Southwest Airlines Case Study

1. According to me, Southwest Airlines have been much more successful than it’s competitors because of it’s low-prices policy (supported by it’s effective cost-management), it’s focused then expanded strategy, it’s good time management, it’s unique culture, and it’s ability to adapt to changes in the market and the customers’ expectations. About the price policy, Southwest airlines began by offering prices at least 60% of the average coach fare and still offers really low fares now compared to other airlines. Its tight cost-management enables it to offer such prices: it makes the maximum utilisation out of the fleet, doesn’t serve meal onboard, doesn’t have any first class or assigned seats, choose less-congested and costly airport.

Moreover, Southwest airlines made the smart choice of being really focused at the beginning and expanding itself afterwards: at first, it focused on only a few cities and a few number of airplanes and now even if it follows a strategy of expansion it still only operates in 64 cities and uses only Boeing 737.Its good time-management also differentiates Southwest Airlines from its competitors: it began by imposing a 10 minutes turnaround which has increased over the years but remain very low compared to competitors and tries to avoid delays as much as possible (and has won best on-time arrival record several times).Furthermore, Southwest unique culture is a reason why it has been more successful than it’s competitors. It describes the Southwest way as “Servant’s Heart” and “Fun-LUVing attitude”, hires fun and positive people, has a “Culture committee”, set parties, has a profit sharing and stock ownership program, is very unionized. Last but not least, Southwest has managed to adapt itself to changes in the market, the environment and the customer’s expectations while keeping its root values by for example adding flight, conquering new airports, introducing code-sharing agreement, making the boarding process change, proposing new fares or products.

2. On the one hand, it can’t be denied that the successful code-sharing agreement with ATA before 2008 created a demand for La Guardia airport among Southwest customers. Also, this situation may be a one-time opportunity for Southwest, which is in a need for continued growth. Moreover, this decision would be quite a small investment and the costs should be covered by only 8 flights a day. Furthermore, according to some Southwest executives, La Guardia wouldn’t be as risky and challenging as Philadelphia was because it’s less related to the whole network. On the other hand, the delays in New York airports represent 50% of all US delays, la Guardia is not a non-congested and low-cost airport at all (it has a really high cost structure, especially cost landing), it represents a threat for good customer service. Moreover, there is very few information about the bid and ATA’s bankruptcy process might take longer than expected. But most of all, I think that Southwest’s expansion process has been successful by the past because they managed to keep their root values (no delays, low-cost, fun-culture), which they won’t manage to do perfectly in La Guardia because of inerrant delays and high cost in this airport. Therefore, I would not recommend that Southwest acquire the gates and slots available at LaGuardia airport.

3. First, I think that this decision of not acquiring the gates and slots at LaGuardia fits Southwest’s basis values. It also fits its recently made decisions: Southwest had 13 new Boeing 737 aircraft due for delivery in 2009 but with the quickly raise of variable cost, it is sometimes cheaper to park a plane than to use it, so I think Southwest has to optimize its existing network rather than expanding it for now to face those increasing variable costs. This decision also fits the challenges that Southwest will have to face in the future: maintaining low prices with more and more competitors, higher costs, and most of all recession.