southwest airlines: a case study
TRANSCRIPT
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‘Our People Are Our Single Greatest Strength And Most
Enduring Long-Term Competitive Advantage.’
Gary Kelly, CEO Southwest Airlines
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Started in 1971 with little money but lots of personality.
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Featured a bright RED HEART as its first logo.
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Advertising showcased its focus on Low-Fares, Frequent
flights, On-time arrivals, Top safety record and how Bags
fly free.
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Used humour to poke itself to convey its warm personality.
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Personalized aircrafts such as a Flying Killer Whale, The
Texas flag and the Slam Dunk One.
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United States’ MOST admired airline!
Profitable for 37 years straight!
One of Top 5 places to work!
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BUSINESS MODEL
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Southwest Airline streamlines operations which results in low fare and
customer satisfaction. The airline takes several steps to save money and
passes the savings to the customers through low fares!
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Flies over 3100 short “point-to-point” trips daily.
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Each flight makes an average of 6.25 flights daily.
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Purchases fuel in advance to hedge fuel prices.
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with fuel hedging!!!
Southwest saved more than
$2 Billion
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Extremely fast turnaround service.
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Follows a unique boarding system.
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Enters new markets other airlines overprice.
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Operates Boeing 737s for all its flights.
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Makes sure that the planes are light with lighter models of
seats and power washing the engine to remove the dirt.
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in fuel cost over just 3 months!!!
Southwest saved more than
$1.6 Billion
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Advertisement by Southwest
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Has pioneered services and programs such as
same day freight service
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Senior Discounts
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Fun Fares & Ticketless Travel
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• Southwest was the first airline with a web site.
• Ranks on top for customer service.
• Receives the lowest ratio of complaints per
passenger.
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Southwest consistently earned profits despite
the various industrial problems.
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With such stability, It makes decisions and
adjusts policies which other burdened airlines
may not be able to make.
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• Other airline companies pride themselves more
on service.
• Their ticket prices are not cheap.
• They generate huge revenues from the elite
people.
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Firstly, Southwest Airlines has to run their
flights even if only half of the seats are full.
In that case the airlines have a risk of earning really
low revenue!
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Secondly, South West Airlines is at constant
price wars with its competitors.
Sometimes South West is forced to keep the prices
of tickets really low!
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“Our fares can be matched; our airplanes and
routes can be copied. But we pride on customer
service.”
-Sherry Phelps, Director of Corporate Employment
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Let’s RECAP
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Business Model Unique Model
Steps to Reduce Fares Future Prospects
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DISCLAIMER
Created by Atulya Manuraj, IIT Kanpur during an
internship by Professor Sameer Mathur, IIM Lucknow.
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