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Southwest Airlines Success: A Case Study Analysis

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 Southwest Airlines Success :
A Case Study Analysis
Dr. Ashutosh Muduli
Ms. Vinita Kaura

ABSTRACT

In this cut throat competitive era service firms may survive with innovative strategies with
reference to people, process and physical evidence that differentiate their services from their
competitors.
The key objective of this paper is to highlight the strategies of Southwest airlines that
facilitated it to produce a successful model in airlines industry that was benchmark for the
entire world. Paper enlightens that if a service firm gives priority to its employees than
customers, it automatically serves customers in better way as services of a company are given
through employees and employees’ delight is customers’ delight in service sector.

Introduction customer’s level of satisfaction, repurchase

The basic concept in marketing is marketing decisions and word of mouth publicity.
mix that is composed of four P’s; product, price, Southwest airlines is the best example for
place and promotion. Key strategic decisions explaining the importance of people, process
related to these four P’s determine success of any and physical evidence in the success of service
firm. However, strategies for the four P’s require firm. Southwest model made it seventh largest
some modifications when it is applied to US airline by 1993. It created a winning model
services. Because services are usually produced for profits in Airline industry. According to
and consumed simultaneously, customers are Money magazine, Southwest’s stock
present in service firm and are actually part of performance was the best performance in the
service production process. Also, because Standard and Poor’s 500 during that time.
services are intangible, customers seek any
This paper presents its strategies with respect to
tangible indication to help them understand the
people, process and physical evidence that
nature of service experience. Acknowledgement
helped it to achieve this marvelous success.
of the importance of these additional
communication variables has led services
marketers to adopt the concept of an expanded
marketing mix for services. In addition to the
traditional four P’s, the services marketing mix Model of Southwest airlines :
includes people, process and physical evidence. Southwest airlines was founded in 1967 by Rolling
King and Herb Kelleher. It started its operation in
These new elements (people, process and 1971 covering intrastate Texas cities, Dallas, Houston
physical evidence) may decide the success and and San Antonio.
failure of any service firm because any or all of The airline’s new president, Lamar Muse, adopted the
them may influence the customer’s initial “love” theme for attracting the attention of passengers
decision to purchase a service, as well as the as it was based at Love Field in Dallas. For executing
the “love” theme, lots of efforts were made. Drinks

© BVIMR Management Egde, Vol. 4, No. 2 (2011) PP 115-118 115

served on board were called “love options”, ticket required announcements to the passengers. Some
machines were called “love machines”, and cabin employees sang the messages, others delivered them in
hostesses were sexy and had seductive voices. dialect (such as an Arnold Schwarzenegger-like “you
Their low cost fares were below than the cost of driving vill sit back. You vill relax. You vill enjoy this flight.
a vehicle over the same route. Southwest’s policy of Hasta la vista, baby”) or in Donald Duck-speak.
pricing its service was to compete with auto travel. Company’s main event of the year was the annual
After its inception, it achieved break even in two years. awards banquet, for which employees from all over the
Baniff international, one of the Southwest’s principal system were brought to Dallas and honored for their
competitors initiated a 60-day “half-price sale” of length of service.
tickets between Dallas and Houston, offering tickets at In addition, the culture committee sponsored a hero of
$13(below than cost) as opposed to Southwest’s $26 the heart celebration at headquarters on February 14
fare. Southwest’s counter strategy was an ad each year. Awards were made to groups nominated by
proclaiming that “nobody is going to shoot Southwest others in the organization that had gone “above and
out of the sky for a lousy $13”. They offered an beyond” to deliver Southwest service.
unusual alternative to customers that they could ask to
pay either $26 or $13 for exactly the same seats on Joint problem solving was the culture of Southwest
Southwest flights. Customers who were purchasing airlines. Southwest engaged in joint problem- solving
$26 tickets were rewarded with gifts such as ice buckets exercises with those supplying everything from fuel to
or fifths of whisky. This strategy worked and 80% of peanuts served on planes. Team work was the spirit of
customers requested for $26 tickets. this organization. Works were assigned in groups.
Failure to do so according to schedule resulted in a
In 1993, southwest acquired Morris Air, hence “team late”. Rather than assessing individual
increased number of operating stations. responsibility, teams were then tasked to figure out
Southwest’s strategy was to limit the markets served how to avoid problem in the future.
and provide high frequency departures each day to a
given destination. The intensity of this schedule Pilots sometimes handled baggage or helped cabin
reduced the consequences of a missed flight and attendants in picking up the cabin while gate
enabled Southwest to retain tardy passengers. attendants might be seen putting provisions on board
Southwest’s strategy, “fly eight flights, get one free” was for the departing flight. The main spirit was to do
the simplest in the industry. everything that was required to complete a task rather
than having mentality that it is not my job. Southwest
People : Airlines looks for the people who can think in terms of
we rather than me. One way the company assesses
All human actors who play a part in service delivery
these service inclinations is by interviewing potential
and thus influence the buyer’s perceptions: namely,
the firm’s personnel, the customer and other in the flight attendants in groups to see how they interact
service environment. with each other. Pilots are also interviewed in groups to
flexibility at work place, recognition and appreciation assess their teamwork skills, a critical factor above and
for outstanding performance as well as for the length beyond the essential technical skills they are required
of service, group decision making, team building to possess.
approach, training, profit sharing, stress on positive Throughout the organization, stress was placed on the
attitude rather than skill, taking home satisfaction value of “family” in the organization.
than salary, low labour turnover and involving
All ground operations employees had one to two weeks
customers in process were some of the attributes that
of technical orientation at individual stations before
helped Southwest airlines to achieve success.
going to class in Dallas for a week to study everything
Employees : In Southwest airlines, employees were from the use of the company systems to the
given the latitude to do whatever is necessary to get a organization’s values. Southwest’s employees’ total
plane turned around in the targeted time of 15 compensation was roughly equivalent to other airlines
minutes. There was emphasis on fun for employees but productivity of Southwest employees was more
and travelers. Ground and In-flight employees were and it led to decreasing cost of Southwest airlines.
encouraged to be creative in the way they delivered After completion of six months probation period, all

116 © BVIMR Management Egde, Vol. 4, No. 2 (2011) PP 115-118

employees became members of Southwest’s profit- Process :
sharing plan. The environment in which the service is delivered
Southwest operated on some basic principles; focus on and where the firm and customer interact, and any
the situation, issue or behavior, not on the person, intangible components that facilitate performance or
maintain the self-confidence and self-esteem of others communication of the service.
maintain constructive relationship with your Frequent trips, direct flights rather than Hub and
employees, peers and managers, take initiative to make Spoke system, not assigning any seat to passengers,
things better and led by examples. family work culture, flying only Boeing 737 jets,
choosing un-congested airports, selling tickets
One of the Southwest employee stated that most
through internet made the process quick, efficient and
enjoyable thing about his job is coming to job
convenient for customers.
everyday.
Southwest’s frequent departures provided opportunity
A quote from Southwest’s president, Herb to frequent business flyers to catch a later flight if they
Kelleher,illustrates the importance of selection of right missed one. It used direct flights rather than Hub and
person. “ the People Department (name given to Spoke system. It indicates user-friendly process.
Human resource Department by Southwest) went to
Herb Kelleher, one day and said, ‘We have interviewed It didn’t assign any seats to passengers. It issued
34 people for this ramp agent’s position, and we are colorful reusable plastic cards numbered 1 to 30.
getting a little worried about the time and effort and Passenger who came first could take seat of his choice,
cost that is going into it’. And he said if you have to thus provided an incentive to early arrivals. This
interview 154 people to get the right person, do it.” process of assigning seats eliminated the time-
Southwest’s management used to host “best practice” consuming reconciliation of the double assignment of
teams from all industries that wanted to discuss hiring, seats on full flights and allowed Southwest agents to
training, and employee- relations practices. After some keep the plane doors open for last minute arrivals at
time it discontinued this practice as it was devoting too the gate. The airline didn’t transfer baggage to
much time, energy, attention and resources educating connecting flights on other airlines and didn’t provide
the outside world. So, he thought to devote that time, food in flight.
energy, attention and resources internally on In all, the process was very efficient, standardized and
enhancing and enriching their own culture low-cost, allowing for quick turnaround and low fares.
Customers : On early flights, passengers who could Customers were part of process and taking their roles
produce the largest holes in their socks were willingly. For distribution of tickets, earlier
recognized and rewarded. In-Flight contests were commission was given to travel agents but later it
conducted to see how many passengers could be fitted implemented “ticketless” (paperless) travel program
into the bathroom at one time. Holidays were and later the development of Southwest.com as a
celebrated with costumes and giveaways. means of using the internet to sell travel directly to
customers. It lowered down distribution cost.
The interview team often included frequent-flier
customers as well, particularly when customer-contact Southwest’s turnaround time had grown to an average
were being selected. When a frequent flier was asked of 24 minutes, a figure that was expected to be atleast
that why will he take off time from his organization to 30 minutes. It was a benchmark for entire airline
spend time hiring Southwest employees, he replied, “I industry. For this success, the factors that were
responsible, were; an absence of meals on all
might learn something and have a little fun doing it.
Southwest flights, a limited amount of checked
And besides, it’s my airline.”
luggage on Southwest’s typically 60- to 90- minutes
Southwest airline was dependent on customers to flights, a near-uniform configuration for all of its 737
perform critical service roles for themselves, thus aircraft, a team-oriented approach to ground services
increasing the overall productivity of the airline. with team measures for turning around planes and
Passengers are asked to carry their own bags when employees freedom to do whatever necessary to get a
transferring to other airlines, get their own food and plane pushed off on time and a high speed boarding
seat themselves. process.

© BVIMR Management Egde, Vol. 4, No. 2 (2011) PP 115-118 117

Physical evidence : perishable. These unique characteristics impose
The actual procedures, mechanisms and flow of challenges for service firms to overcome. There are
activities by which the service is delivered- the service different strategies to beat these characteristics.
delivery and operating systems. Services are variable by nature as different people of
Southwest worked more on low cost model, fast same designation deliver services of different types and
process and people than physical evidence but still same person provide different types of services at
physical evidence attracts attention of people. different times. This problem can be overcome by
training of employees and customers. Inseparability of
Southwest’s aircraft are orange and mustard brown and
production and consumption makes consumer part of
accentuates their uniqueness and low-cost orientation.
service process so their active participation, employees’
The walls of the three-story building were covered enthusiasm, easy techniques make effective and
with literally thousands of framed photos and awards, efficient process.
many of them showing southwest employees in their
party cloths ranging from black tie and formals to Providing physical evidence through website, brand
jeans. Others portrayed employees engaged in name, colour, logo, uniform etc help a service firm to
community activities together in their free time, often overcome the problem of intangibility. It is evident
at Ronald McDonald houses for children across the from analysis of Southwest airlines that effective
country. Some of the framed photos included strategies related to people, process and physical
Kelleher, one of the founders, who had gained fame for evidence help a company to overcome some of its
his unorthodox but effective style of leadership. characteristics and thus achieving success.
Employees dressed casual as well as formal, wearing
shorts in the summer showed fun as well as employee References
comfort. The reusable plastic cards also provided 1. James L. Heskett, 2002 Southwest Airlines: An
physical evidence that signals low cost and no frills to Industry Under Siege
customers. Southwest’s website also provides
tangibility to its services. 2. Zeithaml A. Valarie, Bitner Jo Mary, Services
Mrketing: Integrating Customer Focus Across
The Firm, Tata Mc Graw Hill, Third edition
Conclusion
Services are variable, inseparable, intangible and 3. www.southwest.com

118 © BVIMR Management Egde, Vol. 4, No. 2 (2011) PP 115-118

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