Student Info BBA 8

Name: M. Humayun Khan Department: AUSOM

University: Air University, Islamabad Submitted to:
Email: 160161@students.au.edu.pk Prof. Imran
Hameed
Contact Number: 0335-0012585
SOUTHWEST AIRLINES: IN A DIFFERENT WORLD
CASE SUMMARY
Founded in 1967, first regular flight in June 1971 due to ‘Barriers to Entry’ law-suit
filed by Braniff and Texas International which ultimately ruled in Southwest’s favor.
The competitive and knowledge backed Business model was the core competency of
Southwest which was executed by the founders/executives changed the ‘rules of the
game’. The idea of cost innovation resulted from the rising costs, cut-throat competition
and ever-changing consumer needs. The case opens at possible acquisition of ATA
Airlines where Operations, Properties and Legal & Marketing were not on the same
page. The long line of competitors was only exceeding by the process of
internationalization: Air Asia, Air Deccan, Spice Jet etc.) as new entrants. Learning
from late-mover advantage and consultation with companies like Air Cal helped dearly
in many issues. Additionally, the strong alliance with Boeing (supplier) which
contributed in the growth so much that it grew the arsenal of aircrafts to 537 Boeing
airplanes. With 60% lesser coach fare as per the industry standards, Southwest
become the pioneer of introduction to the concept of low-cost player in a service
industry as established as the airline industry. Their unpopular approach which had
many differentiation factors like only 90 minutes flights, with no food (peanuts only),
enhanced customer experience, establishing a niche, Operational Excellence
(reduction of turnaround time) etc. were the strategies that gave them the edge of
gaining a larger market share because their competitors were regarded as the private
automobiles which was a substitute to airline industry. Southwest investment in raising
the standard of human resource (stock ownership plans, love machine etc.). Also to
be able to keep up with the fast paced industry growth and competition the unnecessary
beauracracy was abolished. Raising awareness for the society (McDonalds House
charities). Herb Kehller’s approach towards cultivation of Organizational and team
based training activities led to the spotlight shine for Southwest. Succession planning
was a constant practice and steady procedural equity was the backbone of
Southwest’s momentum. CFO Gary Kelly was promoted to CEO in 2004 in which era he
worked on saving the organization through implementing a successful fuel hedging
strategy which gave them the Emeritus status to both of them so that both of them can
synergize the organization by staying in offices for the next 5 years and also keep any
threat away. Continuous growth in terms of rewarding employees and external growth
factors e.g. Customer Satisfaction. The 9/11 incident brought Operating cost rose 35%,
led them to decide to increase revenue generating capabilities by offering more
products and services i.e. (expanding routes, adding codeshare destinations etc.).
Southwest wanted to maintain its low fare brand and also avoid bankruptcy was a very
tough challenge to begin with. Southwest sense of innovation and survival instincts
were the key lead management techniques by the executives.