Its strategy, right from having standardized fleet to having minimal but motivated employees while wittily introducing cost-cutting initiatives like fuel-hedging and employee profit-sharing plan, have helped it gain a benchmark position which cannot be easily touched by any of its competitors. With its punctual flight record, pleasantly approachable staff, impressive Customer service,
despite the fact that it
offers no-frills, there is still a high degree of customer satisfaction that continuously builds customer loyalty for the company.
This is one of the reasons why, even in the aftermath of the 9/11 terror attacks, when the entire aviation industry was reeling under the disastrous consequences of running empty flights, Southwest Airlines not only was successful in maintaining fully seated flights but also earned an ROIC of 5.8%.
Its hiring process which lays stress on applicants possessing teamwork skills and optimistic outlook has helped it shape a dynamic and motivated workforce which not only helps in smooth functioning of an informal horizontal organization but also promotes accountability among the employees not just as individual but as a team. Its method of offering differentiated products like Rapid Rewards frequent flyer program have made it stand apart in the LCC sector.
However even while being an epitome of success in the Aviation industry, it has been unfeasible and impossible for Southwest’s rival carriers to
imitate
its business model due to following factors:
Group 10, Secon A, 1
st
Semester, Bachelor of Business Management (2013-2016)
October 25, 2013
A Case Study on Southwest Airlines
8
Southwest Airlines, in order to cut its maintenance, training and inventory costs had standardized its fleet by Boeing 737 aircrafts; something which its rival cannot think of doing. Its
Cost Leadership
is one of its vital factors which it has been able to stay ahead of its rivals.
While it follows a Point-to-Point transit system enabling it to have punctual and less cost-incurring flight schedule, most of its competitors follows a Hub and Spoke transit mechanism; and changing from the latter to the former is not recommendable at this fragile state of the aviation industry.
Southwest Airlines has a unique, thorough and highly selective hiring process which ensures that its workforce has the requisite motivation at par with the spirit of the Airlines. Now, this cannot be as easily applied by its rivals which are mostly very hierarchical and formal.
Southwest Airlines innovated the strategy of fuel hedging for a long time, something which its rival cannot start and reap short-term benefits.
With its unique way of communication to both prospective and incumbent passengers, either by goofy humor or funny flight attendants, Southwest Airlines has been able to sustain a
Differentiation Leadership
. No other carrier can practically think of depending too much on its on-board staff in absence of any kind of inflight entertainment.
Hence, we can see how Southwest Airlines was successful in able to maintain both Cost effectiveness as well as Customer loyalty and retention, through its innovative and foresighted strategies.