Strategic Advantage of Southwest Airlines: A Case Study

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Question 1. What is the strategic advantage that Southwest Airlines has and how is
strategy execution supported?
Answer 1. Southwest Airlines has become a successful airline, were most Airlines have been
struggling to attain the status of Southwest. The company has always being able to
maintained their quality, whether there was the problem of fluctuation in demand was
experienced by them or the company faces the problem of rising oil prices. The strategic
approach of the company always provided them to take an edge over their competitors.
Southwest Airlines main corporate strategy is that they are dedicated towards the highest
quality of Customer service that is delivered with a sense of Company spirit, individual pride,
friendliness and warmth. The company is following there these strategies for the past 30
years. This corporate strategy helps the company in maintaining its commitment to
customers. In addition, the company has maintained their lower cost structure for the
domestic airlines that helps the company in maintaining customer’s loyalty and it also
increases the revenue of the company by attracting more customers (Muduli and Kaura,
2011). The customer satisfaction is shown in the accolades that Southwest has received.
The business strategy of the company is very clear they always give preference to the
employees and the employees of the Southwest are the highest paid employees in the industry
and this is the result of cost reduction across the entire system. Due to the business strategy,
the employees of the company contain high energy for work, maintain a friendly environment
and the attrition rate is extremely low (Raynor, 2011).
To get success in every aspect of the business model is the basic requirement of every
company but Southwest provide their focus more on the hiring right people and company’s
this approach provide it a competitive advantage. Southwest has pride in itself that they are
the world’s one and only people-oriented airlines that operate with an approachable and
friendly team members and employees (Bettencourt, Lusch and Vargo, 2014).
One more strategy that is helping the company in getting an advantage over their competitors
is its flexible policies. The company always wants that their customers have an enjoyable
experience and for that, the company has developed various procedures and policies that
make the fly with the company easy for customers. With the easy and flexible policies, the
customers of the company always remain satisfied with their travelling experiences. Policies
also help the company in building brand value and creating brand loyalty.
Southwest has one of the most better reward systems in the whole Airlines Industry. The
reward system motivates the employees to provide great customer service to the customers
who are travelling with them. In the reward system, the company also provide an offer to
their customers such as the company offer a low fare price.
The main strategy the company follows is that they always look forward to making new and
innovative improvement in the Airlines. The company has a record of accomplishment of
being a company who always thinking forward to boost the business.
Question 2. What factors make Southwest Airlines different than other airlines?
Answer 2. Many factors make Southwest Airlines different from other airline some of them
are- Southwest has become one of the largest airlines company in the U.S in terms of
increased number of passengers. The company has not devoted from their initial focus from
low fares, high-frequency flights, a fleet consisting only of Boeing 737s, point to point flights
and primary short haul. In comparison to the other airlines, the company uses ‘no frills’

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method of service. No frills means the company do not reserve seats or offer meals on
priority bases the seats and meals are based on first come first served bases. Unlike other
major carriers, the company rarely provide a facility of a hotel room or long distance
telephone calls to delayed customers. The company has limited participation in the
computerised reservation system, that why they preferred to have travel agents and
reservation centres (Shekari and Nikooparvar, 2012). The company always put their focus on
maintaining labour relation, the pilots of the company do not belong to the Airline Pilots
Association they have their individual union, 87% of the employees were unionized.
Southwest is the first airline that introduced the concept of employee’s profit sharing.
In 2011, the company has acquired AirTran Airways to expand their business worldwide.
This step of the company proves that the company is always ready with their future plans and
they are aware of the facts what is going to happen and with that how the company is going
to deal.
The main factor Southwest has that other airlines did not have is their single fleet strategy.
Single fleet strategy means Southwest did not pursue a multiple fleet strategy like other
airlines they have developed their concentration on only one kind of aircraft. The single fleet
strategy allows a company in reducing their operating cost by reducing maintenance and
service cost.
Another factor that makes Southwest different from other companies is the company from the
beginning has used point to point service business model as opposed to the hub and spoke
model. All the other companies in the industry use the hub and spoke model, on the other
hand, the only company uses the point to point business model is Southwest. The point to
point business model allows the company to offer more direct and non-stop flights at very
less fares.
The company did not charge any kind of additional charges from the customers for the
additional services the company provide such as meals, seat selection, change in flight
reservation baggage, clearance etc. These charges are levied by other airlines but Southwest
did not want to trouble their customers by putting additional bundle of charges.
Question 3. What role do culture and leadership play in their success?
Answer 3. It is well known that the airline's industry is a very tough place to make money, as
there are so many competitors, high capital intensity, price sensitive customer power full
suppliers and bust and boom cyclicality. To face all these challenges, to bring the business
forward, and to earn a maximum profit by keeping the employees satisfied the good leader
and his good leadership is very much required (Choi, Lee and Olson, 2015). For that, the
company has Herd Kelleher. From 1981 to 2001 Herd Kelleher was appointed as a CEO of
the company in 2001 he resigned from the post and till 2008 he holds the position of the
Chairman. He was a great leader and an important part of the company. The leadership style
adopted by Herd Kelleher is the combination of fun, unique perspective, and flamboyance
and it is fresh (Diaconu, 2012). Herd Kelleher leadership led the company to consistently
new standards for itself and for the industry. Among employees, he has generated an intense
loyalty. He is a person who binds the whole organisation as a family. He after being a
CEO/chairman of the company knows the name of each and every employee of the company.
This gesture of Herd Kelleher makes them feel that they are important of Southwest. He is
the person who has believed and maintains the bond of loyalty between company and
employees.