1) How does this company make money even when other airlines don't? What are the most important contributors to its financial success? ANS: - Southwest airlines founded specially to create intrastate between Dallas and Texas and their main agenda is to provide services at low cost as compared to other airlines. Even it's very competitive to achieve this goal but southwest succeeded by keeping operations simple and consistent, cost saving strategy and meet customer expectation(on-time) at low cost but these are not enough as these can be easily imitable by other airlines.
In addition to this, Southwest focuses on other strategies like niche (especially for business people), Market orientation, strong management and strong internal culture which give them uniqueness. Main key points of their success and financial growth are as follows:1) Cost saving strategies:Southwest Airlines provide services at very low rates. To decrease the input cost they reduce the complexity, making consistency of the operations and try to use the assets more efficiently. They also save time per flight so they can increase no of flights per day. One type of 737's fleets - They can easily change parts if there is a problem at last minute which saves time and automatically cost, easy to train employees about one type of fleets, one type of inventory decreases maintenance cost. No seat numbers - This decreases the management cost as no need of boarding passes.
Save time. No first class service- Number of seats in one class is more. No meal in flights. Limited amount of checked luggage.
Reservation and ticketing system which save cost because they have to pay only 1$ per booking.2) Strong organization:• Point to point route system - This enables to provide on- time performance. Passengers can take later flight if they miss the first one because there are frequent departures due to less complex system and more turns around time between Dallas, Houston and Texas.• Focus mainly on business people.• Departure and arrivals at small and secondary airports which reduces the delays and suitable for business persons.
• Strong employee to employee relation and culture- employees are loyal, dedicated and innovative unlike other airlines.3) Market orientation:Develop strategy to consider specific customer needs and provide services better than the others. Managers try to create innovative ways for attracting customers and selling products. e.g.
Doing Sales and marketing in unique ways better than the other airline offers. All these facts are responsible for the financial growth and are reasons for the success.
