Southwest Airlines:

In a Different World
Corporate Strategy
A course by Shahid Zaki

Submitted by:
Armenay Shehzad (21470)
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Why has Southwest been so much more successful than its competitors?

The case study builds upon multiple reasons that differentiates Southwest Airlines from its
competitors and adds up to their successful journey. Few of them are discussed as following:

 The Business Model – Southwest airlines did not operate as any regular airline; they
had substantially set low fares than the rest of airlines to drive more customers and
develop a niche in this busy industry. What adds cherry on the top is the frequent
departures along with the low fares. As the case study mentions, the competition for
SWA was not other airlines, it was actually the local automobile industry. They wanted
the consumer to choose/prefer Southwest airlines over a local cab while traveling inter-
city.
 The 10-Minute Turnaround Strategy – This strategy came gradually when in the
beginning days there was a shift from 4 planes to 3 which meant greater utilization for
every fleet and eventually led to a reduced turnover time to 10 minutes. The savings
provided by this strategy yielded significant competitive advantage by increasing
utilization of its 537 planes, each flew about five to six flights segment for about an 11-
hour day.
 The Contrarian Approach – Now the Southwest airline was not like any ordinary flight
because the timing was 90 minutes or less, there was no food except serving peanuts, no
assigned or classified seats and no popular hub-and-spoke route structure. SWA focus
was on the low fares, frequent, on time flights and point to point services.
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 The Focus on People & Culture – Another core area that sets it apart from the
competitors. It is said that working and flying in
Southwest airlines is an experience to be done
once in your life time. Throughout our courses
since quite an early stage, the SWA culture has
been set as an exemplary, it’s not just the
consumer experience, their employees have an
embedded sense of ownership for the company, an employee turnover rate less than 5%,
an option of profit sharing says a lot about the company itself.

SWA bring Concerts to the Air

How has the original strategy been altered in recent years? How, if at all, have these
changes affected Southwest's key success factors?

With the changing dynamics, every organization needs to innovate and improve and that’s what
Southwest airlines did with the changing times. Challenges like 35% increase in operating costs,
new entrants’ low-cost carries, a world of new security, led them to transform the customer
experience by:

 Developing long-distance service – from 90 minutes or less flights, SWA moved to long
distance flights. In 1984, they added their first 3-hour flight. This led to more exposure
and greater number of customers.
 Entering New Markets – Now the next feasible
option after long distance could be entering the
new markets and SWA entered northeast USA in
1993. New flights, new customers, new
experience, more profitability.
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 Code Sharing Agreements – a strategic move of code-sharing with ATA led SWA with
an opportunity to nearly $40 million additional revenue.
 Innovating Technology – every passing day, every organization has to improve and
adapt to technology and so did SWA. New systems allow to develop new strategies such
as routes and changing the way of boarding as discussed next.
 Innovation in the Boarding Process - Southwest is going to automatically give
passengers an assigned number within in its current boarding groups: A, B and C. They'll
get the number and the group when they check in, which can be done within 24 hours of
a flight. Another change: A and B groups will also be expanded to 60 passengers. The
new process will eliminate the need for passengers to wait in line to secure a good
boarding position. That will free up passengers' time. Happy customers are always the
way to success.
(Article reference: https://abcnews.go.com/Travel/story?id=3624856&page=1)

 Additional Features – It was all not just confined to this, there were more innovations
like giving early bird fare discounts, rapid reward program, internet services, cashless
cabin, all these features that would enhance the consumer experience and increase the
brand equity.

But all these strategic alterations will have an impact on the key success factors. For example, if
it enters new markets or opts for long distance flights then the core 10-minute turnaround
strategy has to be altered because maintaining standard procedure time across can be difficult
and may lead to an increased turnaround time.

All these new moves also mean new consumers and hiring new employees to entertain them so
the recruitment process gets more tough, a wrong hire can take down the reputation in
microseconds.

On the other hand, if all goes well, the result can be a good cost reduction.