.

The company is equally unsure whether its point-to-point business strategy will apply as it tries to expand its domestic operations. Another problem is the stringent competition within the industry. International expansion strategies, union walkouts, and environmental uncertainties are some of the problems faced by the organization.

SWOT analysis, PEST analysis, & internal analysis (strengths & weaknesses)

When subjected to SWOT analysis, Southwest Airlines has numerous strengths in its business endeavors. The company has several competitive advantages compared to its rivals in the aviation industry. Additionally, it has established right products for its clients. This is evident in the travel arrangements, reliability, and variability in the destinations it covers. Additionally, it embraces technology and innovation to ensure that it remains competitive.

Concurrently, the company has trained competent human capitals hence capable of achieving customer satisfaction. Southwest Airlines has equally enhanced its customer services and changed business processes in order to attain the desired competitiveness. Conversely, the company possesses some weaknesses when analyzed critically.

Some of its customer services still need to meet international standards. The aspects of technology have not been fully enacted in the company despite the stringent competitions experienced. Additionally, it has limited international flights compared to other prominent competitors in the very industry.

Southwest Airlines has numerous opportunities it can cease in order to enhance its competitiveness, revenues, and customer value when scrutinized critically. The demand for aviation services is rapidly growing despite the recent economic challenges. This indicates that the company might perform well in future due to increased flight demands. Another opportunity is the merger it makes with other international airlines like WestJet Airlines. Additionally, the fact that it has a competent, innovative, and creative workforce is crucial.

This provides another considerable opportunity in the entire scenario. There are various opportunities in the aviation industry, which the company can harness in order to remain competitive in the market. Conversely, there are business threats that might hinder the wellbeing of Southwest Airlines. The fluctuating fuel prices, global fiscal crisis, stringent competition, security threats, high operational costs, and adverse international regulations form critical threats to the company.

There are also some issues that emerge when Southwest Airlines is subjected to PEST analysis. Political issues can affect the company massively. This is possible with regard to political trends, legislations, international policies, political wrangles, and other prominent business aspects in the entire scenario.

Economic factors incorporate the current global financial challenges and other considerable factors. Additionally, there are other specific economic factors in the aviation industry that have affected Southwest Airlines. This incorporates high operational costs within the industry, fluctuating fuel costs, and other potential fiscal problems facing the industry.

On social factors, the company enjoys changing lifestyles that have promoted the use of aircrafts as a means of travelling and sending important cargos. The use of flights is embraced by people of different ages. Additionally, the company has embraced technology in its various operations. Southwest Airlines has been innovative in its business approaches, a fact aided by technological advancements within the business.

Value Chain Analysis

Southwest Airlines has attained considerable competitive advantages in the business realms having enacted and embraced stringent and viable value chains in its endeavors. Airline industry is quite competitive hence demanding its players to embrace considerable value chain provisions as evident in the provided case. The entire business activities that Southwest Airlines assumes in its daily operations have contributed to the aspects of the alleged value chain.

Things done in every department or sectors of the company contribute to the demanded value chain. This is quite important in various aspects. The management of the company, employees, suppliers, affiliates, and other considerable stakeholders have endeavored to add value to the service provision granted by the company.

The ultimate competitive advantages noticeable within the company result from considerable contributions made by the entire stakeholders. It is from this observation that Southwest Airlines attains its ultimate value chain. This has enabled it to grow tremendously in the past years despite the challenges.

Customers have also trusted the services given by the company as evident in the case. Due to these provisions, the company has managed to grasp a considerable market share as evident by its continuous business growth. Additionally, the use of appropriate business approaches and staying customer-focused has allowed the business to augment its competitiveness in the airline industry despite the noticeable challenges.

Industry (Porter’s 5 forces analysis)

Porter’s 5 forces are applicable in the airline industry with respects to the provided Southwest Airlines’ case. This is an important observation following its relevancy in the entire context. For example, threat from new entrants into the industry is applicable in this context. Southwest Airlines and other existing airline firms are threatened by the entrance of other competitive rivals. However, since the industry is costly to establish and operate, such chances are limited.

Additionally, there is a considerable rivalry from the existing firms within the American market and beyond. Other international airlines like Emirates Airlines and Qatar Airlines among others have fronted stringent competition to Southwest Airlines with regard to its international markets. Additionally, the bargaining power of buyers is evident in the industry due to competition. Customers go for cheap and reliable airline companies.

This has forced other industry players to strategize properly and cut prices. Additionally, suppliers operating in the industry have equally fronted their bargaining power. The jet fuel suppliers usually change the cost of fuels to suit their business interests. This is a massive challenge to the industry and beyond.

Another apparent force evident in the case is the availability of substitute products/services. Airline customers can seek the services of other companies if such needs arise. This factor forces numerous businesses to establish their competitive advantages and other relevant business strategies.

Southwest Airlines experience competition from various firms. This occurs both locally and internationally. Since the company started as local airline business, all the local airlines in US as at then provided considerable competition provisions. On the international flights, Southwest Airlines experiences competition from well-established airline companies globally.

Evidently, Southwest Airlines can still maintain 36-year streak profitability despite the challenges mentioned in the case. This is possible since the industry is growing rapidly while the company has numerous strengths and opportunities to cease this opportunity. Additionally, the company can still depend on fuel hedging to control cost despite the fluctuating oil prices. This is possible through proper management and other characterizing factors.

Concurrently, the point-to-point methodology will still be useful as the company enhances its domestic flights. This is possible since it adds massive competitive advantages to the company against other rivals. Major traditional airlines will threaten Southwest Airlines when they become low-cost counterparts.

Additionally, the company will be able to expand internationally, maintain its positive relations with employees, and avoid future union walkouts and bargains. Despite the probable persistence of the current financial crisis, Southwest Airlines will still expand if it enacts its business strategies evident in the case. The company can embrace viable business strategies to curb environmental uncertainties. This will help it maintain its loyalty to customers.

• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2024, March 30). Southwest Airlines: Point-To-Point Business Strategy. https://ivypanda.com/essays/southwest-airlines-analysis-case-study/

"Southwest Airlines: Point-To-Point Business Strategy." IvyPanda , 30 Mar. 2024, ivypanda.com/essays/southwest-airlines-analysis-case-study/.

IvyPanda . (2024) 'Southwest Airlines: Point-To-Point Business Strategy'. 30 March.

IvyPanda . 2024. "Southwest Airlines: Point-To-Point Business Strategy." March 30, 2024. https://ivypanda.com/essays/southwest-airlines-analysis-case-study/.

1. IvyPanda . "Southwest Airlines: Point-To-Point Business Strategy." March 30, 2024. https://ivypanda.com/essays/southwest-airlines-analysis-case-study/.

Bibliography

IvyPanda . "Southwest Airlines: Point-To-Point Business Strategy." March 30, 2024. https://ivypanda.com/essays/southwest-airlines-analysis-case-study/.

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