Southwest Airlines in 2014: Culture, Values, and Operating Practices: Problem Is

Question

Southwest Airlines in 2014: Culture, Values, and Operating Practices:

Problem Issues

1.Southwest’s tarnishing reputation-Due to safety incidences and inspection failures, Southwest has been reflected negatively in the media.

2.Southwest faces high competition-Southwest competes with American Airlines, Delta Airlines, JetBlue, Frontier, and many others. This brings on pricing wars and affects profitability.

3.Factors such as terrorism and bad economy causes decline in airline ticket purchases-Southwest has outside forces that they can’t control that affects their business.

Find alternatives to the issues above and Decision Statement (which alternative was chosen and why)

Explanation / Answer

Southwest Airlines established in the year 1967 is indeed regarded as low-cost airlines carrier operating in US. However intense competition within the industry along with sellers offering products with very little differentiation has indeed led to very low profit margins across the industry as airlines use price competition as their principal mode of rivalry.

Differentiation might be possible as airlines begin to single out precise sectors in the market which indeed effectively facilitate focusing their efforts. Southwest has eventually begun doing this by focusing foremost on low budget hassle free travel. However the method of incentives through frequent flyer programs employed across the industry indeed does effectively fails to pay off with actual consumer loyalty.

However if Southwest is unable to effectively compete as they grow into busier and more congested markets globally then they might witness retreating growth. Furthermore it has been witnessing a sharp increase in operating costs over the past few years which if not appropriately controlled and allowed to grow faster than the competition then it could face high prices and reduced market share.

In order to maintain their comparatively low operating costs they must either raise prices or make the flights more profitable. Furthermore Southwest top management has approved procurement of approximately around 70 Boeing jets thus facilitating with an enhanced capacity on certain flights.

Griffin Consulting Group in its research study report have indeed effectively enumerated that such expansion of capacity eventually also necessitates for expediting delivery effectively as slots at larger and more congested airports indeed do have fixed costs regardless of plane size thus operating larger aircraft eventually could be more profitable provided the demand can sustain it.

Furthermore if Southwest could appropriately integrate its acquisition plan of Air Tran into their business operations then eventually they could well position themselves thus facilitating effective growth. Furthermore taking advantage of new fuel-efficient technologies, increasing the capacity of some long-haul flights and expanding their discreet collection of ancillary fees as suggested by Griffin indeed would facilitate Southwest continue to lead the airline industry.

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