Case Study on
Southwest Airlines 2002:
An Industry Under Seige
GROUP NO-06
Ritesh Chhadwa – 3
Gopal Kadkade - 12
Dipesh Kotecha - 15
Darshan Kurlawala -16
Jayesh Name - 28
Santosh Vishwakarma - 55
Topics Covered

The Southwest Story
• The Founding Strategy
• Competitive Response
• Southwest’s Takeoff
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Strategy
Leadership, Values, and Culture
Organization
The Impacts of the Events of 9/11
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Immediate Responses
Heightened Security and Regulations
Industry Bailout and Taxation
New Competitive Position
Labour Relations
Short-Term Challenges: Operating Procedures
Long-Term Challenges: Growth Strategies
A Late October Visit to Southwest Airlines
Headquarters
The Southwest Story:

The Founding Strategy
• Founded by Rollin King and
Herb Kelleher in 1967
• Need for low cost airlines
• Comparison to driving a
vehicle over the same
route
• Love Theme
• Point-to-Point service
• Turnaround time
minimized to 15 mins
• Fun during Flights
The MAP
The Southwest Story:

Competitive Response
• Enjoin issuance of Southwest’s
intrastate operating certificate
• Abandon Love Field
• Low-price fare “sales”
• 60-day “half price sale” by Braniff
International
• Chivas Regal’s biggest distributors
The Southwest Story:

Southwest’s Takeoff
• Airline Deregulation Act in 1978
• ”Manage in good times in order to survive in
bad times”
• Acquisitions of Morris Air and Muse Air
• “The Southwest Effect”
• NYSE trading symbol “LUV”
• Replication of service by People Express
• Cultural devotion to the internal resource
Market Share
Strategy:
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Non-adaptation of Hub-and-spoke route system
Point-to-point route system
Turnaround time strategy:
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Absence of meals on flight
Limited amount of checked luggage on aircraft
Near-uniform configuration
Team-oriented Approach
High-speed boarding process
“Hands-off” of flights
Utilization of agents
No fixed assignment of seats
Incentive for an early arrival at
the gate
Last-minute arrivals
Maverick in ticketing processes
Own-ticketing distribution system
“The world’s first frequent-flier program”
Leadership, Values, and Culture:
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Leadership
• Day-to-day operating responsibilities by
Jim Parker (Former VP – General Counsel)
now CEO
 Barrett (Former VP – Customers)
now President and COO
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• Anchoring the leadership team
• Kelleher positioned as Chairman
Public Role
 Responsibilities for growth strategies,
government and airline industry relations
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Hierarchy
Herb Kelleher
Chairman
Ron Ricks
Jim Parker
VP - Governmental Affairs
Vice Chairman & CEO
Colleen Barrett
Keith Taylor
Gary Kelly
President and CEO
VP – Revenue Management
Executive VP - CFO
Jim Wemberly
Pete McGlade
VP - Schedule Planning
Marketing Aspects
of the Schedule
Finance and Fuel Aspects
Executive VP & COO
Donna Conover
Executive VP – Customer Service
Gary Kelly
Executive VP - CFO
Airport Technology
Strategies
Corporate Project
Management Office
Investor Relations
Purchasing
Systems
Leadership, Values, and Culture:

Values and Culture
• “The Basic Principle”
Focus on the situation
 Maintain self-confidence and self-esteem
 Maintain constructive relationships
 Take Initiatives
 Lead by example

• Culture Committee
• Partnering with Unions
• Joint problem Solving
Organization:
Cross-functional decisions
 Operating agents concept
 Group Interviews
 Total Compensation
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The Impacts of the Events of 9/11:

Immediate Responses
• No Lay-offs or Cut-back in flights
• Security Issues
• More customer service agents
• Patriotism and Resiliency
The Impacts of the Events of 9/11:

Heightened Security and Regulation
• Awake of Transportation Security
Administration (TSA)
• Daily call on “Today’s directive” with all
Southwest stations
• Maximum passengers screened
comparatively
• Abandoning of plastic boarding passes
The Impacts of the Events of 9/11:

New Competitive Position
• Increase schedules and employment
post 9/11
• Substantial decline in earnings due to
lower ticket prices, higher costs and
new taxes
The Impacts of the Events of 9/11:

Labor Relations
• Labor contract negotiations
• Superior relations with labour
comparatively
• “We don’t want to be just another
airline”
Short-Term Challenges: Operating Procedures
No change in flight schedule by
Southwest Airlines despite 9/11
 Just doing the best possible job
 Reschedule the airline
 Redesign passenger and baggagehandling process
 Boarding policies
 Abandon open seating
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Long-Term Challenges: Growth Strategies
19 aircraft deferred
 Borrowed Billion dollars
 Developed Contingency plan
 First non-stop transcontinental flight
 No additional catering or on-board
staffing
 Analyst’s observation
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A Late October Visit to
Southwest Airlines Headquarters
Emergency Exercise for crash
management
 Preparations for annual Halloween
celebrations
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Recommendations
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Use its low price tickets to drive its
competitors out of business and take over
their market
Buy more 747 Boeing’s apart from
traditional 737 Airbus for larger capacity
and business-class across regions
Implementations of cost saving technology
such as internet is needed to lower the
operation cost to give customers better
deals
Practice to continue
Thank You!!!