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Submitted By:Group 6Lavish KhuranaLokendra Singh RathoreMehak KaulNavlika SinhaNikita SharmaSimranjeet KaurYash KanchanZahid M Jamal
Submitted to: Professor Semila Fernandes
South West AirlinesThe Company Under Analysis
Started to fly within the state of Texas.
Established in 1967 by Herb Kelleher
Headquartered in Dallas, Texas
The world's largest low-cost carrier
The Southwest External and Internal Environment
Parenting Travelers&
Friendliness with CustomersEmployee Respect
Family friendly place Upbeat & Positive Attitude
Casual Know How Procedure…Beverages (Love bites & Potions)
Thus maintaining balance…
What they did differently?• Flew Point to Point as opposed to Hubs!• Hub system – all airlines have to route through a HUB airport
allowing smaller markets to be served
South West Strategy
• No complicated Reservation System• No Interlining• Turnaround was 30 min faster than Industry Average• Planes flew an average of about 12hours per day on planes
that cost approx $40 million
Rapid Rewards Scheme Frequent Flyer Reward
Free trip for every 16 one-way or 8 round trips within 12 months. 97% seats were available for Award ticket travel.
Reward Rewards Companion Pass The one who completed 100 one way or 50 round – trips. Eligible to take a member free for one year.
Low Boarding Pass Preference Made a traveller eligible to be in first group to board
SOUTHWEST AIRLINES OPERATION STRATEGY
Small airport – less congested area.
Short Haul Airlines Approach.
Simplicity. (Only flew BOING 737 Aircraft).
Maximize utilization and Regular Observation on improving efficiency.
Flying Point To Point Strategy and no Interlining.
FIRST COME FIRST SERVE approach.
Low training costs for maintenance and flight crews-developing deep knowledge about technical issues and max utilization.
Airlines RASM CASM PASMAlska 0.101 0.102 -0.001America West 0.086 0.087 -0.001South West 0.094 0.077 0.017US Air 0.139 0.14 -0.001Delta 0.108 0.097 0.011United 0.11 0.107 0.003American Airlines 0.118 0.11 0.008
South West v/s The Aviation Industry
Name Consumer Complaints (For 1 lakh passengers)
On time performance
Mishandled Baggage
Southwest 0.47 75% 5.07
Industry Average 3.23 72% 5.29
Quality Assurance
Airlines Sales & Profit Stats in 2000
Alaska
airlin
es
Amercia
West
South W
est
US airw
ays
Delta
United ai
rlines
American
Airlines
02000400060008000
100001200014000160001800020000
Sales as on 2000
Alaska
airlin
es
Amercia
West
South W
est
US airw
ays
Delta
United ai
rlines
American
Airlines
-400
-200
0
200
400
600
800
1000
Profit as on 2000
Alaska
airlin
es
Amercia W
est
South W
est
US airw
ays
Delta
United ai
rlines
American
Airlines
-5000
0
5000
10000
15000
20000
Alaska
airlin
es
Amercia
West
South W
est
US airw
ays
Delta
United ai
rlines
American
Airlines
0
1000
2000
3000
4000
5000
6000
Sales for 2 quarters(2001)
Airlines Sales & Profit Stats in 2001
Alaska
airlin
es
Amercia
West
South W
est
US airw
ays
Delta
United ai
rlines
American
Airlines
-600
-500
-400
-300
-200
-100
0
100
200
300
Profit for 2 quarters(2001)
Alaska
airlin
es
Amercia
West
South W
est
US airw
ays
Delta
United ai
rlines
American
Airlines
-1000
0
1000
2000
3000
4000
5000
6000
REVENUE
Particualars 1998 1999 2000 2001 2002 Reasons for such estimation
Passenger 4010 4563 5468 5905 6378 Past trend is a double digit number. Estimated growth 8%.
Freight 99 103 111 117 122 Past trend is 5.5%. Estimated growth 5%.
Others 55 70 71 75 78 Past trend is inconsistent. Estimated growth 5%.
Total Revenue 4164 4736 5650 6097 6578 Past trend is a double digit number. Estimated growth 7.8%.
OPERATING EXPENSES
Particualars 1998 1999 2000 2001 2002 Reasons for such estimation
Salaries 1286 1455 1684 1886 2112 Keeping Past trend into consideration estimated growth is 12%.
Fuel 388 492 804 712 769 Refer to the other slide for detailed explanation.
Maintainence 302 368 378 416 457 Past trend is inconsistent. Estimated growth is 10%.
Agency Commission 158 156 159 162 165 Estimated growth is 2%.
Aircraft Rentals 202 200 196 196 196 Meagre fluctuation in expense.
Landing Fee and other rentals 215 242 265 265 265 Meagre fluctuation in expense.
Depreciation 225 249 281 309 340 Past trend is 10%. Estimated growth 10%.
Other Expenses 704 792 860 946 1041 Past trend & Estimated growth 10%.
Total Operating Expenses 3480 3954 4627 4892 5345
Operating Income 684 782 1023 1205 1233 CAGR= ~12% | From 2000 to 2002
Oil Prices/ barrel
Year Price ($)
1999 23.42
2000 37.54
2001 30.68
2002 29.92
http://inflationdata.com/Inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp
Fluctuations in Oil prices
THANK YU
