Southwest Airlines Essay Example

by high-end brands and resorts. Hotels should not solely focus on being the cheapest option available but can learn from airlines' experiences. Some airlines have been able to expand while others enter previously profitable markets by implementing higher charges in the industry. These airlines use various communication approaches when interacting with passengers. Maintaining cash flow is crucial; thus, providing reasonable discounts regularly is considered good business practice. Southwest Airlines has consistently achieved profitability over the past two decades by offering low fares and closely monitoring and adjusting prices even during economic downturns, contributing to their excellent customer satisfaction ratings.Southwest Airlines, the fourth largest airline in the United States with 64 million passengers annually across 64 cities in 34 states, understands the importance of social media promotion and aims to utilize modern advertising channels. They have been engaging with the online community and showcasing their low-cost prices and services on platforms such as chirrup, Facebook, YouTube, Flickr, and blogging. Southwest's fleet comprises of 388 Boeing 737 aircraft ranging from the models 737-200 to Next Generation 737-700. While primarily a point-to-point carrier, Southwest has observed an increase in transfer traffic on their routes. Notable hubs within their network include Las Vegas (185 daily departures), Phoenix (183), and Baltimore/Washington (161). In collaboration with Coastal Vision 3000, a business group in Northwest Florida, Southwest is determined to establish Northwest Florida as a leading beach destination by stimulating job growth, promoting economic development, and offering travelers more flying options to popular beach destinations.Despite economic challenges faced by airlines like United, US Airways, and Delta due to factors such as the impact of September 11th on the industry, Southwest Airlines has

managed to thrive alongside Jet Blue, Frontier, and Airtran by offering low-priced air fares. Southwest Airlines has achieved success through a combination of a $2 billion cash reserve, effective marketing strategies, and long-term plans. They have remained true to their original philosophy of providing low-cost flights without amenities like meals or assigned seats in order to keep costs low. Additionally, they utilize a linear route structure by flying only one type of aircraft in high-density markets. This gives them a competitive edge and generates high profits.

Currently, there is controversy and ongoing debate within the US airline industry regarding standardized restrictions for carry-on luggage. Despite calls from various industry groups to establish uniform size and weight limits for carry-on bags, the Federal Aviation Administration (FAA) has not taken significant action on this matter. As a result, both airlines and passengers continue to experience confusion and inconvenience when it comes to carry-on luggage restrictions. With concerns about loss, damage, theft, and the time-consuming check-in process on the rise due to increased air travel, more passengers are choosing to bring their belongings onboard rather than checking them in.Consequently, the overcrowding of overhead bins and storage compartments on flights often leads to approximately 4,500 injuries annually in the United States, as reported by Air Safety Week. These injuries can occur when passengers open overhead bins upon arrival or during turbulence, particularly if the bins accidentally open and luggage falls on them. It is important to note that Southwest is the only national carrier that does not charge passengers for a second checked bag; however, both Legacy Airlines and low-priced carriers have recently started implementing charges for second bags, causing

significant disruption. The controversy surrounding this issue began when American Airlines announced a $15 fee for the first checked bag on May 21st, 2008. Southwest CEO Gary Kelly has expressed that customers do not want to be charged for additional services, leading other airlines to follow suit with a $25 fee per way for checking a second bag. Maxon's research also revealed that Southwest initiated a $25 fee for the second checked bag on January 29th, 2008. Furthermore, besides changes in baggage fees, other airlines are now imposing charges for various services like transporting pets or unaccompanied minors, checking specific items such as antlers and ski gear, or upgrading seats.Southwest Airlines has managed to maintain profitability despite industry modifications and challenging economic times. It is currently ranked as the top U.S. airline in terms of customer satisfaction. Having a unique strategic perspective and long-term commitment to that strategy, along with an attractive market presence, is crucial for success in the troubled aviation industry. Southwest differentiates itself from competitors through its unique strategy and committed workforce. Unlike other airlines, it has never resorted to bankruptcy court for union contract renegotiations. Despite operating for 37 years, Southwest consistently generates profits while offering low fares and high wages. The airline prides itself on customer-oriented approaches and constantly seeks ways to distinguish itself in the industry. In contrast to major carriers, Southwest does not charge customers for checked bags and even launched a mocking ad campaign targeting competitors who did. These strengths give Southwest a competitive advantage in the airline industry as it offers affordable travel packages with minimal frills but maintains excellent customer service. Additionally, by exclusively using

Boeing aircraft, Southwest can reduce maintenance costs and take advantage of bulk discounts on purchases.Southwest Airlines has implemented various customer-focused initiatives, including senior citizen discounts, ticketless travel, and a "no seat assignment" policy. These initiatives save time and cut costs compared to other airlines. The company also rewards frequent flyers based on the number of trips taken rather than miles traveled.

The airline's customer-centric programs, such as the "Bags Fly Free Campaign" and early bird check-in program, are estimated to generate around $18 million in revenue. Additionally, Southwest has generated $10 million in revenue from services like pet menu offerings, unaccompanied minor charges, and excess/heavy luggage fees.

Despite consistently earning a profit, Southwest Airlines faces some weaknesses. One notable weakness is their limited destinations within the Continental United States; they do not offer international flights. This exclusion may impede revenue growth from customers requiring international travel.

Another weakness is Southwest's failure to utilize online booking agents like Priceline.com and Expedia.com. Collaborating with these companies could boost ticket sales and meet capacity requirements. Additionally, the airline's lack of chat communication methods such as email hampers efficient interaction with employees and customers.

Overall, while Southwest Airlines has implemented successful customer-focused initiatives and generates significant revenue through its programs and services, it should address its limitations in destination options and consider partnering with online booking agents for further growth opportunities.Southwest Airlines has historically experienced growth and profitability through technological advancements. They prioritize using technology to enhance the travel experience and invest in research and development to improve procedures, services, and introduce new products. Enhancing internet advertising capabilities is crucial for reaching a wider range of consumers. The airline plans to expand its

domestic and international flights by increasing frequency on 65 flights, decreasing 10 flights, and adding a net total of 52 flights. They are also considering offering leisure or business class options. To align staffing with capacity levels, Southwest implemented a voluntary early-out plan to reduce labor costs, generating annual savings that exceed implementation costs. Despite challenges in leisure travel post-9/11 due to fear of flying and subsequent terrorist attempts on airplanes, Southwest must consistently communicate their dedication to passenger safety in order to thrive in the airline market.Despite the increasing costs, they need to invest in airport security measures. Government regulations can also increase operating expenses by imposing limitations on aircraft types and flight frequencies. Fuel price fluctuation poses a significant threat, but Southwest has an advantage due to their fuel hedge contracts. However, if these contracts expire without successful renegotiation, Southwest may face higher fuel costs, impacting ticket prices and profits. To mitigate this risk, they have adjusted their fuel hedging portfolio by including derivative contracts covering approximately half of their estimated fuel consumption for 2010. This adjustment resulted in a $30 million reduction in projected marketing expenses compared to the previous quarter's expenses which were $15 million lower. Market segmentation is seen as a valuable tool for Southwest in becoming the preferred airline in every city it serves under Joyce Rogge's leadership as vice president of marketing. They have specifically targeted different customer bases, including the African American demographic which remains prominent in up to 24 out of the 59 regions where Southwest Airlines operates.Southwest has formed partnerships with various media outlets and companies such as BET, ESPN, National Football League games, Pizza

Hut, and Disney to target the male 25-54 demographic within their target audience. By effectively utilizing platforms and collaborations, Southwest maximizes its exposure and impact. Unlike other airlines that primarily focus on price-insensitive business travelers, Southwest caters to cost-conscious budget travelers by offering lower prices compared to competitors who charge additional fees for amenities. Instead of starting from scratch, Southwest strategically positions itself where customers are already located. With a track record of operational excellence, low-cost structure, outstanding customer service, and innovative HR management practices over 23 years in the industry, Southwest maintains an advantage over competitors despite future challenges such as increased labor and fuel costs. To grow quickly like Southwest Airlines, other airlines would need to operate at a cost equal to or lower than theirs. Various sources recognize Southwest Airlines as one of the top competitors in an ever-changing industry.The sources provided offer various perspectives on Southwest Airlines as an industry leader. Included are a news release, an article discussing their advertising strategy, a book exploring their approach to performance through relationships, and an article highlighting their ability to operate as a low-cost carrier without compromising quality service. The fifth source is an article in the Journal of the International Academy for Case Studies that focuses on the challenges and strategies faced by Southwest Airlines in the competitive airline industry. In "Southwest Airlines: An Industry Leader" by Matthew Russell, it is stated that Southwest Airlines is considered a leader in the airline industry. This article explores the factors contributing to their success. Additionally, Smooth Landing Research Associates conducted a research report for Cornell University's Johnson Graduate School of Management in 1997 that

examines Southwest Airlines as a case study and delves into its business model and impact on the industry. Furthermore, a press release issued in January 2010 titled "Southwest Airlines Reports Fourth Quarter Profit and 37th Consecutive Year of Profitability" announces Southwest Airlines' financial success for the fourth quarter of the previous year, emphasizing its consistent profitability over several years. Collectively, these sources provide insights into different aspects of Southwest Airlines and its position as an industry leader.