Regardless of the angle, one looks at it from, it is not easy to pin down the one thing that makes Southwest Airlines, whose headquarters is in Texas, tick! In fact, there is no one thing that explains the fierce attraction that Southwest Airlines inspires to would-be employees and customers alike to make possible the 3200 daily flights across America. At inception in 1973, the airline started with three jets. It currently operates a fleet composed of five hundred and forty-four Boeing-737 series jets. It is a member of the Fortune 500 companies. The charm at Southwest Airlines includes its strong employee and customer loyalty (Grubbs-West 6), its focused leadership, and its compassionate involvement with the community.
Customers enjoy flying with Southwest because it is safe, has the best prices in the industry, and has very good customer service. It is famous for its low fares which are some 30% lower than those of its major rivals (Hill & Jones 105). Since 1987, the Department of Transport (DOT) rates Southwestern Airlines as the airline with the lowest ratio of complaints per passenger in the industry. This explains why it topped the American consumer satisfaction Index in 2010 as the best airline. The airline operates six customer support centers across America and remains a leader in the point-to-point flight category. Customer loyalty has propelled the airline to be the number one airline, handling the largest volume of domestic passenger travel. In addition, the airline is known for its record levels of safety (Gittel 7)
The employees at Southwest are carefully selected and taken care of because, its culture is unique and fiercely protected (Grubbs-West 6). The company hiring policy stresses hiring for attitude and training for skills thereafter. This has ensured that a unique blend of employees joins the Southwest family. Because of a very stimulating working environment, Gittel observes that Southwest has by far the most productive aircraft and employees of any major U.S. airline (6). In addition to a unique working environment, the employees own 8% of the companys stock thanks to a profit-sharing plan. When compared to other airlines, employees at Southwest show a greater degree of knowledge of how their function fits into making the airline profitable. When its profits, they profit too.
Southwest has outstanding corporate leadership. It is also a market leader. What else explains thirty-seven years of straightforward profitability? The bottom line never lies. In a very turbulent industry, the leadership at Southwest has managed to keep the company afloat and satisfy its stakeholders through consistent profitability. Other Fortune 500 companies recognize this leadership genius at Southwest. Otherwise, 66% of them would not have subscribed to SWABIZ. Other facts demonstrate Southwests market leadership. It was the first airline to create a homepage on the internet. It was also the launch customer for the Boeing 737-700 in 1997.
A sense of concern for the community and compassion for people are some of the key things that Southwest looks for when hiring new employees. It takes the needs of the community seriously. Its main charity is the Ronald McDonald program. In addition, it sponsors the Southwest Airlines LUV Classic Golf Tourney that has made possible the collection of proceeds of over eleven million dollars for charity. In a further demonstration of Southwests commitment to community, Yerkes reports that The Hearts & Homes Project saw Southwests Dallas employees rejuvenating homes in poorer neighborhoods; in Operation Cover-up, San Francisco employees painted over graffiti on public walls and bridges (49). Whichever way you look at it, Southwest Airlines is the place to work, the airline to fly with, and the best neighbor to have.
References
Grubbs-West, Lorraine. Lessons in loyalty: How Southwest Airline does it-an insiders View. Dallas: Cornerstone leadership Institute, 2005. Print.
Jones, Gareth, and Hill Charles. Strategic Management Theory: An integrated approach. Ohio: Cengage Learning. 2009. Print.
Gittel, Jody Hoffer. The Southwest Airlines Way: Using the power of relationships to achieve high performance. New York: McGraw-Hill Professional. 2005. Print.
Yerkes, Leslie. Fun Works: creating places where people love to work. California: Berrett-Koehler Publishers. 2007. Print.
Written by Mary Schlangenstein and Dan Hart, the article, Southwest Airlines grounds 79 planes after hole in 737-jet forces emergency landing, analyses a story of the emergency landing of one of the Southwest airlines 737 jets. The 737 jets was forced to take an emergency landing after developing a hole while in flight forcing the company to cancel about 300 flights. Flight 812 was carrying 118 passengers and 5 crews when this problem happened on its route from Phoenix to Sacramento on Friday. The problem occurred when an oxygen mask was forced to deploy after the loss of cabin pressure. The article also looks at a similar case that happened last year in July with a Boeing 737-300 where one passenger and flight attendants were injured. Southwest airline has also started a serious inspection to establish the cause of that incident though from the past cases metal fatigue can be blamed for the problem (Schlangenstein & Hart, 2011).
Analysis
The article presents the actions taken by Southwest Airlines after the emergency landing of Boeing 812. The article gives all the actions that the company has been taken to establish the cause of the problem. It also analyses similar cases that happened in the past such as last July case. Many problems in the airline can only be solved by looking at the past records; for instance, the main problem in the Boeing jet is the engine problem, which is solved with past incidences (Langston, 2011, p.46). However, the author of the article does not present the reaction of the customers who are most affected by this problem. For example, many flights were canceled which affected customers of Southwest airline in many ways. This can add to the problem that is already in the company of delaying customers as Tang and Zimmerman (2009, p.74) claim.
Conclusion
The article analyses the steps taken by Southwest airlines to fix the problem. Presentation of the past incidence helps to address the current problem. Despite all these efforts, the article does not present the views of the customers, which are also very important in solving the problem.
Schlangenstein, M., & Hart, D. (2011). Southwest Airlines grounds 79 planes after hole in 737 jet forces emergency landing. Bloomberg News.
Tang, C. S., & Zimmerman, J. D., (2009). Managing New Product Development and Supply Chain Risks: The Boeing 787 Case. Supply Chain Forum: International Journal, 10 (2), p74-86.
Regardless of the angle, one looks at it from, it is not easy to pin down the one thing that makes Southwest Airlines, whose headquarters is in Texas, tick! In fact, there is no one thing that explains the fierce attraction that Southwest Airlines inspires to would-be employees and customers alike to make possible the 3200 daily flights across America. At inception in 1973, the airline started with three jets. It currently operates a fleet composed of five hundred and forty-four Boeing-737 series jets. It is a member of the Fortune 500 companies. The charm at Southwest Airlines includes its strong employee and customer loyalty (Grubbs-West 6), its focused leadership, and its compassionate involvement with the community.
Customers enjoy flying with Southwest because it is safe, has the best prices in the industry, and has very good customer service. It is famous for its low fares which are some 30% lower than those of its major rivals (Hill & Jones 105). Since 1987, the Department of Transport (DOT) rates Southwestern Airlines as the airline with the lowest ratio of complaints per passenger in the industry. This explains why it topped the American consumer satisfaction Index in 2010 as the best airline. The airline operates six customer support centers across America and remains a leader in the point-to-point flight category. Customer loyalty has propelled the airline to be the number one airline, handling the largest volume of domestic passenger travel. In addition, the airline is known for its record levels of safety (Gittel 7)
The employees at Southwest are carefully selected and taken care of because, its culture is unique and fiercely protected (Grubbs-West 6). The company hiring policy stresses hiring for attitude and training for skills thereafter. This has ensured that a unique blend of employees joins the Southwest family. Because of a very stimulating working environment, Gittel observes that Southwest has by far the most productive aircraft and employees of any major U.S. airline (6). In addition to a unique working environment, the employees own 8% of the companys stock thanks to a profit-sharing plan. When compared to other airlines, employees at Southwest show a greater degree of knowledge of how their function fits into making the airline profitable. When its profits, they profit too.
Southwest has outstanding corporate leadership. It is also a market leader. What else explains thirty-seven years of straightforward profitability? The bottom line never lies. In a very turbulent industry, the leadership at Southwest has managed to keep the company afloat and satisfy its stakeholders through consistent profitability. Other Fortune 500 companies recognize this leadership genius at Southwest. Otherwise, 66% of them would not have subscribed to SWABIZ. Other facts demonstrate Southwests market leadership. It was the first airline to create a homepage on the internet. It was also the launch customer for the Boeing 737-700 in 1997.
A sense of concern for the community and compassion for people are some of the key things that Southwest looks for when hiring new employees. It takes the needs of the community seriously. Its main charity is the Ronald McDonald program. In addition, it sponsors the Southwest Airlines LUV Classic Golf Tourney that has made possible the collection of proceeds of over eleven million dollars for charity. In a further demonstration of Southwests commitment to community, Yerkes reports that The Hearts & Homes Project saw Southwests Dallas employees rejuvenating homes in poorer neighborhoods; in Operation Cover-up, San Francisco employees painted over graffiti on public walls and bridges (49). Whichever way you look at it, Southwest Airlines is the place to work, the airline to fly with, and the best neighbor to have.
References
Grubbs-West, Lorraine. Lessons in loyalty: How Southwest Airline does it-an insiders View. Dallas: Cornerstone leadership Institute, 2005. Print.
Jones, Gareth, and Hill Charles. Strategic Management Theory: An integrated approach. Ohio: Cengage Learning. 2009. Print.
Gittel, Jody Hoffer. The Southwest Airlines Way: Using the power of relationships to achieve high performance. New York: McGraw-Hill Professional. 2005. Print.
Yerkes, Leslie. Fun Works: creating places where people love to work. California: Berrett-Koehler Publishers. 2007. Print.
Written by Mary Schlangenstein and Dan Hart, the article, Southwest Airlines grounds 79 planes after hole in 737-jet forces emergency landing, analyses a story of the emergency landing of one of the Southwest airlines 737 jets. The 737 jets was forced to take an emergency landing after developing a hole while in flight forcing the company to cancel about 300 flights. Flight 812 was carrying 118 passengers and 5 crews when this problem happened on its route from Phoenix to Sacramento on Friday. The problem occurred when an oxygen mask was forced to deploy after the loss of cabin pressure. The article also looks at a similar case that happened last year in July with a Boeing 737-300 where one passenger and flight attendants were injured. Southwest airline has also started a serious inspection to establish the cause of that incident though from the past cases metal fatigue can be blamed for the problem (Schlangenstein & Hart, 2011).
Analysis
The article presents the actions taken by Southwest Airlines after the emergency landing of Boeing 812. The article gives all the actions that the company has been taken to establish the cause of the problem. It also analyses similar cases that happened in the past such as last July case. Many problems in the airline can only be solved by looking at the past records; for instance, the main problem in the Boeing jet is the engine problem, which is solved with past incidences (Langston, 2011, p.46). However, the author of the article does not present the reaction of the customers who are most affected by this problem. For example, many flights were canceled which affected customers of Southwest airline in many ways. This can add to the problem that is already in the company of delaying customers as Tang and Zimmerman (2009, p.74) claim.
Conclusion
The article analyses the steps taken by Southwest airlines to fix the problem. Presentation of the past incidence helps to address the current problem. Despite all these efforts, the article does not present the views of the customers, which are also very important in solving the problem.
Schlangenstein, M., & Hart, D. (2011). Southwest Airlines grounds 79 planes after hole in 737 jet forces emergency landing. Bloomberg News.
Tang, C. S., & Zimmerman, J. D., (2009). Managing New Product Development and Supply Chain Risks: The Boeing 787 Case. Supply Chain Forum: International Journal, 10 (2), p74-86.
The documentary, The American Southwest: Are We Running Dry? discusses the looming water crisis that poses detrimental effects on the inhabitants of Southwest America. The documentary highlights the connection between climatic change, diminishing water resources, and encroachment of natural habitats due to overdevelopment. Rapid population growth has placed considerable strain on Americas most important natural resource with dry persistence conditions creating an excessive demand for the supply of clean water. Despite the existence of evidence showing increasing scarcity of water, there have been little efforts directed towards reversing the trend unlike the case of natural resources such as oil whose scarcity has triggered the adoption of numerous conservation measures. The lack of concern by the public and government is disturbing because water scarcity is a time bomb whose consequences are more catastrophic than the drying of oil reserves.
It is saddening that people are not taking initiatives to conserve water even though there are no alternatives for water, unlike fossil fuels. The documentary shows that the people facing the greatest risk of water scarcity are minority communities such as the Indian communities in Southwest (The American Southwest). However, water crises will become a global phenomenon due to the inference of the hydrological cycle, which will lead to interrupted snowmelts, rain, and drying of rivers. Diminishing water levels in major catchment areas such as the Colorado River will not only affect the adjacent communities but also hamper access to clean water by Americans across a wider region, including areas such as Los Angeles.
The Indian communities are already experiencing water rationing as evident by the fact that they can only access about 25 gallons of water compared to the 100 gallons used by an average American family. Scarcity of water has far-reaching effects, especially in matters of public and environmental hazards. Awareness regarding appropriate land planning and mitigation of the effects of climatic change emerge as key recommendations whose implementation will ensure the preservation of catchment areas such as Lake Powell, Lake Mead, and the Rio Grande without which the cities in the American Southwest will plunge into a disaster.
The documentary highlights that despite the harsh climate in the Southwest, there is the hope of addressing the water demands of the expanding population with the adoption of appropriate policies. The pragmatic shift towards water conservation should become a major initiative by the government, considering its authority to consolidate resource and spearhead the implementation of national water policy. Changing how authorities allocate water will promote the acceptance of campaigns on water conservation by the public. The status of surface water is an indicator of the condition of groundwater, which can help to predict the future of water availability and influence both the short-term and long-term interventions.
Coordination between departments involved in land planning and management of water catchment areas will greatly reduce encroachment and diversion of waterways, which increase the implications of dry conditions. The documentary provides the viewer with insights on the future of water crisis, considering that the conditions exhibited in the American Southwest are likely to develop in various parts of the world. The documentary provides a scope for preparedness and mitigation of chaos and disasters associated with water scarcity, which governments can rely upon to maintain and preserve the crucial natural resource.
Work Cited
The American Southwest. Dir. Jim Thebaut. Perf. Jane Seymour. Chronicles Group, 2008. DVD.
According to Business Week (2008), Southwest Airlines is a passenger airline that provides scheduled air transport in the United States. The company also sells credit to business partners for instance hotels, telecommunication companies, credit card companies and car rental agencies.
The Southwest Airline Company was founded in 1967 under the initial name of Air Southwest which was later changed to Southwest Airlines in the early 1970s.
The companys headquarters are in Dallas, Texas with a large focus city at McCarran International Airport in Las Vegas. The number of passengers carried domestically, annually is the highest in the United States and in the world over.
By revenue, Southwest airlines are the sixth-largest airline in the United States which makes it one of the most profitable airlines in the world. This is what led to Southwest Airlines posted a profit for the thirty-fifth consecutive year in the month of January 2008. It also maintains the fifth largest passenger fleet of aircraft amongst all the commercial airlines globally (Freiberg, 1996).
Southwest Airlines uses short-haul routes and point-to-point service where their flights operate from one city to the other. The airline complements its services by increasing the number of medium to long-haul routes which include transcontinental service.
There are a number of factors to which the airlines success can be attributed. Its approaches when compared to those used by other airlines are quite different. The method of payment of the crew they apply is by trips. Their crew is one of the best paid in the industry. This must contribute to the high quality of service output. The airline does not assign seats to any particular passengers. Instead, there is just one class of travel for all the passengers. In an effort to make traveling more relaxing for their customers, the airlines usually use the less congested airports. With a combination of low airfares, the airline has been able to attract very high numbers of passengers. The Fortune Magazine once referred to the airline as the hottest thing in the sky (Serwer, 2004).
According to Freiberg (1996), Southwest airlines profitability has not always been stable; the company had to deal with financial constraints, especially in the early 1970s. This can be said to be what led the company to adopt financial techniques so as to first, boost its profitability then, deal with some fuel complications which rose or were expected to rise within the course of the airlines operations. The fuel cost containment was later what came to be established as one of the major reasons why the company succeeded in maintaining its profit margins. The fuel cost containment strategy was implemented by the airline in order to ensure future fuel costs fluctuations are not only predicted but are appropriately planned for in advance. The strategy was called The Hedging Strategy and it enabled the airline to secure fuel at considerably low costs (Banstettor, 2002).
Southwest Airlines is the only airline that maintains an investment-grade rating on the debts incurred which in the airline industry is a great accomplishment. The companys officials point out that this is part of the companys culture (Serwer, 2004).
Southwest Airlines financial developments within a four-year time period show that the gross profit of the company as of 2004 was US$ 1,760 million but by the year 2007 the same had increased to an amount of US$ 2,505 million. The total revenue as stated in the income statement of the year 2007 was a total amount of US$ 9,161 million compared to that of 2004 when the total revenue was US$ 6,530. The Net Income for the year 2007 was a total of US$ 645 as compared to the 2004 amount of US$ 215 (Reuters).
Ratio Analysis
The different ratios are; The Gross Margin ratio which is the five-year average for the company is 28.37 while the five-year average gross margin ratio for the industry is 23.11. This is an indication that Southwest airlines are performing above average in terms of profitability in the industry.
The Net profit margin for the company is 5.86 while for the industry the ratio was 1.95. This shows that the company is more profitable than most of the other companies in the industry. The Quick ratio for the company is 1.03 while the same for the industry is 0.92. This is an indication of the companys high liquidity. The Current Ratio (MRQ) for the company is 1.07 while that for the industry is 1.03.
All the above comparisons of Southwest airlines financial ratios with those of the airlines industry indicate that it is generally doing better financially than most of the other airlines in the same industry.
According to the business Dictionary.com, a perfect competition market is a hypothetical (does not really exist in real life) free market with the following characteristics:
the number of buyers and sellers is so large such that there is no single buyer or seller who can be able to determine or control the prices in the market.
In the market, all the buyers and sellers main objective is to make the biggest profits.
Entry and exit into the market for the buyers and sellers is not restricted in any way.
There is freely available abundant information to all the buyers and sellers and sellers concerning the availability, costs and quality of the various goods and services on sale in the market.
The goods or service which are in the market are substitutable due to the common characteristics that they have. (Business Dictionary.com)
In the united states, the airline industry may be described as such. This is due to the fact that there are billions people who travel annually and also numerous airlines. The United States is the biggest single market in the world and in 1996 it accounted for 41% of the total scheduled travels internationally (the Airline industry, 2000).
The pricing policy implemented by southwest airlines is one price fits all. For many years they have made the prices for their tickets to be uniform without any bias on basis of first, business or economy class as many airlines usually do. on top of this, the airlines has always kept its prices lower than the other airlines and this has helped it keep a large chunk of the air travel market with big profits yearly, but of late this has tended to change.(Reuters, 2008)
In mid this year, the oil prices had risen very high and in return had made the fuel prices to also rise. Since in the airline industry, the most used input is the jet fuel, it determines the prices of the tickets which the airlines can charge. With the increases in its price, many airlines had to also increase their prices.
Apart from the costs of inputs, that is the fuel, there area also some other factors which have affected and necessitated the increase in the prices of airline tickets. There are government regulations, for example at LaGuardia airport where the government intends to control the number of planes landing and taking off in a bid to control congestion (cheapflightss.com). The credit crisis in the united states has also contributed to affecting prices.
The input costs for the airlines industry mainly is fuel which is being concentrated on in this case. The cost of fuel is not necessarily affected by the market structure but there are a variety of factors which influence it. Some of these are: the cost of crude oil, the persistent increase in the demand for oil internationally, uncertainty of oil supply, taxation and also supply and demand imbalances.(caltex, 2006).
In a situation where the costs of fuel rises, Southwest airlines does not necessarily pass all of the increase in costs over to the consumers, their customers. This is unlike other airline companies whose prices are immediately affected by the increase in fuel prices. Southwest airlines has been able to hedge itself against fuel price increases by fuel hedging. This it did by locking in oil prices years in advance. (Denverpost.com).
Southwest Airlines is an American low-cost air company founded in 1967 by Rollin King and Herb Kelleher. The main idea of the creators was to make an airline that has low prices and works fast and efficiently. Nowadays, the company has expanded all over the United States and is having international flights. Southwest Airlines uses only Boeing 737 as the aircraft which helped reduce the costs for its maintenance. Throughout the history of the firm, it has always upgraded its aircraft and has ordered new versions of the Boeing 737. During the 1980s Southwest Airlines adhered to the idea of a low-cost ticket company and offered Senior Citizens programs allowing elderly Americans to buy airplane tickets only for $25 one-way.
Within 9 years (from 1990 to 1999) the aircraft number increased from 100 to 300. In 2006 the company got a win with the Wright Amendment Reform Act. This allowed Southwest Airlines to sell tickets and offer interconnecting flights from Dallas-Love Airport, the companys major bases. In 2010 it purchased the AirTran Airways and extended its international routes. Nowadays, Southwest Airlines is one of the most popular air companies in the United States and constantly transports passengers both with domestic and intercontinental flights. The total equity of the company was $9.853 billion by 2018, and it keeps growing within time. Investing in Southwest Airlines stock is beneficial as customers will always choose a low-cost company and, withing the growth of the market, the stock price of Southwest will relatively increase.
Southwest Airlines has a fundamental business model for a low-cost carrier with a constantly growing network and smart pricing behavior. An average customer will always choose a budget price for a ticket along with trust in the company that exists several decades. That means a demand for a low-cost carrier will remain high, and the value of Southwest on the market will never lose its relevance comparing to full-service airlines.
Moreover, Southwest remains a leader in pricing behavior affecting participants of the market to respond to its actions and set competitive prices. An empirical study by Asahi and Murakami (2017) assessed synchronized demand and price calculations using airline industry data for the fourth quarter of 2003-2010. The results showed that Southwest did not change its price strategic plan within time and also influenced the rivals behaviors. Table 1 below shows estimated results from the study of Southwest Airlines price changes and its rivals pricing behavior after Southwest entered the market.
Table 1. Estimated Results by an Iterative 3SLS Analyzing Changes in Pricing Behavior of Southwest Airlines and Its Rivals After Southwests Entry. (Asahi & Murakami, 2017, p.4)
Southwest shows a smart strategy during market plunges which gives a positive impact on its sustainability and survival on the market. For instance, in 2008, along with rising fuel prices, Southwest created a hedging fuel approach that saved millions on an annual basis. According to Cote (2018), Southwest Airlines had long-term contracts to purchase its fuels at the equivalent of $51 for a barrel in 2009.
The value of those hedges climbed up as oil raced above the $91-a-barrel mark, and they are now worth more than $2 billion. With a flexible strategy to maintain the crisis and the market drops, the company deserves respect and special attention in purchasing its stock as it shows high sustainability and persistence on the market. Along with dominative position in setting costs and leadership in price behavior, Southwest remains actual in the airline industry of the United States.
With a low-price strategy, buying stock from Southwest is profitable now as it has a relevant tendency to grow within the development of the market. Price versus value might seem confusing when deciding to buy stock; however, it is obvious that these two categories have a separate meaning. If the price of the stock goes down for some economic reasons, the value can still be high in the long-term perspective.
For instance, figure 1 below shows the decrease in the stock price of Southwest Airlines in February 2021 and June 2021. These changes are more likely connected to the spread of COVID-19 infection and the delta-mutation that caused the third peak of contamination in June 2021. However, after the pandemic, the economy will grow again that will consequently cause a rise in the stock market. The value of the stock is still high and will remain high even though the price varies within different issues. A low-cost company with a decent strategy to fight a respectable place in the airline industry will remain valuable and highly demanded. It has higher chances to stay in the market for many decades as it shows flexibility and smart policy even throughout economic fall. According to Papke (2021), the greatest returns are from companies that capture value from low-cost business strategies.
It is hard to disagree with Papke as Southwest Airlines along with that, shows high sustainability and corporate social responsibility in business leading. Observing the static entry game model by Ren (2021), the results show that Southwest has a remarkable and negative impact on the payoffs of other carriers. Southwests nonstop presence enforces more descendant stress on opponents profits than its attaching presence. That means the leadership position of Southwest remains up-to-date and influences its competitors on the market. With a constantly growing net, expanding directions, having a sustainable price behavior, Southwest Airlines is worth investing in.
Figure 1. Daily prices of Southwest Airlines stock. (StockCharts, 2021).
Thus, investing in Southwest Airlines is beneficial as it is a sustainable business with a firm trade strategy and a leadership position on the market. With the growth of the economy, the value of the stock will correlatively grow. Risks in investing in this company are minimized as it shows a respectable tendency to survive during market plunges and flexibility while leading a business strategy. The low-cost carrier is also actual on the market comparing to the full-service airlines. The most profitable approach in investment in Southwest will be a long-term investment that can bring a higher dividend income.
The COVID-19 pandemic will eventually end which will consequently cause a rise in the economy and an increase in stock price. Now, in a low-cost stock moment, it is the most profitable period for investment as it is the weakest time for economy and air company policy because of border restrictions. The cites such as finance.yahoo.com and stockcharts.com can show a wider picture of Southwest Airlines stock value and its development within time.
From my perspective, Rollin King and Herb Kelleher, as the founders of the Southwest, created a beneficial idea of a low-cost carrier that eventually became a successful business. The initial goal was aiming to give Americans the opportunity to take an airplane ticket worth less than taking the other way of transportation on the same distance. With developing this idea, the company expanded various routes all over the United States and now is providing passengers with international flights.
References
Asahi, R., & Murakami, H. (2017). Effects of Southwest Airlines entry and airport dominance. Journal of Air Transport Management, 64, 8690. Web.
Cote, R. (2018). Leadership analysis: Southwest Airlines-Herb Kelleher, CEO. Journal of Leadership, Accountability & Ethics, 15(1), 113-124.
Papke, B. (2021). The Evolution of Investing. Finance Undergraduate Honors Theses, 62, 1-20. Web.
Customer loyalty is a vital component in the operation of businesses. One of the ways through which a firm can develop customer loyalty is by ensuring effective service delivery. In order to achieve this, the firm must have a well implemented service delivery system.
According to Bennett and Strydom (210), service delivery system entails a number of components which include people, processes and elements. The firms management team must ensure that there is creation of an optimal service encounter. Bennett and Strydom (211) defines system encounter as the moment of interaction between the customer and the service firm.
The service delivery system entails a framework of activities referred to as the service encounter cascade. This is mainly common amongst firms offering services such as tourism and travel firms. Southwest Airlines is a firm which operates within the airline industry in the United States.
Over the years it has been in operation, the firm has managed to attain a substantial performance. The firm has a well designed service encounter sequence in an effort to ensure a high level of customer satisfaction. The paper is aimed at evaluating the service encounter cascade in relation to Southwest Airlines.
Southwest Airlines service encounter cascade
Ensuring customer satisfaction within the airline industry is challenging. During service delivery, it is paramount for a firms management team to ensure a positive impression is created during the first contact. In addition, firms must ensure that a high level of customer experience is attained.
This arises from the fact that a small degree customer encounter can result into a high level of customer dissatisfaction. In order to develop a comprehensive service encounter, a firms management team must develop a comprehensive understanding of the various types of encounters which are necessary in the delivery of a certain service.
In addition, a high degree of collaboration between the employees and the management team is necessary. This ensures that there is effective formulation of service standards. Southwest Airline service encounter cascade entails a number of activities as outlined below.
Making reservations
Checking in
Security check point
Customs clearance
Clearance through the boarding gate
Meeting the ground hostess
Meeting the air hostess
Serving the customers with a meal and drink during the flight
Greeting the air hostess upon dismemberment
Meeting the ground hostess
Personal experience
As an entrepreneur, I have on several occasions travelled using Southwest Airlines in an effort to scan the environment for business opportunities. As a result of their high level of expertise, I was very pleased by their service delivery. For example, Southwest Airlines has a well implemented reservation system.
This is attained through implementation of the Amadeus technology which is a travel technology. The technology ensures that there is a high degree of efficiency when making travel reservations. This arises from the fact that a customer is able to make travel reservations online. Through the firms online reservation system, I was able to obtain information about the firms fare tariffs, and airlines schedules.
Not only does the firms reservation system enable a customer to book a flight but also to make a reservation on the best hotels and restaurants. This arises from the fact that the Airlines Reservation System (ARS) is connected to the Global Distribution System (GDS). As a result, I was able to attain a high degree of effectiveness with regard to time and financial management.
Customer satisfaction
The customers consider the airline to be effective with regard to a number of aspects as discussed below.
Safety
In its operation, the firm has considered airline security to be of paramount importance, as a result, the firm has implemented a comprehensive security check.
In-flight services
The firm has recruited well experienced airhostesses who ensure that there is a high level of in-flight services. The firm serves diverse meals so as to cater for the customers tastes and preferences.
Pricing system
The customers also consider the airlines price system to be cost effective compared to other airlines. This is arises from the firms low cost strategy.
Flexibly
The firm has a well developed flight schedule. This has been achieved through integration of flexibility.
According to findings of a study regarding the level of customer satisfaction conducted on the employees, it was revealed that the firm has managed to develop a substantial performance as a result of high level of customer satisfaction. The employees interviewed obtained the information from the firms customer relationship software.
A large number of customers are of the opinion that Southwest Airlines brand is the best small and midsized airline brand in US. According to the employees, the high level of customer satisfaction has been attained as a result of effective and efficient management. This ensures that there is efficiency in the implementation of customer satisfaction strategy.
Dealing with service delivery failure
In certain occasions, the firm experiences customer complaints with regard to customer satisfaction. In order to deal with the failure, the firm has implemented an employee training program. The program ensures that the employees are acquainted with skills necessary to ensure effectiveness in service delivery. Considering the fact that customers are dynamic in their consumption pattern, training ensures that the employees are acquainted with the changes. The resultant effect is that the firm is able to move with industry changes.
Conclusion
Service encounter can result into a high degree of customer satisfaction. During this period, the customer develops a certain perception regarding the service being offered. Through service encounter, a firm has an opportunity to build trust, reinforce quality and to build brand identity.
This arises from the fact that the first impression created results into development of either a positive or negative attitude. By creating a positive attitude, the firm is able to develop customer loyalty. This means that service encounter is a building block with regard to customer satisfaction.
Works Cited
Bennett, Alf and Strydom, Joham. Introduction to travel and tourism marketing. New York: Jute and Company Limited, 2001.Print.
Southwest Airlines has strived to succeed in the aviation industry despite the challenges. From the case study, the economic challenges, insecurity threats, and market dynamics have affected the company tremendously. In fact, most organisations in the aviation industry have made considerable losses in the business realms.
This is a considerable provision in the context of customer service and organisations survival in the market. In regard to SWOT analysis, Southwest Airlines enjoys considerable strengths in the business arenas. The company has established, ratified, and embraced distinctive competitive advantages meant to outdo other contenders within the industry.
As indicated by the author, the company has enough resources to counteract its business dynamics despite the challenges. Also, it has a competent human capital with credible knowhow on how to tackle the market challenges. The company enjoys a strong brand having operated in the industry with excellence since its inception.
According to the case study provided, the company exhibits some weaknesses in the market spheres. It sluggishly launched international flights despite the demands to do so with promptness. Additionally, its approaches to the market dynamics have not been strategic enough to counter such challenges with equal measure.
For instance, the company took long to recover from the previous terrorist attacks, which destabilised the American aviation industry. The company has also established some business tactics, which can be copied by other rivals. This might disfavour it in the competition quarters.
From the case provided, Southwest Airlines has numerous business opportunities both locally and internationally. The market for the aviation industry is rapidly growing with numerous flights created to cater for the new customers. Additionally, the aspects of globalisation have enhanced the need for international flights, which Southwest Airlines can exploit to enhance its market presence and profitability.
It is vital to agree that the company can do better with the current market trends. Additionally, the new transport regulations created by the international community allows the company to establish, ratify, and operate numerous flights both locally and internationally. This is a considerable provision when scrutinised critically in the business contexts.
Another opportunity recognisable in this context is the encroachment and implementation of new technologies helpful in doing business. For instance, IT and the emergence of internet have helped in the realms of advertisements, online booking, payments, and spread of information about the company. Southwest Airlines has managed to embrace technology in its operations despite the costs incurred.
Consequently, its operations and global reach have enhanced in the recent past. It is vital to comprehend how the organisation has managed to streamlined its operations to conform to the global demands. Business threats to the company are also numerous. This is evident in the trade contexts. Firstly, competition has tremendously grown in the aviation industry.
Consequently, Southwest Airlines has lost numerous clients to its competitors. Additionally, the liberalisation of the aviation market has done more harm to Southwest Airlines in the context of its market presence. For instance, companies like JetBlue, Delta, AirTran Airways, and ATA Airways are prominent rivals of Southwest Airlines.
Another threat is the establishment and implementation of carbon tax laws. The company must resort to clean energy sources in order to remain relevant and environmental friendly. This might be costly since biofuels are very expensive and rare in the market.
Mckinseys 7s
From the case provided, Southwest Airlines can be subjected to the Mckinseys 7s to assess its prominence and success in the aviation industry. Evidently, the model relies on the ideology that, for an organisation to perform exemplarily, the 7 elements (Strategy, Structure, Systems, Shared Values, Skills, Style and Staff) should be realigned for mutual reinforcement.
For instance, the success of the company has involved various business strategies to counter numerous challenges encountered in the aviation industry. This is a critical observation in regard to the companys accomplishments to enhance its operations. Additionally, the company has structured its operations and management provisions in a strategic manner.
The structure of its operations is in line with the values, systems, and skill of its workforce. This has allowed the company to register massive success in the past.
It is vital to comprehend the prowess demonstrated by this organisation in the realms of management and customer satisfaction. For instance, the company was ranked the best in terms of the customer satisfaction in 2006. This was due to the mutual realignment of its 7s for the success of its service delivery.
Another considerable provision is the companys shared values. So as to achieve its business prospects and global limelight, Southwest Airlines has managed to revitalise its business styles in the aviation industry. Actually, this has occurred in collaboration with other elements so as to attain the mentioned success.
It is vital to understand the prospects frontend by this organisation in the context of its relevance and applicability. From the case study provided, Southwest Airlines managed to realign the 7s mutually for successful business operations despite the challenges.
Alternatives solutions
Evidently, the company has been resorting to alternative solutions when fronted by business challenges. For instance, terrorism crisis in 2001 destabilised the aviation industry; however, the company established fresh strategies to ensure that it remained buoyant in the market. Additionally, it has been improving its financial and business strategies to conform to the current globalisation demands.
These are evident in the case study provided as the company strived to establish its market foundation since its inception in the American market. Precisely, despite the internal and external business challenges, Southwest Airlines has always had alternative solutions to its operational hiccups. In order to operate globally and exhaust the local markets, novel business strategies and models have been integrated to guarantee success.
For instance, the aviation industry registered considerable losses in the recent past due to market instability, high operational costs, and revenue plunge; nonetheless, strategic companies (Southwest Airlines included) managed to survive the menace having adopted alternative solutions to the then problems.
Financial Analysis
The financial provisions of Southwest Airlines have exhibited consistent improvements despite the hassles. For instance, the company registered a net income increment of 8.9% in 2006 compared to 2005. The operating revenues and costs equally increased tremendously indicating how the company managed to grow despite the then stiff financial provisions. This is a critical provision when evaluated in diverse fiscal contexts.
Financially, Southwest Airlines has grown considerably; however, it has not attained its utmost limit. The company currently grows as it expands its flights to remote areas in order to clinch the niche markets in such areas.
Currently, Southwest Airlines is the 3rd largest carrier in the world when considered in terms of customers and service provisions in the sector. The company has been profitable financially as indicated earlier. The consolidated income statement of the company shows considerable increments in various sectors.
Competitive Analysis
Southwest Airlines has been competitive in the aviation industry due to its novel products and well-established business strategies. From the case study provided, the author recognises that the company faces stiff competition from other companies like United Airlines, JetBlue, Delta, AirTran Airways, and ATA Airways among others.
It has managed to outdo these organisations due to its well-established business models and competitive advantages. It offers considerable and reliable carrier services to its clients. In fact, most organisations have been copying its business strategies despite the challenges. It is from this provision that the entire arguments lie.
The company began to offer longer and non-stop trips to Baltimore, Maryland, Las Vegas, and Nevada so as to capture a considerable market share. This move expanded in competitiveness within the American market.
The company remains the lowest-cost yet the most profitable organisation in the market. Precisely, the company has been competitive in its low-priced services, value addition, customer satisfaction, reliability, and credible business models.
Analysing the Company Today
Currently, Southwest Airlines is a stable organisation despite the market challenges. The company has established sustainable development programs within the aviation market.
Additionally, it has enhanced its carrier services to most parts of the world as it strategizes to enhance its global expansion and market presence. It business models are relevant and applicable in the current market as noted by the author in the provided case study.
