Group 6

Ankit Sutariya PGP13138 Avadhesh Kumar PGP13076 Gaurav Sikriwal PGP13088 Jayesh Ruchandani PGP13135 Sidharth Talukdar PGP13121 Shankar Shethe PGP13136

Southwest Airlines
Concentrated on flying to airports that are underutilized and close to a

metropolitan area. Low cost, low fare and frequent flights. Love field in Dallas, Hobby in Houston, San Jose and Oakland in Bay Area, Midway in Chicago

Background
In mid 1980s, American Airlines had to cut down on its operations

on some cities and shorter routes owing to losses. USAir too withdrew services on regional routes. 40 percent of total capacity of the U.S. airline industry was seeking bankruptcy or ceased operation completely. However, in the same context, Southwest Airlines had been profitable in every one of the last years and earned its stock earned highest returns.

Competitive Advantages and Industry Standard

Southwest Airline
Costs:7.1 cents per mile Turn-around time: 15 minutes Pilot Salary:$100000, 70 hrs/

Industry Standards
Costs:10 or more cents per

month 81 employees/ aircraft 2443 passengers/employee 10.5 flights per gate Aircraft spent 11 hours in air daily

mile Turn-around time: 35 minutes Pilot salary: $200000, 50 hrs/month 150 employees/ aircraft 800 passengers/ employee 4.5 flights per gate Average 8 hours in air

Strategy
200 fuel efficient Boeing 737 aircraft

Avoided hub and spoke system Cost cutting

Simple fares: Regular coach and off-peak fare

Only frills and beverages served to passengers

Reusable plastic boarding pass Frequent flyer program based on number of trips Less of use of computers and artificial intelligence

Volume Pricing

Southwest Airlines - Culture and Values

Unconventional and Fun Had flight attendants in hot pants in early days. Refers itself as the Love (LUV) airline. A small hear emblazoned on aircrafts sides. Teamwork It is encouraged that employees identify with others at the company. Customer service Employees routinely volunteered to help customers in need Word Customer was capitalized in all corporate communications

The People department

Has a staff of 100 people dedicated to deal with 18000

employees. Departments mission statement

Recognizing that our people are the competitive advantage, we deliver the resources and services to prepare our people to be winners , to support the growth and profitability

Emphasis on less formal and more lively work culture

Recruiting
Southwest was selective in its recruitment

In 1993 out of 98000 job applicants 16000 were interviewed and 2700 hired To insure fit there was an emphasis on peer recruiting Pilots hiring other pilots Self-centered persons were not entertained, team players required Even customers were involved in recruitment of flight attendants They emphasized on right attitude than superior skills As they said we can change skill levels through training but cannot change attitude Prefer people with industry experience 40% pilots came with military experience, 20-30% from other airlines Doesnt have nepotism policy

Training
New flight attendants go through 4 weeks training (as low as

5% attrition rate) Customer oriented training Hires are exposed to the history ,principles, values , mission , and culture of the company Managers have course on leadership, pricing, revenue management, and how business works Training is 100% internal Used internal customer feedback Courses like the climb to induce necessary behavior which is further transferred to work settings The front line forum for highly experienced employee to explore the deliverability of the promises made

The southwest work force

89 % unionized and 9 separate unions

Compensation program : low pay at the beginning and

high pay after you get seniority Big difference : pilots and flight attendant are paid per trip. Young work force with an average age of 34

The Southwest spirit

Culture : customer service, hard work, equality, cost

consciousness, dedication, fun and most important family. No intra-union conflicts Southwests success lies in its culture.

Threats
United and continental airlines

Advantages
The airline industry overall had

are continuously imitating the strategy of southwest airlines. There is constant threat of damage that can happen to southwest airlines. Southwest is a big firm now with 14000 employees and therefore become trickier to manage people in the same way they did all along.

been characterized by notoriously poor labor relations and authoritarian management. Southwests policies : labor peace, trust, non-adversarial relations, open sharing of information and high productivity.

Case analysis

Southwest Airlines is dedicated to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. Here they are consistent in the mission. There seems to be less power distance in the company.

Citizen ship behavior

Citizenship behavior is displayed and so are high motivation and job satisfaction Interestingly, even though the compensation is less as compared to other airlines yet the attrition rate is low.

Customer service

Low Cost High Productivity by all standards. This was in part achieved because of overlapping roles eg: pilots helping attendants

Low cost

Case analysis contd..

Adherence to the mission

Marketing

The recruitment is done keeping in mind the mission and values of the company.

Inseparability of production and consumption makes consumer part of service process so their active participation, employees enthusiasm, easy techniques make effective and efficient process.

Providing physical evidence through website, brand name, colour, logo, uniform etc help a service firm to overcome the problem of intangibility.

Service