Diversification Of Southwests Fleet Management

Southwest Airlines employs a no-frills, keep-it-simple strategy. Instead of competing head-to-head with major, full-service airlines which are inundated with dissatisfied customers due to flight delays and overbookings, Southwest distinguishes itself from its competitors as a low-fare carrier that provides on-time frequent flights from point A to point B. Southwest caters to the passenger who seeks a reliable and hassle-free flying experience.

How has the original strategy been altered in recent years? How, if at all, have these changes affected Southwest's key success factors?International flights

Southwest formerly offered flights within the United States

With its recent acquisition of AirTran, however, the airline now offers international flights to Mexico and the Caribbean, with other destinations (e.g. Canada, Central America) in negotiations

Effect on key success factors

Affordability - though Southwest has stated that they will offer low fares on these international routes, this does not seem sustainable as different fees and taxes that non-applicable to domestic flights will eventually drive costs higher

Customer service - Southwest, also known for its friendly, spirited employees, might appear inconsistent in customer service, as AirTran employees might not share the same attitude or personality recognizable in Southwest employees

This merger also poses a threat to the existing culture of Southwest, with the introduction of AirTran employees into the workforce

Primary, more congested airports added to its network

AirTran operates from the world's busiest airport, the Hartsfield-Jackson International Airport at Atlanta, and due to the merger, Southwest now operates from here as well

Southwest added Minneapolis-St. Paul to its network of airports in 2008

Effect on key success factors

Reliable, on-time service - this is made possible by minimizing turnaround time. In operating from larger airports with more passenger traffic, airplanes might spend more time on the ground and less time generating revenue while in flight. This also makes Southwest more vulnerable to flight delays and overbookings, which are contra to its customer value proposition.

Diversification of Southwest's fleet

With the acquisition of AirTran, its existing fleet of Boeing 737-700 and 717-200 aircraft was added to the Southwest fleet

Effect on key success factors

Affordability - Southwest's former fleet simplicity in having just one type of aircraft kept training, maintenance, and staffing costs low. Now that the 717 aircraft from the AirTran acquisition has been added to the Southwest fleet, costs may be driven up, thus affecting its air fares.

How is Southwest Airlines compared to competition (especially to imitators and like airlines)?

Southwest Airlines continues its 40-year profitability streak, and is the largest U.S. carrier based on domestic passengers boarded as of March 30, 2011, while many full-service airlines have merged with other airlines, such as Continental Airlines, or filed for bankruptcy, such as American Airlines.

Many have attempted-and ultimately failed-to imitate the low-cost model of Southwest, such as People Express, Continental Lite, United Shuttle, Delta Express, and US Airway MetroJet. Currently, Southwest is neck-and-neck with JetBlue, which came in 1st place in the most recent passenger satisfaction survey from J.D. Power and Associates, while Southwest came in 2nd.

Why has Southwest been so much more successful than its competitors?

The secret sauce of Southwest lays in its labor practices, or its employee relations. The working environment and culture of Southwest places a premium on employee welfare and happiness. Investing in good relationships with its employees (Southwest claims more than 80% of its employees belong to a union), Southwest's returns are tenfold: they have never had a labor strike, and their staff are some of the most cheerful and genuine in the skies today.

In an industry driven by a large workforce, high productivity and service quality are integral to satisfying customers, and Southwest believes that happy employees equate to happy customers. This is the element that most entrants and/or imitators of Southwest miss in adapting the low-cost carrier business model to their own airlines.

What kinds of things over which Southwest's management has some control could go wrong, and what should be done to make sure that it doesn't?

As the price per barrel of jet fuel rises, Southwest can compensate by improving control of non-fuel costs.