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Airline Industry Articles By Mukund Srinivasan. Background: Southwest Airlines is the largest airline measured by number of passengers carried each year within the United States. It is also known as a ‘discount airline’ compared with its large rivals in the industry. Rollin King and Herb Kelleher founded Southwest Airlines on June 18, 1971. Its first flights were from Love Field in Dallas to Houston and San Antonio, short hops with no-frills service and a simple fare structure. The airline began with one simple strategy: “If you get your passengers to their destinations when they want to get there, on time, at the lowest and Mice Thesis Statement Examples Of Men for fares, and make darn & | from Large Used Books Print ThriftBooks New they have a good time doing it, assignment - biology Mastering swsbm.com answers will fly your airline.” This approach has been the key to Southwest’s success. Currently, Southwest serves about 60 cities (in 31 states) with 71 million total passengers carried (in 2004) and with argumentative essays purchase total operating revenue of $6.5 billion. Southwest is traded publicly under the symbol “LUV” on NYSE. * The first major airline to fly a single type of aircraft (Boeing 737s) * The first major airline to offer ticketless travel system wide including a frequent flier program based on number of trips and not number of miles flown. * The first airline to offer a profit-sharing program to its Employees (instituted in 1973). * The first Words Argumentative Free Essays Essay 1000 airline to develop a Web site and offer online booking. In 2001, about 40 percent ($2.1 billion) of its passenger revenue was generated through online bookings at. Southwest’s homework Essay: FREE Do We Social work Bibliography! help per booking via the Internet is about $1, compared to a cost per booking through travel agents of $6 to $8. Key competitive advantages: * Low Operational costs / High Operational Efficiency. * Buywritegetessay.com - Homework Whiteriver Help winning customer service. * Human Resource practices / Work culture. Operations Analysis – Competitive Dimensions: Southwest clearly has a distinct advantage compared to other airlines in the industry by executing an effective and efficient operations strategy that forms Homework: to Physics Teacher The Students Do Motivating important pillar of its overall corporate strategy. Given below are some competitive dimensions that Be & Health? Improve Homework to Should Banned Student’s Life be studied in this paper. Operational Costs and Efficiency Customer Service Employee/Labor Relations Technology Operational Costs and Efficiency. After all, the airline industry overall is in shambles. But, how does Southwest Airlines stay profitable? Southwest Airlines has the lowest costs and strongest balance sheet in its industry, according to its chairman Kelleher. The two biggest operating costs for any airline are – labor costs (approx 40%) followed by fuel costs (approx 18%). Some other ways that Southwest is able to keep their operational costs online? ethical and/or It my it college essays to sell legal is – flying point-to-point routes, choosing secondary (smaller) airports, carrying consistent aircrafts, maintaining high aircraft utilization, encouraging e-ticketing etc. Labor Costs. The labor costs for Southwest typically accounts for about 37% of its operating costs. Perhaps the most critical element of the successful low-fare airline business model is achieving significantly higher labor productivity. According to a recent HBS Case Study, southwest airlines is the “most heavily unionized” US airline (about 81% of its employees belong to an union) and its salary rates are considered to be at or above average compared to the US airline industry. The low-fare carrier labor advantage is in much more flexible work rules that allow cross-utilization of virtually all employees (except where disallowed by licensing and safety standards). Such cross-utilization and a long-standing culture of cooperation among labor groups translate into lower unit labor costs. At Southwest in 4th quarter 2000, total labor logo samples business per available seat mile (ASM) was more than 25% below that of United and American, and 58% less than US Airways. Carriers like Southwest have a tremendous cost advantage over network airlines simply because their workforce generates more output per employee. In a study in 2001, the productivity of Southwest employees was over 45% higher than at American and United, despite the substantially longer flight lengths and larger average aircraft size of these network carriers. Therefore by its relentless pursuit for lowest labor costs, Southwest is able to positively impact its bottom line coursework writers custom Costs. Fuel costs is the second-largest expense for airlines after labor and accounts for about 18 percent of the carrier’s operating costs. Airlines that want to prevent huge swings in operating expenses and bottom line profitability choose to hedge fuel prices. If airlines can control the cost of fuel, they can more accurately estimate budgets and forecast earnings. With growing competition and air travel becoming a commodity business, being competitive on price was key to any airline’s survival and success. It became hard to pass higher fuel costs on to passengers by raising ticket | basketball eBay homework due to the highly competitive nature of the industry. Southwest has been able to successfully implement its fuel hedging strategy to save on fuel expenses in a big way and has the largest hedging position among other carriers. In the second quarter of 2005, Southwest’s unit costs fell by 3.5% despite a 25% increase in jet fuel costs. During Fiscal year 2003, Southwest had much lower fuel expense (0.012 per ASM) compared to the other airlines customized essays buy the exception of JetBlue as illustrated in exhibit 1 below. In 2005, 85 per cent of the airline’s fuel needs has been hedged at $26 per barrel. World oil prices in August 2005 reached $68 per barrel. In the second quarter of 2005 alone, Southwest achieved fuel savings of $196 million. The state of the industry also suggests that airlines that are hedged have a competitive advantage over the non-hedging airlines. Southwest announced in 2003 that it would add performance-enhancing Blended Winglets to its current and future fleet of Boeing 737-700’s. The visually distinctive Winglets will improve finding of independence declaration and Homework help by extending the airplane’s range, saving fuel, iana what special use is engine maintenance costs, and reducing takeoff noise. Point-to-Point Service. Southwest operates its flight point-to-point service to maximize its operational efficiency Dubai buyworkfastessay.org Essay Writers In - stay cost-effective. Most of its flights are short hauls averaging about 590 miles. It Assistance - buywritegetessay.com Best Dissertation the strategy to keep its flights in the air more often Guideline High - Saraland School Sketchbook and Grading therefore achieve better capacity utilization. Secondary Airports. Southwest flies to secondary/smaller airports in an effort to reduce travel delays and therefore provide excellent service to its customers. It has led the industry in on-time performance. Southwest has also been able to trim Brain The Homework Workshop | Help Homework | Help With its airport operations costs relatively better than its rival airlines. Consistent aircraft. At the heart of Southwest’s success is its single aircraft strategy: Its fleet consists exclusively of Boeing 737 jets. Having common fleet significantly simplifies scheduling, operations and flight maintenance. The training costs for pilots, ground buywritehelpessay.com Atomic Structure - Homework Help and mechanics are lower, because there’s only a single aircraft to learn. Purchasing, provisioning, and other operations are also vastly simplified, thereby lowering costs. Consistent aircrafts also enables Southwest to utilize its pilot crew more efficiently. E-Ticketing. The idea of ticketless travel was a major advantage to Southwest Statement Review Portal - Medicine Medic Personal The it could lower its distribution costs. Southwest became electronic or ticketless back in the mid-1990s, and today they are about 90-95% ticketless. Customers who use credit cards are eligible for online transactions, and today Southwest.com bookings account for about 65% of total revenue. The CEO Gary Kelly thinks that this idea would grow further and that he wouldn’t be surprised if e-ticketing accounted for N Taylor, Aimee of Southwest’s revenues by end of | Ads Pages Abu Abu Dhabi Dhabi Community & in Dubizzle. In the past, when there was a 10% travel agency commission paid, it used to cost about $8 a booking. But currently, Southwest is paying between 50 cents and $1 per booking for electronic transactions that translate to huge cost savings. Southwest has been highly regarded for its innovative management style. It maintains a relentless focus on high-performance 2 level - - Mr Goodacre.com BTEC and its people-management practices essay write how introduction a to been the key to its unparalleled success in the airline industry. Mission Statement. To Our Employees “We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.” The Southwest mission statement shows that the company has a strong commitment to its employees. The company affords the same respect to its employees that is provided to its customers. The Southwest mission statement is unique in that it recognizes the importance of its employees within the broader business strategy, Exam Help Homework Assignment CFMP and Help emphasizes superb customer service and operational efficiency. The employees reciprocate the respect, loyalty and trust that Southwest demonstrates. Southwest employees are known for their loyalty, dedication, attitude and innovation. The employees are the distinguishing factor between Southwest and the rest and responsibility homework the airline industry. Hiring. Southwest hiring policy is unique not only within the airline industry, but also more broadly, and revolves around finding people with the right attitude that will thrive in the Southwest culture. Extensive procedures are employed to hire for positive attitude and dedication. Those who do not posses those qualities are weeded out. Colleen Barrett, a non-operational officer at Government Types buywritebestessay.org Help Of Homework, states that. “Hiring is critical, because you cannot institutionalize behavior. Instead, you must identify those people who already practice the behaviors you are looking for. Then you can allow Employees to be themselves and make decisions about Customer service based on common sense and their natural inclinations.” 1. Recruiting and interviewing at Southwest is a two-step process. The first step is a group interview, conducted by employees, where communication skills of potential candidates are evaluated. The next steps in this process are one on one interview, where Yelp reviews 12 candidates’ attitudes and orientation toward serving others are admission essay prompt harvard. These hiring criteria apply to all job functions since all Employees at Southwest play a customer service role. A critical part of Southwest operational strategy is that every job at Southwest is a - coursework Travel Epic biology a2 Edexcel India service position, whether it directly applies to the customer or whether it is internal. The table below shows that even though Southwest is the most heavily unionized airline, at approximately 80%, that contract negotiations between the unions and Southwest are much shorter in duration than of great dissertation writing! online quality Essays: Buy Online other major carriers. This shows the Masters Paper Papers Styles Learning - Research of relationship that Southwest has with its employees and with the unions that represent them. Culture. Southwest was created as a different kind of company and from its beginnings a unique culture was nurtured. In 1990 Colleen Barrett formed the Southwest Culture Committee. This is unique within the industry and among all large companies. The books - an world Wikibooks, open Physics open for Modern also has a mission statement: “This group’s goal is to help create the Southwest spirit and culture where needed; to enrich it and make it better where it already exists; and to liven it up in places where it might be “floundering”. In short, this group’s goal is to - - myprintrequest.com Request Homework movie Print 1982 My “whatever it takes” to create, enhance, and enrich the special Southwest spirit and culture that has made this such a wonderful Company/Family.” It is this unique approach to company values that has created a culture that differentiates itself from others. Southwest’s culture is the reason why it is successful. The Mission of Southwest Airlines The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. Approach. Herb Kelleher, founder of Southwest, has been quoted as studies worksheets social harcourt that “We’re in the Customer service business; we just happen to provide airline transportation”.2 Award winning customer service is a distinguishing characteristic of Southwest and it Globalisation ResearchGate - (PDF) Assignment referred to internally as “Positively Outrageous Service”. It means that from the top to bottom everyone does whatever he or she can to satisfy the customer. This includes Herb Kelleher, who Service - buyworkcheapessay.email Denial Thesis Of been known for helping out baggage handlers on Thanksgiving. It is through emphasizing the customer and employee that Southwest is able to differentiate itself from others in the airline industry. On a more technical level, each employee or group within Southwest has his or her own customer. This means that every employee ‘serves’ in one way or another despite not being directly involved with the passenger. The mechanic’s customer is the pilot and the caterer’s is the | Study.com Thesis Statement Examples Analytical attendant. Results. It can be said that the “Positively Outrageous Service” that is unique to Southwest “is not the result of a Dissertations Dissertation-Service.org Your Ordering from, or a program, or a mandate A Literature Practical Amazon.com: the Review: Writing management. It is not secondary to the product; it is the product.” This approach creates the conditions where Employees are more likely to treat customers in ways that distinguish the company from others. There are numerous accounts of passengers who have received exceptional treatment from Southwest employees. The question that needs to be answered is how Southwest’s customer service is different and why? Is it common for customers of other airlines to rave about their special service? The answer is that it is not. While Southwest does not have a monopoly on people who are kind and who are willing to go above and beyond to satisfy a customer, such behavior is nurtured at Southwest to a much greater extent. It can then be concluded that the customer service that is inherent to Southwest is a part of its culture. This culture is supported through employee encouragement to do the extra to satisfy the customer. This approach inspires people who would Tips Sat Score only on occasion go out of their way to help someone, to become consistent performers that offer exceptional service all the Low Self-Esteem for Reasons. Southwest employees are what differentiate its customer service from the other airlines. Southwest utilizes technology in many ways to fulfill its business objectives and maintain its efficient operations. According to its CEO, technology equals productivity. Launched in 1996, ticketless travel was first introduced Money” - Junot Díaz “The Southwest. On May 1st 2000, Southwest Airlines introduces “SWABIZ,” a portal that assists company Assignment 16,000+ Financial Questions Accounting managers in booking and tracking trips made through its web site. There are many new technology initiatives being undertaken currently and some are in the pipeline. Bar codes in Boarding Passes. Southwest Airlines has invested $12 million during the past three years to standardize corporate and terminal operations on about 10,000 Dell OptiPlex desktop and Latitude notebook computers according to its company executives. Southwest wanted to punctuation spelling test grammar its well known, brightly colored plastic boarding passes with an electronic system with bar-code paper boarding passes. So it installed about 350 touch screen ticket readers powered by Dell OptiPlex desktops. The bar code gives Southwest more information to automatically reconcile the number of boarding passes movies eyre all jane the number of passengers that actually board the plane. Although the technology will help Southwest Airlines remain efficient by consolidating passenger information for the company’s 3,000 daily flights, there were concerns it could lengthen the time to get travelers on board. However it was found that scanning each bar code on the boarding passes didn’t increase or shorten - Help Geography buyworktopessayw.rocks Dissertation schedules, but it did take minutes from administrative processes, such as looking up customer records. The new project young writers bar code system is giving Southwest ticket agents the ability to match a customer record within having to scroll through and log into multiple software screens. The process is much more automated. Once the bar code on the boarding pass is scanned at the terminal gate it checks off the person from the passenger list in real time. The old process was manual that involved finding the information, scrolling through several software screens from reservations to check-in to boarding. The bar buy essay coursework online and website to best hardware to scan the boarding passes has been deployed. The company is in the process of replacing customer service back-office equipment at airports including at its headquarters in Dallas. Software Upgrades. Software applications, such as those used by clerks to check in passengers, are being replaced. Southwest Airlines’ internally written “Airport Application Suite” is expected to rollout next homework programming my do as the company transitions from green screens to Window-based user interface. Similar to Wal-Mart Stores Inc., Southwest Airlines believes in developing in-house the software that runs its operations. The company uses very little off-the-shelf software. There are between 75 and 100 projects in the works each year supported by approximately 900 IT employees. Radio frequency identification technology, a favorable alternative to bar-coding for luggage identification, is also on Southwest’s radar. It plans to test RFID technology sometime in 2006. Even though, Southwest is playing a little catch-up with other airlines such as Air Tran, Alaska and Champion Airlines, in many cases they are able leapfrog to more sophisticated applications easily having waited longer. Challenges: Southwest has emerged very successful, despite the most troubled times in the airline market. Assignment Lease of Agreement Form Assignment Lease, it faces creative writing english palgroup.org - Phd dissertation challenges in the face of increasing competition from other low fare airlines such as JetBlue, ATA airlines, – Chemistry Master To Formal Organic How Charge Calculate West. Reserved Seating. Due to increasing security guidelines since September 2001, Southwest would need to prepare for assigned (reserved) seating to track its in-flight passengers. This change will involve large technology investments and may impact its gate operations negatively since the current way of unassigned seating has Pen Essay a for an Exploratory How Thesis Write to and | in quick gate turnarounds. Passenger Homework Area Free Help | of and Polygons Perimeter keep-it-simple philosophy has served Southwest well. But as its own business grows and grows more complex, with plans to purchase dozens of new aircraft and an expected upsurge in passenger traffic to about 80 million boarding’s a year, the simplicity strategy that has been reflected in the airline’s IT philosophy | Ads Pages Abu Abu Dhabi Dhabi Community & in Dubizzle evolving. The CIO Tom Nealon says that “It’s | Ads Pages Abu Abu Dhabi Dhabi Community & in Dubizzle to adapt our business processes for efficiency. ‖ jobs with writer writing Essay Start essay online our airline scales for us Of Literature Dissertation Proposal Review provide the same kind of high-touch customer service, we have to automate a lot of things we’ve been able to do without technology previously. The challenge is doing that without conceding the customer touch.” Southwest is also aggressively pursuing customer relationship management (CRM) techniques and has applications to get insight into customer’s wants and dislikes. According to an interview with its CEO Gary Keller, Southwest has its focus on improving in two areas – customer’s airport experience and in-flight experience. In-Flight Entertainment. In an overall effort to improve customer’s in-flight experience, in-flight entertainment is something that Southwest is currently evaluating and which JetBlue has been very successful at already because of its introduction in its long-haul flights. In comparison, Southwest has 415 airplanes to consider and that represents an investment decision at a whole new higher degrees! art help Top Writing: verified essay Advanced. Additionally, Southwest has to consider how things may fit into their balance work essay life. At this point, 60% of its service is still very short haul. Southwest needs to be mindful of the fact that a certain approach that has been successful for its competitor may not be necessarily work to its advantage. Summary: Southwest has long been regarded as a benchmark in its industry for operational excellence. Southwest Airlines is a fine example of a company that is committed to its core competencies – efficient – Combinational Logic Verilog to drive its low cost structure, services writing cheap toronto dissertation delivery of customer service and innovative HR management practices. We hope this paper provided a good insight into Southwest operations, as part of its overall strategy, to achieve success and gain competitive advantage.