Southwest Airlines Analysis Free Essay Example

Southwest Airlines (SA) was founded in 1971 after a careful market analysis. Its founders believed in a low cost strategy. Through the Wright Amendment, which not only prohibited any air carrier from offering direct service into Love Field from any place beyond Texas and the four contiguous states of Oklahoma, Louisiana, Arkansas, and New Mexico, but also made more difficult the life of passengers coming from outside theses states and forbid the advertising to flights coming from Love Field, the competition made SA adopt a differentiation strategy.

Which factors became crucial to the success of this company since its beginning? SA chose airports that were underutilized but were close to metropolitan areas. There was a main reason for the Aircraft choice, and its entire fleet of Boeing 737’s. It was a fuel-efficient fleet, and standardized, making the maintenance easier. Low cost fares, frequent and on-time flights, 15-minute gate turnarounds, high aircraft use and point-to-point routes gave them great advantage over their direct competitors (Continental Airlines, American or United Airlines).

SA also chose to fly to secondary airports and not to have connections with other airline companies. With the increasing success of SA, its competitors started to try to replicate SA’s strategy. But the cost structure was not what gave SA the main competitive advantage in the market. The most important attribute was the human capital and the work environment where workers performed their tasks. SA’s Human Resources Department, called “The People Department”, had a huge impact on employees and on their way of working.

“Employees are the Customer” of the Department.

The following statement explains what the company’s philosophy was: “By recognizing that our people are the competitive advantage, we deliver resources and services to prepare our people to be winners, to support the growth and profitability of the company, while preserving the values and special culture of SA”. To provide work quality, employees had to be satisfied and happy with their jobs. Thus, the image and attitude that the crew showed to passengers would be welcomed. They would be more attentive to the passengers’ needs and consequently increasing their confidence to continue to choose SA as their preferred airline.

Consequently, the corporation recorded a low number of complaints showing its notable performance. All employees were aware of their importance within the company to achieve the main objective, which was customer orientation/satisfaction. But they had other functions inside the company. Employees were also called for decision-making process, for the recruitment process, to give opinions about SA’s strategy. As such, not everyone entered SA’s workforce. After a long and complex process of selection and interviews, those chosen had the characteristics that would fit SA’s culture better.

Once inside the company, they turned into company’s real assets, they became part of SA family. It was the main objective for each employee to make SA a successful company over time. Once SA’s success was achieved rapidly, the major competitors implemented the same strategy, adapting it to their business environment. However, they noticed that they did not achieve the outlined goals. The most obvious explanation was the existence of cultural differences within each company. Their employees, the way they were organized and the vision that each one had was also different. Here SA had full advantage.

It was not only the first move advantage in its strategy but also the fact that its employees found themselves working on and to their family. As I believe the main competitive advantage of SA relies on its unique organizational competence, I do not consider any of the above reasons a serious competitive threat for SA. However, SA should not rely on past successes and ignore its competitors. SA should always be looking back to its history and business lessons in order to remain an industry leader through supporting its culture and maintaining the focus on the people, even when and after Kelleher leaves the company.