Driving Forces Of Southwest Airlines, Success Factors Of Southwest Airlines, Challenges For The Company, Resources And Capabilities Of The Company, Classical SWOT Analysis, Strategy Alternatives, Current Strategies Of The Company, Assessment Of The Strategies

The first challenge is that they follow a business model which offers services at the cheapest price.

• Cheapestprice- Southwest airlines has cheaper ticket prices than most airlines in the USA. It is affordable for common people, so it can compete well with the other airline companies.
• Assets- It has grown bigger in size as it has more assets like credit and cash, than the other smaller airline companies.
• Efficient employees- Employees are its biggest and most valuable assets. Well trained people give better productivity to the company. People who have good behaviour with the employees and have deep focus in their work are hired by the company.
• Flexible policies- Its rules and procedures can be easily followed by the customers. Some policies like its ticket cancellation policy, which allows the customer tocancel his/her reservation 10 minutes before the flight takes off. Such policies keep the customers satisfied.
• Rewards- It provides rewards to the customers to enhance their interest. For instance, it issues Southwest credit cards, in association with Chase Bank, which allows the customers to accumulate points if they make any purchases.
• Upgrade of services- It is always open to changes and welcomes any idea for upgrading of services.

• Business model- They are aware of their goal of providing airline services at the cheapest price and have efficiently reinforced it in the market.
• Maximization of flights- Flights are mostly available for customers at all times as it has effectively reduced aircraft turnaround time.
• Uncongested airports- Congestion delays the process of providing service to customers and carrying out daily operations (Herrera Garcia, 2017). Southwest airlines has devised effective ways to remove congestion from airports.
• Workforce- It provides a good work environment and offers a good salary to the employees, which have kept them contented. They also work in a united manner. Working in teams, instead of working individually, increases their efficacy.
• Promotion- Advertising helps to reach out to customers and increase the customer base.

• Their business model and flight maximization.
• Company policies.
• Maintaining assets.
• Promotion and advertising.

The first challenge is that they follow a business model which offers services at the cheapest price. So, they need to provide more attention to satisfy their customers through innovative policies and good services. They should also expand their list of the number of destination countries as well as the number of flights so that they are able to attract more customers and provide satisfactory services.

The second challenge is that they need to have flexible policies and attractive packages as most of their revenue depends upon the passengers. They need to introduce new ideas and innovative policies to attract customers.

The third challenge is their workforce. They need to hire efficient employees and keep them content by providing benefits and rewards so that they do not quit their jobs. Deficiency in the workforce can slow down the process of providing airline services.

The fourth challenge is that they need to maintain their assets as it is necessary for the growth of the company. They must see to this that they do not have to run under debt and can avoid selling their assets.

The fifth challenge is advertising which increases the expenditure of the company.

Resources of a company refers to the financial, technological, social and organizational factors that drive the company. Capabilities refer to the skills of the company to manage its resources effectively.

• Financial- The worth of its assets is $34.6 billion (Salas, 2021), which is one of the factors contributing to its strength. Also being the cheapest airline facility in the US, it has the ability to attract customers even at the time of economic depression. They have reduced their operational cost effectively which allows more scope for profit.
• Technological- They have an easy reservation policy and most of their reservations are done through their website. Customer support is also provided through the official website.
• Social- They have a huge workforce and also provide equal opportunities to each one of them to improve their skills. They also acknowledge their work by giving bonuses and rewards.
• Organizational- They provide good customer service and listen to the complaints from them. They strive to improve themselves by accepting the feedback from the passengers.

According to the table, there are more strengths than weaknesses of the company. Their business model, efficient workforce and financial assets are the main strengths of the company which has led to its success.

SWOT analysis refers to the Strengths, Weaknesses, Opportunities and Threats to the company.

Strengths:

• Affordable flights- Cheap airline service attracts more customers (Ren, 2020).
• Assets- Their assets can empower them to expand their business.
• Good customer service- Maintains cordial relations with the passengers.
• Empowered employees- Skilled employees and high employee satisfaction.
• Promotion- It has increased the customer base.

Weaknesses:

• Lesser number of destination countries (Cote, 2018)- Less attraction of customers.
• Low-cost airline- Depends more on passengers for revenue.

Opportunities:

• Expansion of the number of destinations- It would increase the customer base.
• Increase in air travel- It is predicted to increase (Miminoshvili, 2022).
• Technological advancements- Modern technologies can be implemented to enhance their efficacy.

Threats:

• Fuel price increase- It will increase the service cost of passengers.
• Competition- Many small airlines have grown over the years which can pose a potential threat to the company.
• Heavy regulations- They are bound by regulations of the FederalAviation Administration (FAA).

The strengths may be increased by acquisition of other companies, responding to customer complaints and empowering the employees. The alternatives to weaknesses may be to expand the business to other countries which would in turn increase the customer base and the revenue base should also be increased to make more profit. The alternatives to opportunities may be buying more airplanes and increase its types so that the spare parts are more widely available and government collaborations may help them to get their hands in other countries. The alternatives to threats may be to avoid fuel hedging and providing exciting and attractive packages to the customers.

The current strategies include-

• One aircraft model- They have reduced their maintenance and training costs of employees by investing in one category of aircrafts, Boeing 737 airplanes.
• Point-to-point transit- It follows a single path to reach its destination and never deviates (Fu, 2019).
• Hiring process- They hire skilled and well-trained employees who have experience of teamwork.
• Fuel hedging- This provides long-term benefits to them.
• Differentiation strategy- They maintain cordial relationships with their customers who return again and again to avail their services.

The company’s mission is to provide affordable and reliable airline services and their vision is to become the most efficient, loved and profitable airline service (Southwest Airlines, n.d.). All of the above mentioned strategies have contributed to its success.

The strategies of the company did not fully grasp the chances of opportunities. As the chances of air travel are increasing, they should exploit their assets in buying more aircrafts. They can also increase the list of the number of destination countries to attract more people.

The strategies of efficient hiring and maintaining good customer relations have impacted it massively. People go back to avail their services repeatedly. The point-to-point transit system is also time effective and makes transportation easier.

The company provides low-cost services, hence, to cut down its cost it has adopted the policy of one aircraft model. Their differentiation strategy has made them stand out in the competitive market. As the fuel prices are increasing, fuel hedging may give them long-term benefits. As it depends on passengers for revenue, the time saving strategy of the point-to-point transit system helps them to attract them more.

The strategies have not been implemented in a consistent way as there have been complaints from customers that they have received rough behaviour when they were late. Only a few of the applied candidates get hired by the company each year, so, there are not many opportunities for all.

The company’s cheap services, hiring procedure and point-to-point transit system have sustainable advantages.

The deficiencies in their strategies would be-

• The behaviour with their customers should be more polite so that they do not upset them.
• Their international presence must be increased by increasing the number of destination countries.
• As the covid-19 pandemic had a huge impact, numerous employees have left the company (Koenig, 2022). So, they should make their hiring process less stringent and replenish their staff shortages.

The most critical issues faced by the company and are not addressed well by the company’s strategies are-

• The shortage of employees.
• Increasing the number of airplanes.
• Increasing the number of destination countries.

References

Herrera García, A. (2017). Alternative Solutions to Airport Saturation: Simulation models applied to congested airports. International Transport Forum Discussion Paper. https://www.itf-oecd.org/sites/default/files/docs/alternative-solutions-airport-saturation-simulation-models.pdf

Salas, E. (2021). Southwest Airlines Co.’s total assets from FY 2010 to FY 2020 (in million U.S. dollars). Statista – The Statistics Portal. https://www.statista.com/statistics/419346/total-assets-of-southwest-airlines/#:~:text=Total%20assets%20of%20Southwest%20Airlines%202010%2D2020&text=In%20the%20fiscal%20year%20of,around%2034.6%20billion%20U.S.%20dollars.

southwest.com. Southwest Airlines | Book Flights, Make Reservations & Plan a Trip. https://www.southwest.com/html/about-southwest/careers/culture.html#:~:text=Our%20Purpose%3A%20Connect%20people%20to,efficient%2C%20and%20most%20profitable%20airline

Miminoshvili, A. (2022). Travel’s Theme for 2022? ‘Go Big’. The New York Times. https://www.nytimes.com/2022/02/15/travel/trends-spring-2022.html

Koenig, D. (2022). Incoming CEO at Southwest Air Faces Numerous Challenges. The US News. https://www.usnews.com/news/business/articles/2022-01-10/incoming-ceo-at-southwest-air-faces-numerous-challenges#:~:text=By%20Associated%20Press-,Jan.,2022%2C%20at%2010%3A31%20a.m.&text=DALLAS%20(AP)%20%E2%80%94%20Robert%20Jordan,it%20a%20much%20smaller%20company.

Cote, R. (2018). Leadership Analysis: Southwest Airlines-Herb Kelleher, CEO. Journal of Leadership, Accountability & Ethics, 15(1). https://t.www.na-businesspress.com/JLAE/JLAE15-1/CoteR_15_1.pdf

Fu, X., Jin, H., Liu, S., Oum, T. H., & Yan, J. (2019). Exploring network effects of point-to-point networks: An investigation of the spatial patterns of Southwest Airlines’ network. Transport Policy, 76, 36-45. https://doi.org/10.1016/j.tranpol.2019.01.004

Ren, J. (2020). Fare impacts of Southwest Airlines: A comparison of nonstop and connecting flights. Journal of Air Transport Management, 84, 101771. https://doi.org/10.1016/j.jairtraman.2020.101771