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    Swa Q2 LDP

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    Luca Di Palo
    1. The airline industry is currently not very attractive due to high fixed costs and barriers to entry. 2. Southwest Airlines was able to grow into an industry leader by focusing on short-haul, point-to-point routes; high flight frequencies through quick turnarounds; low fares due to efficiencies; innovating through internet sales and ticketless travel; and building a strong company culture. 3. Southwest was able to attract more customers than competitors by understanding customer needs for short, direct routes; frequent flights from efficient operations; low fares from internal activities; innovating new services; and fostering a positive internal culture.

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    Swa Q2 LDP

    Uploaded by

    Luca Di Palo
    63 views2 pages
    1. The airline industry is currently not very attractive due to high fixed costs and barriers to entry. 2. Southwest Airlines was able to grow into an industry leader by focusing on short-haul, point-to-point routes; high flight frequencies through quick turnarounds; low fares due to efficiencies; innovating through internet sales and ticketless travel; and building a strong company culture. 3. Southwest was able to attract more customers than competitors by understanding customer needs for short, direct routes; frequent flights from efficient operations; low fares from internal activities; innovating new services; and fostering a positive internal culture.

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    1. The airline industry is currently not very attractive due to high fixed costs and barriers to entry. 2. Southwest Airlines was able to grow into an industry leader by focusing on short-haul, point-to-point routes; high flight frequencies through quick turnarounds; low fares due to efficiencies; innovating through internet sales and ticketless travel; and building a strong company culture. 3. Southwest was able to attract more customers than competitors by understanding customer needs for short, direct routes; frequent flights from efficient operations; low fares from internal activities; innovating new services; and fostering a positive internal culture.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    63 views2 pages

    Swa Q2 LDP

    Uploaded by

    Luca Di Palo
    1. The airline industry is currently not very attractive due to high fixed costs and barriers to entry. 2. Southwest Airlines was able to grow into an industry leader by focusing on short-haul, point-to-point routes; high flight frequencies through quick turnarounds; low fares due to efficiencies; innovating through internet sales and ticketless travel; and building a strong company culture. 3. Southwest was able to attract more customers than competitors by understanding customer needs for short, direct routes; frequent flights from efficient operations; low fares from internal activities; innovating new services; and fostering a positive internal culture.

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    of 2

    It is a creative essay (about 1500 words) based on the analysis of the case that formulates vision of the companys

    growth strategy and addresses the following questions: 1. Would you consider the airline industry as attractive to compete in? NOTE: analyze industrys dynamic evolution; apply Porters Five Forces model; explore opportunities and threats for being in the industry. Today? No, the airline industry is not attractive (cost structure 80% fixed cost-, high barriers to enter route, gates, , etc.) 2. Why and how Southwest Airlines was able to grow into the industry leader? NOTE: make five key statements and provide supporting arguments for each statement. Southwest Airlines was able to grow into the industry leader mainly for the following reasons: a) Short-haul and point-to-point routes Southwest airlines reevaluated the traditional model hub-and-spoke used by major players based on a different point of view: the customers one. Indeed, customers prefer a trip point to point, especially on routes below 500 miles. Besides they generally prefer airports near as possible to the center of the destination city. Understanding these elements, Southwest airlines focused its attention on building an offer of domestic short-haul (less than 500 miles), point-to-point flights. b) High frequency flights Southwest airlines increased the number of flights per day through a reduced turnaround time. Indeed the company was able to unload a waiting plane and load it again for the next flight in about 15 minutes, compared with the industry average of 45 minutes. c) Low fares Southwest airlines, leveraging on its operative efficiency, was able to offer lower fares to its customers. The main efficiency drivers were the turnaround time, Southwests limited participation in computerized reservation systems, and essential services on board (e.g. no reserved seating or meals were offered). d) Innovation The company invested in internet channel, understanding before its competitor the value of this new channel for reducing operative cost related to the reservation and to offer a better, faster service to the customers. Indeed, Southwest was the first national carrier to sell seats from an Internet site, and was the first airline to create a home page on the Internet. Southwest was also one of the first airlines to use ticketless travel, first offering the service in 1995. e) Company culture The founder Herb Kelleher built a company employee-centric, where

    the people are still the most important factor to succeed. The company culture supported each employee to be him/herself and with energy, enthusiasm and passion collaborate for doing well his/her task inside Southwest. The spirit of belonging to the company of each employee was one of the success factors of Southwest. In fact, the company invested in training courses, higher salary for pilots, and introducing employee profit sharing. The result was a collaborative relation with labor union and the company protection from crew strikes. 3. Why Southwest Airlines was able to attract customers better than its competitors, in the other words, what made its competitive advantage? NOTE: define up to five attributes of competitive advantage (take customer perspective) and summarize factors that contribute to this advantage (internal activities; value chain). Its similar to the question #2. It requires categorizing the competitive advantages: a) Short haul and Point-to-point routes value chain b) High frequency flights efficiency due to internal activities c) Low fares internal d) Innovation internal e) Company culture internal Other distinctive characteristic was the ability to understand better than the other companies the needs of the customers. 4. How sustainable has been Southwest Airlines competitive advantage? NOTE: explain if it easy to imitate the business model. The distinctive advantages are: brand, routes & gates, company culture, operative efficiency. I think that the business model is easily replicable, especially by a new company starting from scratch (see Jet Blue, while new companies related to established major flight companies failed in imitating the business model).

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