Southwest Airlines (SWA) - case study.

Southwest Airlines: How one Airline Positions Itself in a Competitive Market

BUS105–57 Individual Project 4

(Researched and written by Vaughn Davis)

Introduction

Southwest Airlines (SWA) was started in Texas more than 32 years ago by Rollin King and Herb Kelleher. The small airline started out with only three planes that serviced in Texas only. Now the once small airline has grown to become one of the largest airlines in America. SWA has 400 of the newest jets in the nation and flies more than 65 million passengers a year to 59 cities (60 airports) all across the country. In 2003 they had more than 34,000 employees and served more than 65 million customers.

1. How does Southwest position itself as a “different” kind of airline? How does not assigning seats contribute to the Southwest difference?

When Southwest was started, Rollin King and Herb Kelleher came together and decided their airline would be a different kind of airline. Together they agreed on one simple notion: If you get the passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. Obviously this notion was right on point. Their average passenger airfare is $89.28, and the average passenger trip is about 737 miles. During 2003 The Wall Street Journal reported that SWA was ranked first for the highest customer service satisfaction according to a survey by the American Customer Service Satisfaction Index. Another difference that sets Southwest apart from other airlines is their open-seating policy. SWA does not assign seats for its flights, they only assign boarding groups. This allows faster flight departures and arrivals. Therefore the airline can have their planes fly more routes each day. This difference leads to more revenue, which in turn allows them to offer lower airfare.

2. How has Southwest used the word "love" as a promotional tool? What does the word "love" have to do with the history of the airline?

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2. How has Southwest used the word "love" as a promotional tool? What does the word "love" have to do with the history of the airline?

When Southwest was started in 1971, they had no money for advertising, so they created a personality that would make them unique in the airline industry. Their first logo was a heart and their flight attendants wore bright red-orange hot pants with laced-up go-go boots and served “Love Bites” (peanuts) and “Love Potions” (drinks). Customers purchased their tickets from the “Love Machine”. SWA’s fleet of 737 planes was referred to as the “Love Jets”. As a result of all the love, in 1977 their symbol on the New York Exchange became LUV. Once they had the money to advertise, their first ads, in which the word “love” appeared up to 18 times, announced, "There is someone up there who loves you”. More than 32 years later the LUV is still flourishing at Southwest Airlines and has become one of their core values. They succeed by treating not only their customers, but their employees as well with love and respect. In fact, the love doesn’t stop there; approximately 2,000 Southwest employees have spouses who also work for the company. Last but not least, the home base of Southwest is, of course, Love Field in Texas.

3. What does Southwest mean when it promotes itself as a "triple crown winner?" How has Southwest used its awards to advertise itself as different from other airlines?

In 1988 SWA was the first airline to win the coveted Triple Crown for a month for Best On-time Record, Best Baggage Handling, and Fewest Customer Complaints. Since then, they have won the award more than thirty times. Later in 1992 SWA won the first annual Triple Crown for five consecutive years – an accomplishment that no other airline has been able to compete with in a single month. They have lead and contributed more to the advancement of the commercial airline industry than any other airline company. Southwest was the first airline with a frequent flyer program; giving credit for the number of trips taken, not the number of miles flown. They also established senior discounts, Fun Packs, Fun Fares, a same-day air freight delivery service, ticketless travel, and many other unique programs.

4. What innovations has Southwest come up with that have both made the airline stand out among its competitors and contributed to the advancement of the commercial airline industry?

Southwest Airlines Technology Department employs more than 800 individuals specifically for the advancement of the company and the commercial airline industry. Five employees came together for a nine month project to create . In 1996 SWA was the first airline to establish a home page on the Internet. For the first quarter of 2004 alone, online booking produced 57 percent of SWA’s passenger revenue. Now is the number one airline website for sales and revenue and there are more than 60 fulltime employees on the airline's interactive marketing team, with about half of them working on the software development team.

During 2002 Southwest began to gradually do away with reusable plastic boarding cards and start implementing the Automated Boarding Pass. This gave customers the “Freedom of Choice” to obtain their Boarding Passes at the curb, ticket counter, gate, or self-service kiosk. These changes have minimized lines at the ticket counters and gates and also allowed Customer Service agents to attend to those customers who have questions or special needs. The Automated Boarding Pass also eliminated the need to stand in a second line at the gate after customers checked their bags at the curb or ticket counter, and improved Southwest’s ability to comply with important government security mandates.

Even with SWA’s website, frequent flyer program, ticketless travel, and various other programs, Southwest’s Technology Department continue to work behind the scene towards maintaining a positive experience for their customers. Their tireless effort and dedication to the customer is the reason why they stand out among their competitors. An excellent example set to be followed by all airlines across the nation.

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