Southwest Airlines Case Study: A Comprehensive Analysis Of The

Aviation Industry
Task: Conduct a strategic analysis on the southwest airlines case study.

Introduction
The report on the southwest airlines case study majorly focuses on highlighting the
major approaches and frameworks to achieve a higher level of efficiency and
performance in the organizations by implementing the concepts of strategic
management. The case study of the first-ever cheap travel service of America,
Southwest Airlines is considered for analysis in this research. The major challenges
that have been witnessed in the aspect of implementing new leadership
management in southwest airlines by the year 2001 have been considered for
analysis in this report. The listed challenges would also have significance in the
dynamic variation of the southwest culture and the increased expenditure in
transportation by the hike in wages and fuel. The report on the analysis of Southwest
airlines case study would also focus on the expansion activities commenced by the
managing body of the company. The succeeding discussion would lead to clarity over
the present stature of the southwest airlines company and the associated facts. After
providing the readers with in-depth clarity, the report would further move on in
analyzing the external environment of southwest airlines and the strategies adopted
to balance the associated dynamics. The major objective of this report is to
investigate how southwest airlines has attained a highly competitive advantage in
the transportation business and placed itself among the top five performing
companies in the USA. In the posterior section of this report, various academic
pieces of literature that have laid the foundation for the framework implied in the
southwest airlines case study like Porter’s Generic Strategies and Goolsby Leadership
Model is discussed. Porter's Generic Strategies would deal with the existing
competition in the operational market and the associated cost-effective measures,
and The Goolsby Leadership Model would highlight more about the cultural aspect.
It is only after analyzing these two academic concepts that the other theoretical
concepts are integrated into this Southwest airlines case study. In the final section of
this report, certain valuable recommendations are listed down, which would
improve the output of the company.

Problem Analysis
The context of change in leadership by the year 2011 in Southwest airlines is majorly
considered as the point of analysis in this report. The instance of leadership change
occurred when James F. Parker was promoted to the post of the chief executive
officer from General counsel, and Colleen C. Barette was promoted to the post of the
chief operating officer from the designation of vice president for customers by Herb
Kelleher. A substantial change in the organizational culture has been witnessed by
the sudden leadership change in the company (Milliman et al., 1999). A considerable
gap was developing between the higher authorities, managing bodies, and the
employees instead of working as a team towards achieving the organizational goal.
The managing team used to get involved at a personal level with employees like
taking part in the birthday celebration and similar events before the leadership
changed.

The new policies implied by the changed leadership had made it difficult for the
managers to maintain the previous approach with the subordinate employees. The
new culture of considering the warm relationship between the management and
employees as absurd gradually started rising in the working environment of
Southwest airlines. A higher level of agitation and frustration was displayed by the
workers union regarding this new hostile environment (Boguslaski & Lee, 2004). It
has been prominently argued by the employees of the Southwest airlines company
that the managing team spent most of their time behind the office. However, it was
being argued by the managing team that the new policies implied by the new
leadership while dealing with the worker’s unions would sabotage the existing
culture in the organization. It has been observed under the study conducted in this
report that the hike in the magnitude of employees and the associated growth of the
company in the market has posed a significant challenge to the existing
organizational culture.

The management of the company was also facing additional challenges by the
indiscriminate increase in the wages and cost of fuel. By the year 2006, the
expenditure on average seat mile (ASM) had raised to 8.8 cents, whereas it was just
7.07 cents in 1995 (Morrison, 2001). The increased expenditure and the reduced
profit margin have compelled the higher authority of the company to take some
strict and effective actions. It has been observed that the reduction of the cost is
very difficult in the existing scenario and hence the only viable option before the
company is to reduce the appointed human resources significantly and increase the
fare charges to a moderate level. Though both of these policies were strictly
contradicting the existing organizational culture and hence raised some skirmishes.

The rising of new entrants in the business aspect of low fare division had posed a
new imminent challenge before the management of the company. The major
competitors had copied the business model of the Southwest airlines case study
which compelled the managing team to imply the restructured and updated version
of the existing business model. The major intent of the company to modify the
existing business model was to attract a higher magnitude of potential clients and
customers. As a part of this strategy, the company had included various
entertainment systems and leather seats at the same charges for travellers. The new
business model was extremely beneficial for the company and had placed it as one
of the most successful companies in the USA in just a few years. The new challenge
before the company was the uncertainty whether the existing customer base would
keep on preferring the service of the company if there a new substitute at the same
price, which would provide better service. The report on Southwest airlines case
study would investigate the extent to which the business would get impacted by the
variation in competition, culture, and cost parameters. The question of whether the
departure of Kelleher had created any impact on the business of the company is also
another issue that should be further explored.
Strategic analysis of the company presented in this Southwest airlines case study
It was in the year 1971 that the company Southwest airlines shifted from being a
small Texas carrier to the fourth-largest airline company in the country. The analysis
of the strategic management conducted before the commencement of leadership
change is conducted in the initial section. The company displayed a very accelerated
growth before the sluggishness caused by the new leadership change. There has
been a higher clarity over the expectation of the higher authorities from the
subordinate workers, and the whole human resource had engaged passionately to
attain the common goal of the organization. It was the collective effort of the staff
employed in Southwest airlines that made the company one of the top-grossing
companies in America. The population of America utilized the cheap and leisure
travel experience offered by Southwest airlines. The company has focused on point
to point short interstate trips rather than challenging the well-established aviation
companies which focused on flying through the international routes. Rather than
acquiring the majority of market shares, the management of the company has
focused on a higher magnitude of profit turnover (Bunz & Maes, 1998).

Cost Awareness
The company has strictly followed the policy of providing customers with premium
quality services at a very affordable and cheap price. Along with the customers, the
company has also focused on employee satisfaction. The company should keep
stress on reducing their business expenditure so that the aviation service could be
provided at the minimum possible price. Thus the management of the company has
devised out strategies to increase the efficiency and quality of the services along
with decreasing the overall expenditure. The processes and services of the company
have been upgraded over the years, and a much more introspective nature had been
implied to increase the cost savings. The major stockholders of Southwest airlines,
like its suppliers, employees, and customers, have witnessed the amiable
environment of respect and trust in the organization. The parameter of ethical
integrity, abnegations of personal matters in the work environment, anti-corruption
attitude, etc. are being heavily expected from the employees of the company. The
same level of ethical standards is expected from the suppliers of the company.
Cultural diversity is efficiently identified in the work culture of both the employees
and the suppliers (Smith, 2004).

As mentioned in the earlier section of this Southwest airlines case study, reducing
the expenditure by reducing the inefficient factors has always been the primary
motive of the managing team of the Southwest airlines. The business operations
have simplified to a significant level to reduce the functioning expenditure. Various
tools like offline reservation system, service without a meal, uniform style of aircraft,
tickets being used as the cash register receipts, etc. have been implied by the
managing team of the Southwest airlines company to bring down the cost for
output. It is well understood by the staff members of Southwest airlines that the
aeroplanes could only generate revenue when they are used for air transportations
trips. To work according to this principle, the company has implied the point to point
strategy. The theories of the hub-and-spoke and higher average velocity have well
implied in serving the cause of reduced cost.
The company has stopped providing complimentary dishes and free meals on the
flights, and instead of it, the travellers were provided with some sort of beverages or
other light snacks which helped them in providing tickets at very low fare. The
company had devised up the strategy of reduced turnaround time for the workers to
provide more strength to the cost advantage measures. The pilots who worked in
Southwest airlines were mandated to fly a higher magnitude of working hours when
compared to that of other aviation companies. The aspect of time management was
well mastered by the employees and management of the company.

Just by avoiding the supply of ticket copies to the customers, the company could just
supply the travellers with soft copies through email or other messaging platforms.
The use of official portal and company websites could be used to give the customers
with required information in a cost-effective way. The same platform could be
utilized by the company to publish their contact details, annual reports, vacancy in
the job, product brochures, etc. It was majorly argued by Gary Kelly, the CEO of
Southwest Airlines that the websites of the company have significantly contributed
to mitigating the huge financial gap created by the increased level of fuel prices. By
eliminating the involvement of travel agents, the company was able to provide its
services at a ten times lower price to the customers. By employing the reservation
staff retained by the company itself, the cost was further reduced five times. The
best exclusive feature of Southwest airlines is that it charges only 1 $ as a booking
charge and the management of the company is endorsing some extra effort to
reduce this cost (Freiberg & Freiberg, 1998). The efficient use of the most modern
internet tools has helped the company in reducing operational expenditure.

Effective Internal Marketing

The culture of Southwest spirit is deep-rooted among the hearts of the employed
staff members. It is encouraged in the official environment of the company to treat
every colleague as a family member. The good culture followed in the company
ensures that the components of high communication ability and the better
interpersonal relationship would not get worn down even if Kelleher would leave the
organization. The sort of dedication and work ethic would remain among the
employees even if he decides to leave Southwest airlines (Czaplewski et al., 2001).

The aspect of customer satisfaction and the related services are highly being focused
on by Southwest airlines. Not only the customers but also the employees of the
company are being treated courteously to develop a high level of satisfaction and is
being strictly implied as a part of the company policy. The same factor makes the
official environment of Southwest airlines, one of the most amiable and fun places to
work in.

The working culture in Southwest airlines encourages the employees to serve the
customers in the best possible manner by following an innovative and fun approach.
Though at the same time, the primary objective of making a profit should not be
disregarded. A separate set of principles and working culture is followed by the
employees appointed in the Human resource department, which is also termed as
The People Department in Southwest airlines. The human resource department of
the company appoints the staff by taking into account their attitude and later are
trained for developing further skills.

The approach of first satisfying the employees before the customers are followed in
the policies of Southwest airlines. The same policy of not making any compromise in
the satisfaction of the employees has turned out to be the major factor in the
success of the company. If said in a theoretical manner, the Market – Focused
Management Model is implied in the organizational format of Southwest airlines.
The culture followed in the company mandates that the higher authorities should
endorse their trust in the performance and decisions made by the subordinate
employees since there is a fair chance of customers being wrong (Miles & Mangold,
2005).

The human resource department of Southwest airlines is open enough to appoint

candidates with absolutely no experience as an intern of the company. The company
provides such candidates detailed training and a very apt atmosphere to learn many
crucial skills. The new candidates would get exposure to very experienced officials in
the working culture of the Southwest and opens up a Pandora of opportunities for
them. The new approach of training the new employees would empower them to
take the responsibilities and carry out the required duties when the demand and
situation arrives. The proper understanding of the major challenges faced by various
departments in the organization would help the employees in performing the duties
in the most appropriate manner.

The major policy put forward by Southwest airlines before its employees are that the
whole company is a single-family. The major example which justifies this concept is
the profit-sharing plan followed in the company. The celebration followed by
employees is well encouraged by the management of the company. Every person
associated with the company is well considered by the authorities.

The hygiene of the aircraft retained by the company is considered to be the

collective responsibility of every staff since every employee of the family is
considered to be a single-family. It is the collective effort of the ground duty, which
makes the aircrafts ready again to take off for the next service. It is by dint of rapid
turnaround service of the company that the aircraft is made ready within twenty
minutes for another round of the trip. The internal design of each aircraft is altered
and customized by the company to facilitate speedy service and easy maintenance
by the ground staff.

Only the candidates with a particular level of creativity are selected in the Southwest
aviation company, and hence every employee has their own personality. The
customer is provided with a very comfortable environment since the humorous
interaction, appropriate clothing, and interactive broadcasting are carried out by the
staff members. The company has devised out certain tools to reduce the stress of
travellers by providing them with entertainment at no expenditure. Just focusing
extremely on the security of the passengers may build a barrier between the
customers and the employees. Displaying personality would sometimes get difficult
when the individual is working in a professional environment (Ren, 2020).

It is proven behaviour that a person would feel highly comfortable and thus provide
maximum efficiency when they are wearing their favourite dress or uniform. The
company management has devised out certain other ways that would help the
employees to become much more comfortable while in the working environment.
The competitors of Southwest airlines have just merely copied the business model to
attract a larger market share of the consumers. Since most of the employees are
emotionally connected with the company, a higher level of dedication is delivered by
them. These are some of the major factors which have led the company towards
immense success.

Organizational analysis
The concepts of code of conduct and the lean structure tools are implied in the
business structure of Southwest airlines. The mode of cross-communication is made
possible by implying the lean structure theories. The staff members are provided
with high accessibility and freedom to provide their valuable suggestions and
recommendations to the respective directors or even the presidents. The form of
hierarchy used in Southwest airlines is quite simple, which makes it very easy for the
managers to manage the activities of the subordinates. The particular system helps
the managers to conduct a clear and direct form of communication. The
personalities appointed at a higher position in this company are not inaccessible to
the subordinate workers. Every person in the company has access to even the office
of president. It has been witnessed in the company that the leaders were even
actively involved with the staff members of the baggage handling department. The
particular form of the official environment would provide the workers with a very
higher level of confidence and freedom (Richards, 1996).

It has been particularly identified by the organization that the real factor of
ownership could not be identified by the magnitude of shares owned by a particular
entity or person. It is the will to make a positive change in the existing case that is
considered to be the primary parameter for the level of ownership. The employees
in the organizations are more encouraged to find the solution for the emerging issue
rather than approaching seniors for the answers for every challenge. Whether the
employee is a flight attendant or an engineer, the recommendation put forward by
them would obviously be considered as valuable one by the higher authorities of the
company.

It is believed by the managing team of the Southwest airlines company that the
more knowledge an employee holds, the more that individual would care about and
contribute to the institution. Every employee in the organization would have access
to every crucial data of the organization. The employees of the company have a good
concern over the profit of the company since it directly affects the security and
certainty of the income. Hence every staff member would actively participate in
drafting the money-saving strategies that if implied, would help the company in
generating a high level of profit.
Effective external marketing strategies
The passenger of the companies are always focused on being made comfortable and
delighted, and as a part of it, they are told interesting stories and jokes. The
approach would make the passengers select the same flight service of the company
in the future. The gap that occurs due to the absence of other forms of
entertainment could hence be effectively reduced. It would be very hard to maintain
the enthusiasm of the passengers when the flights are very long. Hence the
Southwest airline should focus thoroughly on entertainment facilities for the aircraft
which conducts distant journeys. It is not a feasible idea to include stewards in every
flight, since significant passenger space would be occupied by them. The option is
hence not practical in every instance of aviation flights. It is hence highly
recommended to the Southwest airlines company that the flights should be installed
with very advanced entertainment technologies so that a very satisfying experience
could be given to the passengers. However, the same action would force the
company to increase its charges to regular passengers.

The company should focus more on including the cheaper mode of entertainment in
the aircraft so that the task could be done very efficiently. Though the same
approach of installing cheaper products would turn out defective in the long run, and
the company may have to suffer a larger range of loss rather than using premium
products. The company of Southwest airlines retains a lot of aircraft which reach up
to the count of 300. Even providing cheap newspapers in every aircraft would pose a
huge financial burden over the reserve of the companies. Providing newspaper may
seem initially very cheaper for the management of the company though including
advanced electronic gadgets would turn out way cheaper in the long run for the
company. The cost of including entertainment facilities in the aircraft used for long
trips would turn out to be very expensive for the company (Hallowell, 1996).

Analyzing the external environment of Southwest airlines

There are many external factors that make a direct impact on the business of
Southwest airlines organizations. Even though there occurs a large economic crisis in
the country, the company would sustain its dominating position in the market. In the
local market of domestic aviation services of the United States, the company of
Southwest airlines is considered to be the best among every other option. The
company has not only proven its brilliance in attracting a wide range of customers
but also in adapting itself to the needs and requirements of the customers. In
contrast, other aviation companies are struggling even to sustain in the business
because of the increasing fuel prices. Most of the companies have lost a significant
part of their market share by increasing the ticket charges (Heskett & Sasser, 2010).

As per the Southwest airlines case study, it should also be understood by the readers
that Southwest airlines were also significantly hurt by providing the customers with
cheaper tickets. It was in the year 2008 when the company had faced a huge
challenge since the oil prices touched the record price. Due to the unprecedented
price hike in gas prices on the global level, aviation companies found it extremely
hard to sustain in the business. The factor of increased gas prices was further
complemented by the challenges like a stagnant economy which resulted in very
poor ticket sales which consecutively led to the insolvency of many other aviation
companies. The companies that have faced the extreme financial crisis were those
which operated on low fares. And it was in the same category that the low-cost
carrier services of Southwest airlines would be labelled. However, the company has
managed to escape this dreadful fate.

The majority of the passengers were concerned about the fare charges because of
the stagnant economy. The services of Southwest airlines were chosen as the most
preferred service by the local citizens of the USA. Apart from the financial aspects,
the company has also faced some challenges from the cultural aspects since most of
the terrorist organizations were targeting the aviation service. The increased fear
had forced the public to choose the alternative mode of transportation. The policies
implied by governments like the Deregulation act of 1978, which allowed other
aviation giants to enter the local market. The move had created large pressure on
the local aviation companies, and in the initial 10 years, around 150 companies
related to aviation were declared as insolvent. Though the group of Southwest
airlines had survived these challenges, the component of federal taxes is still posing
some risks to the operation of the company (Raynor, 2011).

Various techniques and tools have been implied by the Southwest group to increase
the turnover by minimizing the expenditure. The company has relied heavily on cost-
reducing tools rather than just adopting the flexible approaching methods. It is the
Southwest airlines case study that has displayed a standard for technological
advancements before other aviation industries. It was Southwest airlines that had
first established its formal website and official portals.

SWOT Analysis
In the below section of this article on Southwest airlines case study, we have
conducted a detailed SWOT analysis for a better understanding of the external
environment.

Strength Weakness
· Very exciting and relaxed working · The inefficiency of the leadership in
environment countering various internal challenges.

· High focus on the ground level market · High reliance over single supplier for
units aircrafts

· Recognition of cultural diversity · Various skirmishes with the labor

unions.
· Awareness of process expenditure
· Herb Kelleher taking permanent
· Strong connection with the customers retirement

· High productivity and efficiency · When considered the long international

flights, the factors of food and
· Strong coordination with the entertainment have raised to be the
employees

· Premium-quality services
major issue.
· Visionary and foresighted leadership
· The existing aircraft of the company like
Boeing 737 is not well suited for long
· Well-structured organizational process
international flights.
· High level and advanced external
· The exponential hike in the present fuel
marketing
prices.
· Innovative internal marketing
strategies.
Opportunities Threats
· The high risk of terrorism and other
· The high probability of the expansion in
socio-cultural risks.
the related aspects.
· The uncertain dynamics of the local
· Passengers with domestic targets are
economy.
still considered to be potential
customers.
· The rise of new potential competitors.
· The company could focus more on its
· The cheap service is offered by other
international freight and transportation.
multinational companies.
· Unavailability of any low-cost service
· The heavy burden of federal tax levied
providers in international flight services.
by the government.
· There are some code sharing
· Hike in the business expenditure
techniques to be used in the business
because of the rising international
process of the company.
airport taxes.
Conclusion
The article on Southwest airlines case study would throw light on the good business
practices to be followed in the aviation industry. The instance of Southwest airlines
proves that the factor of integrity is of the primary moral character to be followed in
the international business. The employees of the company would require to sustain
their integrity so that a collective approach could be made to attain the maximum
output. The significance of efficient leadership and the business culture followed in
an organization is highlighted in the above article on ‘Southwest airlines case study”.
The higher authority should keep on altering their approach as per the demands of
the customers and should always focus on eliminating the skirmishes within the
organization by focusing on the concerns of employees. The study has proposed that
apart from time management, the factor of energy management also plays a
significant role in the success of the aviation business. Apart from implying the
visionary ideas imminently, the leadership should try to adjust with the traditional
framework that the employees are following for a long period. By reviewing the
dynamics and business processes, as mentioned in this Southwest airlines case
study, it could be ascertained that the Goolsby leadership style would be the most
appropriate and suitable one for the organization. Since this leadership style focuses
on the parameters of Integrity, Courage, and Impact, higher productivity could be
observed in the aviation business.