9 March, 2018
visibility 1Southwest Airlines Case
IntroductionSince the invention of the aircraft during the period before and after the infamous world war, air travel has tremendously changed the way people live and carry out their business across the globe. Over time, the various inventions that have been witnessed in the airteravel industry have had a great impact in improving the industry’s performance to deliver better and safer travel services to the entire world. However, the air travel industry has experienced several challenges through the ever changing climatic and financial factors. The air travel has become such a common place that it has changed the concept of distance worldwide, despite the challenges , air travel has made it possible to visit and do business in place which were once considered remote(Rigas, 2006). External factors Global recession In modern air travel industry the most significant factor that has greatly influenced trends in air travel, is the global recession. Most airlines have inevitably cut on their numbers of available flights purposely to avoid a situation of making flights with empty seats, to save money on fuel and related labor costs. Pricing of air travel packages has gone down due to relative competition in the industry. A significant decline in first class and business class has been recorded over the previous year which has resulted in decreased profits for airline companies. A majority of US airlines have shown an indicator of declining profits. In a financial health analysis of the industry an airline’s success is measured by its ability in generating adequate revenues to cover costs both before and after the non-profit generating items which include sales from sales of assets, interest charges and other adjustments or provisions. In fact airlines can not make sufficient income without positive operating and net results to meet financial commitments and cut on the high borrowing that has become the only solution over the previous years (Bijan, Ken & Tom, 2008). Political situation The political situation has a number of factors which has affected southwest airline drastically. The government regulations on the way airlines operate have been rather very strict on the issue of passengers’ security and fuel. This has put an additional task to the airline due to these factors. The first problem was government regulation regarding old airplanes. The fuel cost was seriously erratic over the years which had lead to difficulties on fuel cost estimation to being a difficult task (Rigas, 2006). US economic situation Another significant external factor is the country’s economic situation which has been through a tough economic situation hence the negative impact on the airline industry’s profit margins. The capacity to sustain the non-profitable period have proved rather tough hence an increase in the company’s debt. Though after the severe period there has been a period of rapid economic growth, making profits in the airline industry is still a challenging undertaking due to increasing debts (Bijan, Ken & Tom, 2008). Social conditions Another external factor that has also had a great impact on southwest airline is the social condition. For instance the passenger insurance costs have been all high and still on the rise. There is also an extra expenditure by the company on the intended extra security measure for its customers across the network of its operations worldwide (Christian, 2011). Technological conditions Similarly the technological conditions have also had their impact on the airline particularly in angle o f competition from the other airlines entering the field. There has been a consistent increase in purchase of new and high technologically advanced ones to keep at the top of the business in its competitive dimension (Bijan, Ken & Tom, 2008). Internal factors Marketing strategy Among its internal factors the airline is greatly influenced by its marketing strategy which targets the tourism industry. The airline’s distinguishing trait from its competitors is basically its choice of strategy. Its choice to work in the tourism industry to provide air travel has seen receive numerous prizes in the previous decades. Quite influential, the airline’s mission is another internal factor that drives this airline company. The mission statement is “To get passengers to their destination safely and comfortably with a laugh or two along the way”. The company’s attitude has caught the attention of many and not only the travelers but also the employees from a motivational perspective. The organization has smart employee coordination and allows the employees to innovate and improve on their daily individual work as well (Susan, 2004). Internal management The internal management of the company is also another factor which lead to the ever success strategies of southwest airline. The approach to hiring and training of its employees is in fact unique and a top secret for the company in advancing its corporate culture. The company conducts its hiring on basis of right attitude and professional skills for the right job. For instance, the flight attendant candidates are interviewed by the company mainly for the purpose of observing how the applicants could interact in a real service to a customer scenario. This a very significant effective approach to easily and quickly spot skill and talent that are potentially viable to add to the company’s reputation and culture for the long-term goal in its success. The identification of highly skilled and talented persons is a definite future indication of how employees will treat the company’s customers (Christian, 2011). Internal relations In addition, the company has put an emphasis on the importance of building and maintaining firm internal relations. This has been achieved by presenting the employees with a chance to grow and learn even more from each other in the course of duty. The follow of information is generally free between the employees and the company’s leadership hence unclogged way of communication. Southwest has also empowered its managers and front-line staff who serve customers on a daily basis to cover up relations with customers by making instant appropriate decisions (Rigas, 2006). Low pricing Southwest airline is currently the most reputable low –cost leader in the air travel business, putting into consideration low cost in daily operations that allow it to pass savings to customers, hence a higher return to customers. The strategic structure of the organization and its leadership culture are key to its success hence it healthy business status. There are several factors both internal and external influencing the performance of southwest airline business (Rigas, 2006). Customer relations Southwest has maintained good relations with its customer through its front-line staff on day to day interaction, settling issue and concerns raised by the customer to ensure continued cooperation. This has put the company on the forefront in that it is an innovative strategy of introducing a new service in the industry. With its innovative strategy, southwest has had a great impact on the industry hence has acquired a large market share of the air travel industry (Rigas, 2006). Conclusion In its success story, the southwest airline is ahead of the competition with regards to nurturing satisfied employees and which a survey drew attention to customer concerns on how they are treated. A majority of Americans are of the opinion that the way a company treats its customers will highly determine whether customer are to purchase from that company or not. The choice of making its employees a priority, southwest airline has really made its customers happy by offering a satisfactory service (Susan, 2004).
9 March, 2018