Southwest Airlines is one of the largest domestic carriers in the United States, with over 3400 flights every day from 64 domestic destinations. Since 2011, Southwest Airlines is the airline that “carries the most domestic passengers of any US airline” (“Scheduled passengers carried”, 2011). The major factor that contributes to the success of Southwest Airlines and makes it different from the other airlines is its approach in designing and managing the processes.
Measuring capacity and utilization at Southwest Airlines
Southwest Airlines uses the unified system to measure its capacity. The measure for capacity of an airline is the available seat mile (ASM), which refers to the number of seats in an airplane, multiplied by the flying length between the takeoff and landing destination. This measure gives information about the capacity, but there are many other factors that influence on the performance of the airline. The utilization at Southwest Airlines makes the performance of this airline different than its competitors. In order to increase the average output rate and perform close to the maximum capacity, Southwest Airlines brought strategic decisions such as, using unified airplane models, implementing Operational Terminal Information System (OTIS) etc.
These decisions affect different areas of operations, from maintenance and training to turnaround efficacy. For example, Southwest trains its crew only for Boeing 737, the only model in the fleet, which gives the airline flexibility regarding the scheduling and the trainings. Also OTIS provides the necessary information for better efficacy of the ground operations team before the plane arrives, so they can turn around the plane in just 25 minutes or less. The company focuses on the gate turn-around time and invests in different programs and employee trainings for turn-around efficacy and recognizes it as one of the main utilization factors: “If we can save one minute off every turn system wide, that’s like putting five additional planes in the air.” (Krajewski, Ritzman & Malhotra, 2013).
Factors that can adversely impact turn-around times at Southwest Airlines There are different factors that can influence the turn-around time. The turn-around time can be prolonged due to weather delays, security delays or technical difficulties. The weather is a factor that the airline cannot control, but the delay can be predicted and prevented with alternative flight plans. Southwest airlines can experience security delays like any other airlines and the company has little influence on this factor. On the other hand, the technical problems can be divided on the ones that can be controlled by the company, and on technical delays caused by the national aviation system. The company can work on prevention of the technical types of delays with different technological improvements and employee trainings. The objective for the company is to have the capability to adapt its schedule to these factors and reduce their impact on the company’s utilization.
Achieving the goals of Southwest Airlines
The company assesses its performance from different external and internal evaluations. The Department of Transportation is an external evaluator that compares the performance of the competitors in the airline market in different operations, like on time departures, lost luggage, etc. Also the company makes internal targets for different operations and has an established appraisal system for the employees that achieve the targets. They identify different goals for different sections of their operations, such as the 25 minute maximum turnaround time, or reduced customer complaints. Even though these goals address different segments in Southwest’s operations they jointly contribute to the company’s increased utilization.
Long-term issues relevant for managing capacity, revenue, and customer satisfaction at Southwest Airlines The goals of Southwest Airlines can be identified as the main factors for their long term success. The further expansion of the capacity of the airline can represent an adverse issue only if it represents a threat for the degree of utilization of the company. For example, if the company expands with addition of new, different models of airplanes, that decision can increase the training costs and decrease the flexibility and the availability of the trained workforce. But if the company expands carefully according to the market demand, and without changing the strategic technical decisions, like types of planes, the chances for success are big. The level of customer satisfaction is a long term investment for the company that depends on different factors like the price and the reliability of the airline. The fact that Southwest operates with high utilization rate gives them the opportunity to be competitive with the price, without losing the profitability. Their performance evaluation from the Department of Transportation affects on their reputation between the customers. The further improvements in their operations can only strengthen their long-term success in achieving their goals.