Southwest Airlines: 1993 (A)

Group 4:
Chandini
Deepak
Kartik
Mohit
Rigveda
Shyam
Where is Southwest?
Low cost and Quality service provider on short hauls in US
market

Mission of Southwest:
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

• The prime driver for Southwest is value to the customer at

lowest cost in the market; its people, operations and
marketing are a manifestation of that goal
Ohmae’s Strategic Custom
Triangle
er High Income
Low/Med Income
Group Group

Southw
est
Value: Value:
Low Cost; Acceptable service High Cost; High quality service

Competi
tors
Strengths Snapshot
PEOPLE
- Family
- Dedicated
- Recruitment
- Peer hiring
- Profit Sharing
- Flexibility
- Broad Job Descr.
- Cross Training
VALUES/PHILOSOPHY - Recognition
- Internal Promotion
- Fun Culture
- No elitism
-Spirituality

OPERATIONS
- Low TAT
- 65 min
- Uncongested
- No hub spoke
- Direct ticketing
- Not working with other airllines
- Young fleet
- Small Airports
- Own gates

MARKETING
-Golf: Connect with customers
-Fun Image
- Quality @ low price
- Peformance
-Media buzz
- Rewarding

COST
- Only drinks & Peanuts
- Diff take-off and laning style
- Low churn rate
- No commision to agents
- All Boeings => low
maintenance/spares cost
- Fuel Arbitrage
 • Options
– Phoenix-Detroit direct flight service
– Enter Dayton market
– Establish base in East Coast: Baltimore
• Evaluation of Options
Phoenix-Detroit: Dayton Baltimore
Pros: Pros: Pros:
-Within system expansion - Short haul -Entry on eastern coast
- Enough pre-existing demand - Low gate fees -Possibility of expanding
Cons: Cons: network there
-Higher charge/cust (gate + - Supply/quarter: Cons:
landing fees) =2x90 d/qx10f/dx137s/fx0.65 -Long haul
-Long haul = 160,290 seats -Employee fit -> X
- more food and drinks - Demand/quarter (Ex 13): -Increased TAT -> whether
- more baggage to handle = 2149x4 (consider 4 times inc.)
= 8596 seats
• Recommendation
– Choose the Detroit – Phoenix option and use the 2
Boeing 737s there
– Gate and landing fees is only marginally higher
– Eventually the growth will come only from long
hauls => Strategically important to develop
capabilities there