Southwest Airlines founded in 1967 with three operating flights to Houston, Dallas, and San Antonio. It has grown to become the fourth largest United States domestic customer carrier with 1998 being Southwest Airlines twenty-sixth year of profits. Southwest airlines mission is to provide dedication to low cost, high quality of customer service that is delivered with warmth, pride, friendliness, and company spirit. Problems Even though Southwest has maintained a lot of success, there are challenges ahead.
Southwest’s big concern is expansion. This decision has several components. First Southwest must meet the current and forecasted demand, find facilities, ensure entry into the market is in a timely manner, and keep their strategy. Southwest also need to decide which cites has the greatest opportunity to profit from, determine ample routes that could be added to increase service. The other threat comes from the competitors. Many of the airlines in America not only operate domestic flights but also international flights.
Globalization generating much demand for international flights from domestic customers. For customers, it is more convenient for them to book their domestic and connecting international flights just in one stop. As a result, it is very difficult for Southwest to convince this kind of customer to take southwest’s flights. Alternatives Evaluation Southwest Airlines, however, is not without weaknesses. No matter how successful, Southwest Airlines serves only 29 states and cannot compete against the bigger companies that serve nationally or even internationally.
Competitors are aware that they cannot match Southwest Airline’s prices; their market is larger and is not feasible to offer cheaper tickets at the cost of no in flight meals. Instead, competitors narrow the price difference between Southwest Airlines and themselves and stress on the quality of frills such as roomier seats. Others, through use of flight hubs, are the only ones who can economically serve remote customers. Furthermore, Southwest Airlines does not utilize a hub system that allows igger competitors to reach further out. Another weakness of Southwest Airlines is their preference of Boeing 737s. Being limited to one type of airplane leaves them with little flexibility if the model receives a bad reputation or a critical flaw is discovered in future. Such would be a costly venture for this company, who has used only one type of airplane and in the face of a dire situation would face a costly venture of finding replacements or counteracting bad publicity.
Southwest Airlines strategy has been proven very effective; competitors often duplicate it, which is making it lose its originality. This duplication could cause competitors offering low rates to the same area covered by Southwest making their limitations obvious to their customers. A larger company with hubs could try to introduce the low cost model, which is used by Southwest Airlines, and out perform them in a wider market. When new companies try to challenge major players in a competitive market with high satisfaction from their customers other companies notice quickly.
Recommendations No frills approach is not always desirable to everyone, but it is good for Southwest to make changes that would be more accommodating. One example would be to upgrade seats, which could cost but it would also open Southwest Airlines to more customers. Internet referrals can also help keep the costs down by charging a lesser fee to book seats through the Internet than with a travel agent. A key strategy for Southwest Airlines is to continue their growth while focusing on their point-to point service.
They could expand their customer basis by adding a long distance mile segment, which would allow them to expand to larger cities that exist within their network. By adding flights that are longer, it would add higher traffic and would allow access to larger airports for long flights. By incorporating flights that originate and end at their current location, the passenger can make direct flights to or from Southwest by using them as a start, mid, and ending point. Southwest would be easy to attract new customers due to their low fares and ne-way ticketing. By adding the expanded flights, they could add more flights to the location and receive higher profits from the longer duration flights. However, with longer flights additional costs would be added for staff, clean up time, fuel, and larger aircrafts, but the cost would be offset by higher profits. By using the strong financial strength of Southwest Airlines, the company can expand its scope to some other major cities in order to provide more routes and would result in an opportunity of increasing its customers as well as its revenue.
Furthermore, based on this existing loyal customers and its brand, Southwest always had an opportunity to expand its business from domestic to international by aligning with other international carriers or operating international flights by itself. In the mean time, Southwest still need to keep its low-fare, low-cost strategy. This will be a new challenge for Southwest Airlines to globalize its business. Conclusion There are still a lot of things can be improved in Southwest, like providing a more efficient way of luggage check-in process.
Southwest competitors are chasing very closely through implementing the more sophisticate technologies to improve their efficiency as well as services. Southwest needs to catch up its steps and adopts more technologies. It is hard for Southwest Airlines competitors to challenge them with the strong success model, customer satisfaction and happy employees. Southwest Airlines has invested many years and enormous amounts of money and effort to instill powerful culture, value system and to develop employee loyalty. But the organization must make every creative effort in order to maintain this asset.