Southwest Airlines Corporation (Case 3-1)

Presented by :- (Group No 4)

Deep Dave…………..(05)

Nikhil Kumar……….(29)

Vikas Nandanwar…..(36)

Smital Sail…………..(46)

Case Synopsis Incorporated in TEXAS

Commenced Customer service on June 18,1971

Provides service to 60 Airports in 31 States throughout US

Entrenched as the “NATIONS” low fare & high Customer Satisfaction Airline

Lowest Operating Cost structure in Domestic Airline Industry

Total Operating Revenue (2004)---$6.5 ……….From Passenger load factor

Contd…1974—2005 32 consecutive years of Profitability …………..………Year-end Result (2005)

Since 2002 Listed in “100 Best Corporate Citizens”………….…..Business Ethics Magazine

In 2004 Best Bonus Promotion & Best Award Redemption……Insideflyer Magazine

In 2005 No. 1 in Customer Satisfaction…………………….…..ACSI

In 2005 (9th consecutive year) Most Admired Airline in the world……………………..Fortune Magazine

Questions

1. What is Southwest’s strategy?

2. What is the basis on which Southwest builds its competitive advantage?

3. How do Southwest’s control system help execute the firm’s strategy?

Marketing Strategy

Low cost leadership strategy

Online PresenceDing! (Desktop Application)

Operational Strategy

Low operational Cost

Short haul approach

Point to point approach (Unlike others using HUB & SPOKE Model)

Reduced head count per aircraft(from 85 to 74)

Uses less congested airports

Turnaround time for takeoff and crew is lesser (20-25 min)

Hedged 85% of its Fuel & oil needs

HR’s Strategy

Philosophy followed : Keeping employees happy & Satisfied

In 2004---Hired 1,706 employees

Unique recruitment policy…Pilots hired Pilots & Gate agents hired Gate agents

Highest paid (Crew paid per Trip)

More than 1,000 Married couples (2,000 Employees) worked

Pilots did not belong to any National Union

Low employee turnover

Financial Strategy

Avg Airfare---$91.15

60% Revenue generated through Direct sales

Southwest offered $126 mn in Profit Sharing……In 2003

How do Southwest’s control system help execute the firm’s strategy?

Strives for goal congruency

Low cost leadership by Implementing Short & Medium haul Flights Encourage on-line booking Ensuring lesser time spent at the gate Hedging of fuel and oilMore of Direct Sales of Tickets

Contd...

Open and Inclusive Culture Unique Hiring process Profit Sharing Plan Encourages Pro-activeness Task control through Automation

THANK YOU…