The timing of these postings are made at the discretion of Southwest Airlines.
Technology Operational Costs and Efficiency After all, the airline industry overall is in shambles. But, how does Southwest Airlines stay profitable?
Southwest Airlines corporate level strategy has the lowest costs and strongest balance sheet in its industry, according to its chairman Kelleher. Some other ways that Southwest is able to keep their operational costs low is — flying point-to-point routes, choosing secondary smaller airports, carrying consistent aircrafts, maintaining high aircraft utilization, encouraging e-ticketing etc.
Perhaps the most critical element of the successful low-fare airline business model is achieving significantly higher labor productivity. The low-fare carrier labor advantage is in much more flexible work rules that allow cross-utilization of virtually all employees except where disallowed by licensing and safety standards.
Such cross-utilization and a long-standing culture of cooperation among labor groups translate into lower unit labor costs. Carriers like Southwest have a tremendous cost advantage over network airlines simply because their workforce generates more output per employee.
Therefore by its relentless pursuit for lowest labor costs, Southwest is able to positively impact its bottom line revenues.
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.
It became hard to pass higher fuel costs on to passengers by raising ticket prices due to the highly competitive nature of the industry. Southwest has been able to successfully implement its fuel hedging strategy to save on fuel expenses in a big way and has the largest hedging position among other carriers.
During Fiscal yearSouthwest had much lower fuel expense 0.
The state of the industry also suggests that airlines that are hedged have a competitive advantage over the non-hedging airlines. Point-to-Point Service Southwest operates its flight point-to-point service to maximize its operational efficiency and stay cost-effective.
Most of its flights are short hauls averaging about miles. It uses the strategy to keep its flights in the air more often and therefore achieve better capacity utilization. It has led the industry in on-time performance.
Southwest has also been able to trim down its airport operations costs relatively better than its rival airlines. Its fleet consists exclusively of Boeing jets. Having common fleet significantly simplifies scheduling, operations and flight maintenance.
Purchasing, provisioning, and other operations are also vastly simplified, thereby lowering costs. Consistent aircrafts also enables Southwest to utilize its pilot crew more efficiently. E-Ticketing The idea of ticketless travel was a major advantage to Southwest because it could lower its distribution costs.
Customers who use credit cards are eligible for online transactions, and today Southwest.
Employee and Labor Relations 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.
Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.Affordable Business Travel Services - Southwest Airlines.
Skip top navigation. Español. Our strategy has our Customers in mind – giving you the options that make sense for your travel needs, while allowing Southwest to manage distribution effectively.
This enables us to continue delivering on the low cost, high Customer Service travel. Nov 21, · Southwest has become one of the biggest airlines and is turning 40 next year, but it is clinging to a corporate culture of Halloween parties and .
Proven Business Strategy Southwest believes in a sustainable future where there will be a balance in our business model between Shareholders, Employees, Customers, and other Stakeholders. Southwest Airlines is a fine example of a company that is committed to its core competencies – efficient operations to drive its low cost structure, outstanding delivery of customer service and innovative HR management practices.
American Airlines is pouring resources into its sales efforts this year, including a significant buildup of its sales team under SVP of global sales Alison Taylor, as the carrier seeks to reclaim corporate .
Business-Level and Corporate-Level Strategies Business-Level and Corporate-Level Strategies Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice.
Justify your opinion.