Southwest Airlines: Strategic Analysis of Business Development

This report provides an overview of Southwest Airlines' current business strategies. It examines fuel hedging, an employee-driven approach focusing on motivation and ownership, the Rapid Rewards frequent flyer program, a proven business strategy emphasizing stakeholder balance, and streamlining and automation efforts. The analysis highlights how these strategies contribute to maintaining a large customer base, boosting service demand, and achieving growth in a competitive market. The company's commitment to low fares and operational flexibility is also discussed as key factors in attracting and retaining customers. Desklib offers this and other solved assignments to aid students.

South-West Airlines
Current strategy of South West Airlines

South West airlines
 Background of the company
South West Airline is one of the largest low cost carrier airlines and headquarter of the company
is in Dallas, United States. The Slogan of the company is “Low fares, nothing to ride”. South
West Airline was founded on March 15, 1967. There are more than 57,674 employees who are
managing the activities of the company (South west airlines, 2019). In this paper, the discussion
will be made on the current strategies considered by the company to achieve set goals and
objectives in the highly competitive market.
 Fuel Hedging strategy
There are different strategies taken into consideration by the company and one of the strategies
relates with Fuel Hedging strategy and also passenger friendly technology. This strategy is
considered by the company to attain the competitive advantage and also to maintain its market
share. The executives of the South West airlines know that it is not possible to pass the high fuel
prices on the passengers by enhancing the prices of the tickets due to the highly competitive
nature of the industry. The fuel strategy is considered by the company to minimize the amount
spent on the Jet Fuel per annual (Liu and Jones, 2016). This strategy assists the company in
maintaining its growth in relation to the other competitors present in the market.
 Employee driven strategy
The key strategy of the company in order to attain the competitive position is employee driven
strategy. The company focuses on motivating the employees so that they can give their best
towards the assigned work. This is only one of the reason due to which the company run a
program that assist its employees to own its share on the discounts prices such as 85% to 90% of
the workers owns that southwest airline stock and also 12% of the stock is considered by its
employees just because of the discount purchase program offered by the management. The
company focuses also offer incentive policy to the employees that help in boosting their
engagement level towards the work (Rao and David, 2015).
Positive culture is also one of the factors in which the company emphasizes on enhancing
coordination and relations among the employees. South West Airlines maintain direct
communication channel in which the employees can easily share their views and opinions with
the management. This strategy is taken into consideration by the company as it also directly
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impacts the satisfaction level of the customers. If the employees are happy then it would be easy
for them to enhance the satisfaction level of the customers in the competitive market (Atallah,
Hotle and Mumbower, 2018).
 Rapid rewards frequent flyer program
Rapid rewards frequent flyer program is offered to the customers as it is one of the best strategies
on which the management emphasizes the customers towards the services. In this the members
can easily redeem the rewards or the points for the available seats. In this, there is no fee to
change or cancel is taken from the customers and also low fares are provided as it helps to
maintain the large customer base. It has been examined that there are many companies who have
the similar strategy but it is complicated for the customers. But Southwest offers flexibility in the
operations which directly helps to retain the customers towards the services offered by the
company among the different competitors present in the market (Weinstein and Winston, 2016).
Through this strategy, it is seen that the new customers are retained and also the demand of the
services enhances from the existing customers. Southwest company also focuses on thee
maintaining its core competencies by offering services in the low price to the customers. By
offering low prices in the market, it can be seen that it is easy to attract the customers in
comparison to its competitors present in the market. By emphasizing on the Tagline “Low fares,
nothing to ride”, the company maintained its low price as compared to the competitors present in
the market (Taneja, 2017).
 Proven business strategy
Proven business strategy also relates with South west airline in which the company believes in
maintaining the sustainable future. In this strategy, the company emphasizes on maintaining
balance in the business model between the shareholders, employees, customers and also the
stakeholders. In this strategy, the company emphasizes on robust route network in which the
company schedule daily departure on the global platform and also serves more than half of the
top 50 US Metro cities. The main purpose of the strategy is to attract the customers from the
competitors so that it could be easy to boost the demand of the services of the company. This
helps in maintaining growth opportunities on the international platform also. It has been
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observed that this strategy considered by the company helps to foster a creative and innovative
workforce and also maintain the large customer base in the competitive market (Lawton, 2017).
 Streamlining and automation
South West Airline also emphasizes on considering the strategy related to streamlining and
automation in which it has been seen that company focused on cutting the cost and maintaining
the competitive advantage. South west airline expanded its ticket counters and also security
checkpoints so that it could be easy for the customers to avail the services. It can be analyzed
that company also streamline its board process by replacing the traditional plastic boarding
system in relation to the automated one and also they introduce the new self check technology
plan that minimize the boarding times and also reduced the queue in the boarding gates. This
strategy implemented by the company helped to retain the customers towards the services
offered by the company on the global platform (Asahi and Murakami, 2017).
CONCLUSION
It is concluded that these are the current strategies implemented by the company in managing
the overall operations of the company. These strategies assisted the company in maintaining the
large customer base and also help to boost the demand of the services on the global platform It
can be said that the company faces high competition level in the market, so the aim is to compete
with the competitors present in the market. This has helped to achieve success and growth on the
global platform.
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References
Asahi, R. and Murakami, H., 2017. Effects of Southwest Airlines' entry and airport
dominance. Journal of Air Transport Management, 64, pp.86-90.
https://www.sciencedirect.com/science/article/abs/pii/S0969699717302983
Atallah, S., Hotle, S.L. and Mumbower, S., 2018. The evolution of low-cost Carrier operational
strategies pre-and post-recession. Journal of Air Transport Management, 73, pp.87-94.
https://www.sciencedirect.com/science/article/abs/pii/S0969699718301777
Lawton, T.C., 2017. Cleared for take-off: Structure and strategy in the low fare airline business.
Routledge.
https://www.taylorfrancis.com/books/9781351951029
Liu, C.Y.A. and Jones, K.J., 2016. Integrated Risk Management on Fuel Hedging Program: A
Case Study on Southwest and China Eastern Airlines. Academy of Business Research
Journal, 2(7), pp.74.
https://search.proquest.com/openview/888c933940a9ce7cce75369e0c42a075/1?pq-
origsite=gscholar&cbl=2044544
Rao, V.S.P. and David, R., 2015. Employee branding and strategies: A winning combination for
southwest airlines. SMART Journal of Business Management Studies, 11(2), pp.73-81.
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http://www.indianjournals.com/ijor.aspx?target=ijor:sjbms&volume=11&issue=2&article=007
South west airlines, 2019. About us [online]. Available from: https://careers.southwestair.com/
[Accessed on 26 March 2019].
Taneja, N.K., 2017. Driving airline business strategies through emerging technology. Routledge.
https://www.taylorfrancis.com/books/9781351942836
Weinstein, A. and Winston, W., 2016. Defining your market: winning strategies for high-tech,
industrial, and service firms. Routledge.
https://www.taylorfrancis.com/books/9781317957782
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