Mgt 409 - Southwest Airlines

                                 Southwest Airlines

Diagnosis:  The single biggest problem for the company is that it haven’t had the substantial innovation because the recently merged carriers involving Delta/Northwest, Continental/United, and American/US Airways were having a significant impact for the industry. Also, smaller companies such as JetBlue, Alaska, and Spirit were threatening Southwest’s cost advantage and low-fare focus. Without the substantial innovation, the company’s operating cost were still rising due to high productivity. In addition, the company’s salaries for pilots of narrow-body jets, and salary expenses for mechanics and flight attendants were the highest in the industry. This is why the company’s performance would like to be affected negatively. There is no doubt that the company will be obsolete while competing with other companies in the future if it’s left unresolved.

Analysis:  I think the substantial innovation was the single biggest problem because the company really had some weaknesses which need to be addressed and were definitely confronted with threats and challenges from other developed or innovative companies. The method I used is S.W.O.T analysis. Although the company had some strengthens like low fares, short-haul, point-to-point flights, high- frequency flights, short turnaround time, ticketless travel and so on, it still had some serious weaknesses such as high operating costs, the highest salaries, no international flights, a fleet consisting only one type of aircraft called Boeing 737s while facing future challenges. Furthermore, the company had some opportunities because the domestic airline industry was experiencing a rapid growth, and the acquisition of AirTran could allow the company to increase the market share domestically and enter the global market, but domestically strong competition would threat and impede the company’s development. It’s worth mentioning that the legislation made non-U.S. carriers easier to enter the domestic market so the company had to face more pressure.

Recommendations:  

  1:  The company should keep its advantages like low fares, short turnaround time, ticketless travel, high-frequency flights, etc and try to make them better. In addition, the company should try to know what customers really need by conducting a survey and offer different rewards for new and loyal customers. It’s also important for the company encourage flight attendants and ground crew to be responsible and enthusiastic, and offer better service.  

  2:  The company certainly needs to create specific goals and experience the substantial innovation in order to face the strong competition in the future and decrease the number of weaknesses according to its real situation. Based on the weaknesses above, the company should try to enter the global market to obtain more profitable opportunities. The best way to do is that establishing cooperative relationship with other airline companies. Also, the company should reform the internal system and the whole company’s structure for reducing operating costs and salary expenses. Lastly, the company should free up capital and purchase more types of aircraft for international flights.