Lahore School of Economics

1/2/2015
Hashim Hussain
Hira sarfaraz
Muhammad Hamza
Rao Haris
Syeda Saba
MBA: Marketing
Section I
Wac Number: 1
Rapid Rewards at Southwest Airlines

Introduction
Southwest airlines one of Americas top airlines was started in 1967 by Rollin King and Herb
Kelleher. And began to spread across the united states over the years. The airline provides a
different kind of experience to its travelers compared to its competitors. The airline with no
assigned seating promotes egalitarianism and grabs travelers and holds them close, they build
good consumer relationships and the flight atmosphere is always lively since everyone is treated
equally. Apart from the consumers end workers of the company are also too much into the
organizational goals, every worker is self motivated and is treated with equality, they are always
upbeat and have a positive attitude towards work. The worker union is also very happy and care
about the airline. Operational excellence allows the airline to have short turnaround times and pit
crew tactics to have a significant effect on the company's time management. Rapid rewards and
free tickets for frequent travelers makes sure for consumers that southwest airlines cares about
them and they are their first priority.
although southwest airlines is dealing huge amount of happy customers it does face the risk of
losing a huge chunk of customers. According to the case study people have started to dislike the
egalitarianism strategy of the airline and there is a chance that southwest airline might lose a lot
of its loyal customers as well hence the threat of customer loss is the biggest problem for
Southwest airlines.
Southwest Airlines faces tremendous amount of competition and with the cost cutting strategies
being adopted by its competitors customers might will shift to other airlines. Apart from that
some of the airline policies are a bit problematic for many customers such as
Luggage re checks: travelers had to double check their baggage if switching the flight to another
airline which creates a time setback or gets problematic at times for customers. (Perkins 2012)
No seat assignment: although people like the idea of equality but for those who travel allot they
wanted to be treated special. According to the case Bast wanted a better seat and she could not.
Such policies make customers think that the company isn't valuing their loyal customers.
restricted fare ticket : loyal travels were hurt by the restricted fare ticket as they couldn't cancel
without paying a fee.

apart from the problems mentioned above the rewards were given on the trips made not the
length of air travel, some customers would love having more rewards based on air time travel as
rewards on total trips made subject them to make short trips to get more free air travel.
consumer loss is rather a long term problem for the southwest airline as once a customer is
dissatisfied it could take a long while to get him/her back. Competitors emerging can also be
problematic for the company. long term problems such as future fuel prices and stock price
declines could also occur but mean while they are not of concern. However baggage rechecks,
rewarding system and the no seat assign policy are rather short term and the Southwest airlines
can make changes in its such policies to gain consumers back.
Causes of the Problem
Customer loss is the main problem according to the case. As customers getting the feeling that
company isn't valuing them. The case talks about 2 different types of people who travel allot with
the southwest Airlines. William Mack and Liz Bast. Mack being a guy who likes to bring his
own food and would like a little privacy and took the best seat by arriving first while Bast being
the person who uses the airline like a subway was late and couldn't choose her seat. Both people
have different personalities as Mack is not a very high income earner while Bast was a CEO.
According to the case study Mack looked upon her with disdain and considered her official calls
indecent as he was disturbed by her loud voice. and Bast had accidently knocked Macks food
over him and Macks possessions were damaged. Which shows that there should be a separate
class for such customers and frequent travelers should be separated from occasional ones.
The first come first serve strategy suggests that people would have to wake up early and get in
line, which means that the boarding process for southwest airlines is very time taking, and people
would have to wait in lines for very long hours.
more problems being were the baggage double check and the rewarding system. The case says
that consumers had to recheck the baggage if they wanted to get onboard with another airline.
This creates time constraints and mismanagement for the airline and customer itself. and due to
the rewarding system customers were de motivated to travel long distances compared to short
ones as only short ones gave them more benefit it terms of free air travel. this causes the increase
of risk for customers to change airline for longer distances.

Apart from that it is said that although Southwest Airlines had the first come first serve policy
there were some practices being taken place which seemed to be unfair to the other public. such
as the rich being able to get first in line by paying more money. (cranky flier 2013)
the diagram below shows a graphical representation of the southwest airlines boarding process.

Decision Criteria and Alternative Solutions

Since the boarding process is a very problematic southwest should come up with some structural
changes. This would reduce cycle times in many processes and might remove bottle necks. such
as different booking systems for different types of customers would reduce cycle times in the
booking process. people have to wait in very long lines in airports and in such as big airlines as
southwest the bottle necks are quite time consuming. Bottle necks not only create time
constraints for people but also make things problematic for Southwest airlines. As if occasional
travelers get first in line, they get the better seats and due to which the regular travelers are

subjected to the seats which are not preferable to them. And such situation creates a negative
image in the mind of the regular ones who even know the names of the flight crew.

Solution no: 1
southwest should come up with an online booking in advanced and a differential quota for those
who travel more and for those who travel occasionally so that seats could be assigned.
pros

this will cause removal of bottle necks at the boarding process as both frequent and

occasional consumers will have different quos and task times will be reduced
will remove the negative image of the airlines created by loyal customers who think the

airline doesn't value them

will cause a division between classes of people which will cause lesser chances of

disagreements or in plane accidents

large families could sit together finally

cons

an addition of a new task such as handling occasional and frequent customers will encore

additional cost
the concept of egalitarianism will be eliminated , upon which the airline was based in the
first place and some customers will think that they are not treated equally

Solution no :2
advertisement for the airline tickets on the internet and media about price and customer value

pros

will create a more positive image in the minds of loyal customers and would stop them

leaving in our case Bast

company already sells a low priced ticket , it will attract more customers
good against emerging competitors to increase market share

cons

incurring of additional costs while competitors are also applying cost cut strategies

Solution no:3
Change in the rewarding system and baggage double checks. by changing the rewarding system
from giving free air travel hours based on trips to total air travel and making a new baggage
system for travelers who switch the airlines at an end node.
pros

will create additional company image when customers don't have to worry about their

luggage too much and can save time on having a check on it

New rewarding system will motivate long distant travelers as well to use southwest

airlines as this would now grant them rewards as well.

increase in revenues due to more travelers

cons

additional tasks leading to more cycle times

more costs for hiring a team for baggage system
lesser revenues due to giving more rewards

Recommendation
The southwest airlines should choose the first solution which is to introduce a new online
booking system to exclude occasional travelers from frequent ones. This is allow Southwest
Airlines to give away assigned seats to travelers and would avoid problems such as Bast and
Mack were having according to the case. This system will also remove ambiguity from the minds

of regular clients who think that they are valued by Southwest airlines. Since people do think that
they are not given value at Southwest especially when they cannot choose their seat. This
situation also occurs in the case as when Bast who is an individual who travels very frequently
via Southwest Airlines is not given option to choose where to sit when she brings so many
revenues to the company while Mack who is more of a typical traveler gets the seat he wants
based on first come first serve. The Southwest Airlines has allot of clients who are hooked onto
the company having a very strong consumer relationship but among those are occasional
travelers and frequent travelers. And due to the first come first serve the business class is at loss.
If we consider the According to our opinion the second option or solution would be more
appropriate as well in which they have suggested to change the companys policies on the
restrictions of ticket and on seat assignment. The five main reasons for this are as follows:

By following this option the focal problem will be resolved; Liz Bast, the

opportunity to choose their seats with additional fee. Moreover, this solution will
retain the customers of the company and give them more satisfaction and it will
also eventually increase their loyalty.

Secondly, by adopting the solution number two, it will increase the

revenues of the company.

Thirdly, by looking at the first solution we can say that it will strengthened

the awareness for the products of the company and companys offers and also
builds up image of the company. But it will rise to more costs for the company as
to spend money more on advertisement.

Fourthly, this second solution is long term. Its giving a benefit to customers

who make the prior reservations. The position of Southwest among its
competitors will be strengthened and the focal problem will be resolved.

Lastly, Southwest should focus on customers loyalty by offering an

attractive reward system so it can enlarge its customer base.

Appendix
Southwest Airline is well known as the low-fare airline that has achieved ongoing financial
success in one of the most financially troubled industries in the United States. Told from the
perspectives of two Southwest customers a frequent flier and a typical customer- the case

revolves around two customer service requests from the frequent flier both of which provide a
compelling temptation to carter to the satisfaction of the airlines highest revenue customers. How
would the request add costs or increase the turnaround time of South west service? Please help
from process analysis or Designing, Management and Improving Operations readings.
According to the case the clients at Southwest are more than happy but the ratio differs as the
regular ones are not so satisfied with the service provided by the airline. As per the case Mack
was a happy client who arrived early and brought lunch, and later which falls over him damaging
his possessions. Bast was the other client discussed in the case who knocks Macks food. The
situation described states that seating on first come first serve bases is not so organized and there
might be little room in the plane to make movements. As being an economical Airline they put
have put more seats to cover up the low price (whiteny and Brooks 2012). They have 175 seats
for the average 143 seater Boeing. Hence it suggests that there is always heavy rush at the
Boarding and the plane itself. Southwest accommodating so many clients should at least consider
the pre booking option so that clients could easily take the desired seats. Apart from that
according to the (cranky flier 2013) there was a new thing going on as the high income earners
now found out a new way to get in line first. By paying a little extra money they could get all the
tickets they wanted and due to this the occasional ones were at stake. So Southwest should come
up with new policies to carter with occasional fliers and regular ones and to remove some hassle
it should remove some seats to make more room for comfortable journeys.
So such operational policy changes and structural airplane changes will lead to shorted cycle
times, which are currently prolonged due to heavy bottle necks at boarding the flight.