Southwest to a national pilot’s union. Fuel costs

Southwest clearly has a
distinct advantage compared to other airlines in the industry by executing an
effective and efficient operations strategy that forms an important pillar of
its overall corporate strategy.

The carrier provided
frequent point-to-point service between secondary airports that are were less
congested allowed them to have an efficient use of gate times keep costs low,
and an efficient operation within airports be seeing as a result.

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Operations were designed
for simplicity: an all-Boeing 737 fleet, an absence of meals and seat
assignments, an all-coach cabin with no frills, flexible work rules, and an
enthusiastic workforce contributed to very short turn times and high aircraft
utilization. Also uses one type of aircraft help to reduces training and
maintenance costs as well as contracts with fuel suppliers. They hedge
aggressively on fuel which allowed them to be profitable when other airlines
were losing money.

Southwest
set its prices very low, typically to compete with the cost of auto travel
rather than other airlines’ fares.  Southwest’s pricing structures were
simple and relatively transparent to passengers, with few classes of fares and
few ticket restrictions. Southwest Airlines low prices are attributable to no
luxuries or unnecessary extras; however, their friendly staff’s culture creates
a fun, personable and unique experience for their passengers at low cost fare.

Among
the key success factors for Southwest Airlines are the well-known operational costs and efficiency of the
company, perhaps the most critical element of the successful low-fare
airline business model is achieving significantly higher labor productivity.
Other key factor and advantage the airline has over its competitors is that it
is the only major carrier that does not belong to a national pilot’s union.
Fuel costs is the second-largest expense for airlines after labor and accounts
for about 18 percent of the carrier’s operating costs. Airlines that want to
prevent huge swings in operating expenses and bottom line profitability choose
to hedge fuel prices. If airlines can control the cost of fuel, they can more
accurately estimate budgets and forecast earnings.

 Employee and
Labor Relations is undoubtedly an important key for the company success, Southwest
has been highly regarded for its innovative management style. It maintains a
relentless focus on high-performance relationships and its people-management
practices have been the key to its unparalleled success in the airline
industry.  The company affords the same respect to its employees that is
provided to its customers.

Undeniably, customer
service has played an important role in the success of the airline. The mission
of Southwest Airlines is dedication to the highest quality of Customer Service
delivered with a sense of warmth, friendliness, individual pride, and Company
Spirit. The customer service that is inherent to Southwest is a part of its
culture. This culture is supported through employee encouragement to do the
extra to satisfy the customer.

Another important key to
be mention is technology. Southwest utilizes technology in many ways to fulfill
its business objectives and maintain its efficient operations, such as: bar
codes in boarding passes, software upgrades and RFID,

 

Southwest has emerged
very successful, despite the most troubled times in the airline market.
However, it faces new challenges in the face of increasing competition from
other low fare airlines such as JetBlue, ATA airlines, America West. Since
competition became a fact Southwest Airlines must address safety concerns to continue
being considered as a safe airline

One of the weaknesses of
Southwest Airlines is related to one point of its strategy. In certain way,
keep insisting in only flying to second tier airports could represent a problem
of growth limitation since there are still big cities with a great profit potential
with no SWA services. Southwest Airlines need to extend flights to further
destinations either international or other national markets, as well as apply
new technologies to make the travel experience more enticing.