Southwest Airlines Co. is a major U.S. airline and the world's largest low-cost carrier, headquartered in Dallas, Texas. It was established in 1967 that operates Southwest Airlines and AirTran Airways to fly among three major Texas cities – Dallas, Houston and San Antonio. It is the biggest operator of the Boeing 737 in the world. Flight distances ranged from 190 to 250 miles and flight time were about 45 minutes. Today Southwest operates nearly 400 Boeing 737 aircraft to 59 U.S. cities. LUV is Southwest’s NYSE symbol, selected to represent the company’s home at Dallas Love Field, as well as the theme of Southwest’s employee and customer relationships. Southwest principally provides point-to-point, rather than hub-and-spoke, service. And AirTran principally provides hub-and-spoke, rather than point-to-point, service. Southwest’s point-to-point service has enabled it to provide its markets with frequent flights. In 2012, approximately 72% of Southwest’s customers flew non-stop, and Southwest’s average aircraft trip stage length was 678 miles with an average duration of approximately 1.9 hours. Southwest Airlines succeeded in defining a very simple and clear key business purpose, which is “the only short haul, low fare, high frequency, point-to-point carrier in America” that leaves very little room for interpretation. The most powerful strategy that Southwest Airlines adopted to be successful is not just the very clear definition but certainly also what the company and its leaders do with it. Their simple but effective key business purpose is the main guiding principle for Southwest Airlines’ strategic goals, business strategy, organizational infrastructure, and their company culture. The mission of Southwest Airlines
The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.
Figure: Southwest Airlines top-line revenue growth from Year 2007 - Year 2012 The figure above shows Southwest Airlines’ 6 years top-line revenue from year 2007 to year 2012. In the fiscal year 2007, its total revenue was $12,200 million. Slowly its revenue increased every year and reached to $17,100 in the fiscal year 2012. According to Aviation Analysis, in the late December 2012, Southwest laid out three major revenue-generating initiatives it plans to execute during 2013 that will contribute roughly USD 300 million to the USD 1.1 billion increase in revenues the carrier is planning to deliver this year, which would result in total top-line revenues in 2013 of more than USD 18 billion. Each of the three initiatives should produce USD 100 million of incremental revenue during 2013. What is the key problem? (Customer dissatisfaction)
Frequent flight delays and worst on-time rates:
According to data deported to the Department of Transportation, Southwest has been placed at the bottom of the monthly on-time statistics. Recently, Dallas-based Southwest has had the worst on-time rates in America which was a shocking turn for an airline that once topped the industry in punctuality year after year. According to the most recent DOT statistics, at Midway, where Southwest has more departures than any other airport, the airline’s on-time rate this year has been a chaos, with an average of only two of three flights departing on time. Such airline’s records of flight delays have a negative impact on passenger demand. Some of the passengers have switched to other airlines and some have cancelled their ticket. This led to decrease in sales.
Price fluctuation which led to financial condition deterioration:
Southwest Airlines have adopted varieties of publicity stunts regarding pricing offers which put customers in confusion. The prices of the ticket changed every week Customers who book tickets online a month ago or two will be dissatisfied if the prices fall in the last minute because of the scheme. This may...
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