SOUTHWESTAIRLINES: IN A DIFFERENT WORLD
Itis said that a successful start-up focuses on its strategy andvision, not the money. Then later upon executing the strategy andattaining its vision, the money follows the start-up. The preciseapplication of the foretasted business formula has worked wonders forSouthwest Airlines. Not only did it capture an underserved segment ofthe market (low-cost), but it has grown to edge out establishedcompetitors. This paper will venture into Southwest`s progressive andtransformative strategies through the decades in an industry markedby volatile fuel prices and constant shifting in customer demandtrends and technological changes.
SouthwestAirlines: In a Different World
TrulySouthwest Airlines cannot be classified together with other competingairlines in the United States of America. Straight from its humblebeginnings in the 1970’s, which could have easily be mistaken for apassing cloud because its unique business approach that did not relyof established paradigms. Its continual growth has attracted a lot ofattention to its style of management and business model from criticsand business students.
ReasonsWhy Southwest is Succeeding More Than Its Competitors
Southwest’ssuccess begins in its foundational mission that puts its individualcustomers first by focussing on the high quality of service delivery.It has also focussed its services to specific cities, where it isable to optimally deliver clientele expectations with maximumefficiency without compromising on customer service, experience andits expertise. Its beginnings made an indelible impression on itstarget niche by charging 60% of what the average ticket flight costs.This was achieved by its creative approach of targeting travelers whofound it cheaper to drive across cities. Southwest’s success hasalso been derived from its endeavor to make maximum use of its fleetof jets by reducing turnaround time. Another factor contributing toits success is its ability to have a panoramic view of the airlineindustry. This ability has helped it to capitalize on the weaknessesof established airlines as well as identify gaps and opportunitiesfor growth in its core niche market.
Effectsof The Alteration of Southwest’s Successful Strategy
Oneof Southwest’s key success factor is managing to keep fare priceslow. This particular strategy has been altered by the looming rise ofenergy costs. This rise consequentially necessitates Southwest tocome up more responsive strategies that enable it to maintain itslow-cost image. Such responsive strategies include: increasing thenumber of flights within destinations in its network. This move edgesout competitors and helps in establishing a strong foothold in theseroutes. Other helpful strategies include adding code-sharearrangements, improving client experience and expanding flights toother cities. Southwest’s original strategy can be seen to haveundergone some sorts of metamorphosis from its initial deliberatedecision to operate a lean fleet of planes to acquiring a largefleet. This shift in strategy was necessary due to the increasingdemand for its services driven by a growing customer base. Thistransformation of Southwest’s business model as well as offeringnew services has proved to be necessary and responsive.
Inthis particular segment of the paper, we shall take a deeper lookinto the risks that Southwest is taking and the opportunities that itis capitalizing on as it surges towards financial glory. In thisdiscussion focus shall be directed to recommendations thatSouthwest’s managers should consider embracing as it rolls with thepunches of fuel prices volatility.
ManagementOver Key Aspects and Risks Involved if Mismanaged
Thereare some things that could go wrong for Southwest if it failed tomaintain full and proper control over them. One of these things isthe proper control over its employee’s attitude towards customer’sneeds. The fun ‘LUV’ attitude by Southwest’s employees isfostered by being anchored in the company’s mission. The staff isconstantly reminded on the positive and energetic mood that givesthem the edge that competing airlines are lacking. The second issueis its well-established brand of low-cost flights. The control overthis particular brand can easily be lost the moment Southwest isunable to mitigate the effects of volatile fuel prices. Once theairline significantly increases its fares then its customers will notsee the difference between Southwest and its competing airlines, moreso the new entrants offering similar low fares. The third issue isSouthwest`s constant knack for coming up with creative ideas andapproaches to imminent challenges and opportunities that enable theairline to meet and further its mission and strategies. Such creativeideas include: cheaper fare for passengers who booked early (EarlyBird Fares), select business programs to provide greater convenienceto business flyers, frequent flyer programs to promote free flightsfor loyal passengers, zero charges for changing tickets, “bags flyfree’[ CITATION Fam13 l 2057 ]andmany other brilliant ideas.
RequiredChanges by Management
Thereare some adjustments that Southwest can employ for purposes ofretaining its competitive edge in the airline industry. Suchadjustments include identifying and building up on sub-segment coreniches. An example of such sub-segment can be offering differentservices on board different routes. The other change which should besecond nature to the airline is to continue identifying opportunitiesfor the increase of technology use in its service delivery. This movewill boost its levels of efficiency and provide a soft landingcushion when disaster strikes such as terror attacks. FinallySouthwest should consider identifying and employing talented andwell-skilled staff that are being retrenched by competing airlines.By having a strong team of highly skilled, experienced and talentedwork force Southwest will be able to constantly generate ideas thatwill cut down its costs and at the same time increase its profitsmargins. The airline can also consider venturing into other serviceprovision, such as offering currier services within its networkdestinations.
Reasoningfor Recommendation on The Acquisition of The Gates and Slot atLaGuardia Airport
Carefulthought and consideration need to be exercised before ruling onwhether Southwest Airlines should acquire the slot and gates atLaGuardia. The executives need to look at the benefits vis-à-vis theconsequences of acquiring or not acquiring the infrastructure. Thebenefits and opportunities that Southwest stands to gain from theacquisition are: the ability to meet demands that flights to Islipairport are currently not meeting and the opportunity to engage intrading of slots with other competing airlines operating out ofLaGuardia Airport. These benefits should be juxtaposed with thepossible and apparent risks and challenges which directly stare intoSouthwest’s future. These perils include but are not limited to,exposure to congestions that cause delays and increases turnaroundtime, high landing charges and high costs of infrastructure. Myinformed opinion offers a recommendation that leans towards theacquisition of ATA’s gates and slots at LaGuardia Airport. This ismajorly because Southwest has to continue with its strategy of growthwhich cannot take place without taking such a worthy business risk.The potential risks can be averted or mitigated by Southwest’stalented and devoted managerial staff.
Southwest’ssilver bullet seems to lie in its ability to increase efficiencywhile decreasing underutilization by pursuing network optimization asit adjusts to higher cost structure. Its continual pursuit inchallenging long-established paradigms that established the industryand their successful application has seen Southwest’s positiongraduate from that of an underdog airline in the 1970’s to analternative airline in the new millennium and hopefully to a dominantairline in the new future.
Fames L. Heskett, W. E. (2013, January 9). Southwest Airlines In a Different World. Harvard Business Review, 1-15. Retrieved October 31, 2016