...order for it to last forever. While some may disagree that “LUV” can’t last forever, when it comes to relationships, the “LUV” that is in question is Southwest Airlines. What once was a small commuter air service, has now grown to be one of the largest and most successful major airline companies in the United States. So how did Southwest Airlines become so successful? It all began with the founders Rollin King, an entrepreneur, and Herb Kelleher, an attorney, who demonstrated strategic leadership from the beginning. The strategic leadership began when the these two gentlemen saw an opportunity that would be beneficial due to the inconvenience and expense of ground travel by either bus, train, or automobile between three major cities, which were Houston, Dallas, and San Antonio. Due to this, the establishment of Southwest Airlines came into existence by providing point-to-point short haul flights to less popular and less congested airports. Shortly after its establishment, like any other new businesses, Southwest faced many barriers in the beginning phases, which pertained to safety issues, inspections, and flight operations, which Southwest was able to overcome due to Herb Kelleher’s legal experience. After overcoming the barriers, the strategic leadership continued with the incessant building of the organization. Southwest Airlines’ organization is like an upside-down pyramid where upper management is on the bottom and the employees, who are the experts, are at the top...
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...industry and how these trends might impact a company’s strategy. The airline industry exists in a competitive market. In recent years there have been more lows than highs due to the economy, oil prices, post 9/11, and mergers. The terrorist attacks on September 11, 2001 led to a decrease in passenger traffic, bankruptcy, and lay-offs, which resulted in a major decrease in production, and a rise in labor costs. Prior to September 11, many airlines were already in bad shape, and were in the process of restructuring. Layoffs loomed on the horizon and on September 15, Continental announced it would cut 12,000 jobs. United and American followed with 20,000, Northwest 10,000, U.S. Airway, 11,000, and Delta 13,000. (Ward, 2002) Jet Blue and Southwest airlines were the only airlines that refused to cut jobs. “Before 9/11, the airline industry as a whole earned a profit five straight years from 1996 to 2000.” (Ackman, 2004) Things are starting to look up for the industry with airlines reporting their biggest earnings in a decade. (Martin, 2011) In 2008, crude oil prices rose to a record $140.00 dollars per barrel. (Thompson, Strickland, & Gamble page C-68) This caused many airlines to offset higher fuel costs by charging consumers additional fees. These fees included fuel surcharges, charging for first checked bag, and charging for pillows, blankets, and headsets. Airlines also cut costs by lowering wages, grounding aircraft, and doing away with meals during inflight service....
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...AN ANALYSIS OF BUDGET AIRLINE- ‘RYANAIR’ Module Name: Management and Strategy (MBA INTERNATIONAL) Module Reader: Claire Devlin Student Name: Varghese Jacob Student Number: 8202730 Date: 16/03/2007 Introduction Air line Industry can be called as one of the biggest industry in the world. In that huge industry European Airline industries part is very high. European Airline industry consists of two sectors mainly Main stream and Budget Airlines. The budget airline sector is becoming a great threat to the main stream airlines in these days. Among the Budget Sector Airlines Ryanair is the most established one. Here the essay is mainly dealing with the reviewing of the management strategy of the budget airline giant RYANAIR. Essay includes not only the management strategies but also the main problems that Ryanair have to face in their entire business period. And also includes the analyses of European Airline Industry in relation to Ryanair. ANALYSIS OF EUROPEAN AIRLINE INDUSTRY European Airline industry can be called as the world’s biggest airline industry. Europe’s main stream airlines industry includes British airways, Lufthansa, Scandinavian Airlines and BMI. Before the establishment of the budget airlines they were the kings of European airline industry. The Budget Airline or the Low frae airline includes Easyjet, Virgin Express, Aer Lingus, bimbay My TravelLite and last but not the least Ryanair. Among these...
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...JetBlue Airways Air travel is a large and expanding industry. It facilitates economic growth, world trade, international investment, tourism, and is critical to globalization. Over the past ten years, air travel has grown by approximately seven percent per year. However, the airline industry suffered its largest downturn between 2008 and 2009, due to the economic downturn. Airlines carried 767,627,651 passengers in 2009, down from 809,447,811 passengers in 2008. Airlines have been forced to accommodate the economic recession by cutting flights, rescheduling existing routes, and looking for new revenue streams. As the economic recession revives itself, the demand for flights has begun to increase with 787,182,312 passengers flying in 2010; a significant upturn from the previous couple of years. Business travel has grown as companies increase their international presence in terms of their investments, supply and production chains and their customers. The rapid growth of global trade markets in goods and services and international investment have all contributed to growth in business travel. The domestic travel industry in the United States is typically a low cost, low fare environment. Most of the major airlines have undergone cost restructuring. Some airlines have sought the protection of Chapter 11 bankruptcy to restructure and reduce costs and then emerged as strong low-cost competitors. The majority have entered into cross-border alliances to improve profitability...
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...1. Is there anything that you find particularly impressive about Southwest Airlines? There are several things that I like about Southwest Airlines The first is its large fleet of 527 aircraft, all of which are Boeing 737. In addition, I like the implementation of the strategy of the low cost airlines. The company has been able to understand the cost structure in the Airlines industry, has been able to understand customer needs, and has been able to deliver a remarkable value based product to its customers. I have been impressed by the manner in which the Airlines has been able to implement the low cost model of airlines. Southwest Airlines has also shown flexibility in addressing the needs of its customers. It has now decided to go in for 737-800 because they would improve scheduling. Southwest Airlines has been successful because it has eliminated services that were not valued by the customers and instead provided customers with a relatively lower cost option. 2. What grade would you give Southwest management for the job it has done in crafting the company's strategy? What is it that you like or dislike about the strategy? Does Southwest have a winning strategy? Southwest Airlines management deserves to be given an A grade for developing a winning strategy. Southwest Airlines strategy begins with its HR strategy of recruiting personnel that are high quality, are trained well and their performance is well managed. In addition, the strategy focuses on improving high level of employee...
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...market share and even more to increase their share. Southwest Airlines has become the market share leader in terms of passengers carried with the simple strategy: “low-cost/low-price/no-frills.” They have done an excellent job in implementing and executing their strategy elements. Some of the most crucial executions in the Southwest strategy are their point-to-point scheduling of flights, customer service and customer satisfaction, and appreciation of employee involvement for continuous company improvement. Although many other airlines can implement the same strategic elements as Southwest has, they would still be behind the times since Southwest has been working efficiently from inception. Throughout this analysis of their performance, one may conform his or her own opinion on how to grade Southwest with the information provided. Alternative strategic suggestions will be evaluated with a preferred alternative choice that could improve the Southwest image and performance. Situation Analysis General Environmental Analysis Until the Airline Deregulation Act of 1978, the government had control over airline fares, routes, and market entry. But since Southwest's initial plan was to fly only intrastate routes, they did not have to come under the regulation of the Civil Aeronautics Board. Southwest did, however, encounter some legal and regulatory issues within Texas asserted by competitors in Texas. Southwest endeavored a four year long legal fight to enter the airline...
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...Defining the Task: The APPLE analysis is an analytical tool used to breakdown a company’s areas of operation, profile of present strategic posture, performance summary, leadership and governance approaches and any essential challenges that the company may encounter. Complexities into the following categories can be referenced in the Appendix A. JetBlue Airways Corporation, which may also be referred to as JetBlue or JBLU by its ticker name. JetBlue is a passenger airline that provides customers with high-class amenities at a relatively low-cost. I. Areas of Operation A. Segment Assessments JetBlue operates through two segments: passenger and in-flight entertainment. (JetBlue Airways is a passenger airline. Co. operates primarily on point-to-point routes with its fleet of 120 Airbus A320 aircraft and 49 EMBRAER 190 aircraft. As of Dec 31 2011, Co. served 70 destinations in 22 states, Puerto Rico, Mexico and 12 countries in the Caribbean and Latin America. Co.'s onboard offerings include inflight entertainment systems which consist of 36 channels of DirecTV®, 100 channels of XM satellite radio and movie channel offerings; and a range of snacks and beverages. Co.'s subsidiary, LiveTV, LLC, provides in-flight entertainment, voice communication and data connectivity services for commercial and general aviation aircraft) (Business Summary, 2012). The company's other businesses include LiveTV, a wholly owned subsidiary which provides in-flight entertainment, voice...
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...diversifications: concentric, horizontal and conglomerate. When the new venture is related to the existing lines of business, it is called concentric diversification. When a firm develops or acquires new products that are different from its core business or technology but appeals to their current customer that is called horizontal diversification. Conglomerate diversification is when there is no common thread of strategic fit or relationship between the new and old lines of business; the new and old lines of business; the new and old businesses are unrelated (Enotes.com). Diversity at Southwest Airlines can be explained by the company having a modern and multi-faceted workforce which gives Southwest a competitive advantage in the national marketplace. Southwest employees represent a variety of backgrounds which possesses unique individual experiences to help Southwest’s corporate culture (Southwest.com). Southwest is able to foster an environment that encourages diversity, (ideas, knowledge and action that reaches out to various organizations and...
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...the company will need to be profitable in the market. Innovation impacts the strategy, process, products and services that a company has to offer. Three organizations that have greatly used innovation are Discover Financial Services, Apple Inc, and McDonalds. The impact that innovation has on an organization is significant. Defining what innovation, creativity, and design are to and organization and the impact it can have on an organization. When an organization looks at innovation the company should be looking for a new way to do something. To expect change in innovation cannot be avoided in this changing and competitive world of business, changes will always be necessary to stay competitive. The three organizations I have chosen are Southwest Airlines, IBM Corporation and Motorola Company let see how innovation impacts these organizations. Organizational Impact Paper Innovation is what gives an organization the competitive advantage the business will need to be successful in the market. Innovations are ideas that can impact the strategy, process, products and services that an organization has to offer to its customers. Three organizations that have an enormous impact on innovation are United Parcel Service (UPS), Hewlett-Packard and The Coca-Cola Company. Apple Inc. Apple Inc has been a computer company with ups and downs in its career. There innovative ideas have always been bold and fresh for a computer hardware/software company. In the 90’s Apple started a campaign...
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...Discuss the trends in the U.S. airline industry and how these trends might impact a company’s strategy The airline industry is facing one of its most difficult times in history. A worldwide recession along with the terrorist attacks of September 11, 2001 have led to a decrease in passenger traffic, reduction in revenue and rising fuel prices. Additionally, airline companies face the increase competition from new entrants. The shortage of pilots has also caused problems for the airline companies. In 2008 when the economy started to take a downward turn, businesses began to cut back on employee travel, consumers were being more conscious about their spending. Airlines had to come up with a strategy by charging consumers for check bags, headphones pillow and blankets to increase revenues to offset high fuel prices. The Airport Transport Association determined that each cent increase in the price of a gallon of jet fuel cost the industry an additional $190 million to $200 million a year (Thompson, Strickland, & Gamble, 2009). New competition included Virgin America which is a low-fare carrier with a hub in San Francisco and administrative offices in New York City. It serviced flights between San Francisco and New York. It also operated five daily flights between San Francisco and Los Angeles. Another competitor was Newair & Tours based out of Canada. Accordingly, training schools were not providing enough schools for airline pilots. The airline industry needed...
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...| Southwest Airlines Co. | Organizational Commitment and Communication | | | | Southwest Airlines, Co is according to Fortune magazine one of the best places to work for. The Company’s mission statement is "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." (Southwest.com) Southwest believes that their mission statement has led the way to the best cumulative consumer satisfaction record, according to statistics published by the U.S. Department of Transportation. They have the fewest customer complaints, and they have the most satisfied employees, their turnover ratio is less than 10% (D’Aurizio, 2008). Communication and Leadership play a critical role in any organization and Southwest Airline is not the exception. These two factors are crucial to their success. In this paper, I will discuss the role of organizational commitment and communication within Southwest Airlines. Specifically, I will discuss how the various sources of power and leadership styles impact the organization as a whole. Also, I will discuss the motivational theory that I believe fits best with Southwest’s current culture and how the organization communicates the motivational theory to its employees. Finally, I will take a look at the commitment of the employee and how they respond to the organizations attempt to motive them. Organizational Commitment and Communication ...
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...transportation in the world. It has been in business for over forty years. It is a commercial airline that services thirty nine cities. The company Head Quarters is in Dallas, Texas. They recently merged with Air Tran Airways and are now working under one name. | Identify the investor’s relations link and review the company’s investor relation information. The investor relation is dedicated to the three P’s. Performance, People, and the Planet Southwest (LUV) is the symbol that was chose to represent its home base of Dallas Love Field its employees and customer relations. It is known for its excellent customer service. Southwest Airlines has endured thirty-nine years of profits. It made over 400 million in free cash Flow which means a company is able to its debt. On May 2nd, 2011 Southwest finished its purchase on all the stock of Air Tran Holdings. There are forty- one years of service and they still can be differinate from other low cost carriers. Provide a financial summary of your selected company’s financial health. Southwest airlines received a B+ by the (GRI) Global Reporting Imitative which is a standard grading of company sustainability. December 31, 2011 the company operated 698 aircrafts, 610 was Boeing 737 and 88 Boeing 717 and serve 39 states and 72 cities. It is a passenger airline that offers air transportation in the US. The company headquarters is in Dallas, Texas. It was founded by (King. R., Kelleher, H. 1967) Define two financial concepts and how they...
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...know what to look for. In this article, we'll give you a list of seven tips and recommendations for researching and selecting the best airline stocks to own. 1. Analyze Fuel Hedging Some airlines try to pass higher fuel costs on to their customers in the form of a fuel surcharge. But the most efficient way to mitigate fuel costs (particularly over time) is to purchase futures contracts that lock in a company's fuel supply for the coming year at a set price. (To read more about fuel prices, see Getting A Grip On The Cost Of Gas and Fueling Futures In The Energy Market.) To be clear, all airlines do some hedging. But some companies hedge more than others. As such, they are better prepared, should oil prices skyrocket. For example, Southwest Airlines hedged as much as 85% of its annual fuel usage over the past six years. The move effectively locked in consumption at $26 per barrel of oil, which in turn saved shareholders an estimated $1.8 billion (from 1999 to...
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...Classic Airlines Marketing Solution Classic Airlines is the sphere's fifth leading airline by way of a fleet of more than 375 jets, serving 240 cities (Keller & Kotler, 2007), using additional 2300 flights daily. The airline has developed into an organization of 32,000 employees from exemption of 25 years ago. The corporation has earned $10 million on $8.7 billion in transactions from the preceding year (University of Phoenix, 2010). The commercial airline industry has continuously been vulnerable to the economic and political fluctuations, typically in times of an economic calamity for that reason; Classic Airline’s tests as an airliner are not unforeseen. The corporation is a significant contender within the airline business; nevertheless, like countless airlines; Classic faces several challenges because of the increasing customer worries about flying and the current market ups and downs. Classic Airlines recognizes changes that are necessary for the business; conversely, the managing team needs to recognize the present-day marketing difficulties that are troubling the business and determine choices for solving these complications. The paper will benefit Classic Airlines by means of the nine-step problem-solving model in the direction of identifying issues and prospects that will support the airline within the current marketing problems, pinpoint the internal and external pressures contributing to the corporation's crisis. By using the nine step-problems solving model...
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...efficiency and pass cost saving to its passengers by offering them low prices. The basis on which Southwest builds its competitive advantage is putting employees first, this will make them take real care of customers. It record as the first in the industry in the term of customer service and customer satisfaction based on some conducted surveys. Its strategy is valuable, rarely done because its difficulty to manage, hardly to imitate and organized well by the whole employee from pilot, gatekeeper, cabin crew, ground crew that committed to the company. The employee have one goal congruence with the company’s goal. The Southwest Airlines strategy is keeping costs low and treating employees well and a commitment to managing the company. The employee happy and they give the best service that will give satisfaction to the customer. There are two main strategic areas: a. Operating Costs Southwest Airlines has the lowest fares among its competition. Its lowest fares partly came from low operational costs. Here are the source of cost savings: * Using only one kind of airplane that is ‘Boeing 737’ while competitors are using all kind of airplanes and models. That saves millions for Southwest in maintenance cost, spare-parts inventories and mechanics training. More, every pilot and crew members will be familiar with every plane. On the other hand, using one type of airplane gives Southwest the opportunity to move the aircrafts through the route network without costly reconfigurations...
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