IntroductionThe story of Southwest Airlines is a great one. According to Doolittle (2011), Southwest launched in 1971 flying regionally from Houston to Dallas. To stand out from the crowd, their criteria for flight attendants was beauty and unique personality and then proceeded to attire them in hot pants and go-go boots. In order to save costs on maintenance, all the planes they purchased were 737s in order that they did not need to train their mechanics to maintain more than one model of airplane. They remain a single airplane model company to this day which has saved them quite a bit of money.
When their competitors dropped their prices to an extremely uncompetitive level, Southwest responded by offering frequent flyers a bottle of whisky for each flight they took with Southwest. When other airlines were serving in-flight meals to their passengers, Southwest served peanuts. They were known at the no-frills airline and this saved them a lot of money. The growth of Southwest was facilitated by the fact that they were an interstate airline operating in Texas only. Therefore they were not subject to Civil Aeronautics Board (CAB) authority.
Southwest was able to charge significantly lower fares than the trunk carriers on many routes which meant that demand for their services rose. In spite of charging lower prices, Southwest was profitable on a consistent basis ( Bailey, Graham and Kaplan, 1991). For more than thirty years, Southwest Airlines has been a shining light in the American airline industry, growing non-stop in that time and posting an unprecedented string of profits and fostering an organisational culture that surpassed any in an industry known for its bitter labour relations.
In 2009 however, pressure mounted on Southwest, as it posted a $176 million dollar loss during the second half of 2008, recording its first two loss quarters one after another. This lead to cutbacks on flights and new airplanes after years of solid development. Rising costs had also been recorded as they downsized. Thisreport will discuss the factors that affected their growth in the organization’s external and internal environments. It will also review and analyze Southwest’s environment might affect its management style and make recommendations. To conclude the report will examine how other companies can learn from Southwest’s experience. 1- Analysis and discussion of the most important factors in Southwest airline’s external and internal environmentsA 2009 review done by an captain at Southwest airlines claimed that the company is still an enjoyable place to work but not as enjoyable as it was a decade and a half ago.
The benefits and compensation remain higher than the industry average and employee rapport is good. The atmosphere is considered to be positive. However, the degree of cost cutting is starting to affect operations in the field which was not considered a good trend.
The fact that management brands any employees who point this out as malcontent is considered retrogressive. There seems to be a lack of attention by management to issues cropping up at outstations which is leading to discontent amongst customers. Considering that Southwest is a no-frills airline with no first class or in-house entertainment, management would do well to address this issues (Employee review, 2009). The SWOT Analysis will examine the internal and external environment at Southwest airlines.