How the Southwest Airline’s Quality Processes Operate.
Southwest Airlines is one of the most conspicuous examples of a company in Australia that identifies a very clear and simple key business rationale, chooses the appropriate business model to support the business purpose, and consistently displays the main standards and values deduced from that key business purpose.
The greatest guarantee of Southwest Airlines is commitment to the highest quality of consumer Service offered in order to meet a sense of warmth, friendliness, individual pride, and Company Spirit. Every single employee of the company is aligned with this brand promise hence staff morale is exceptionally high. Southwest currently has the lowest operating-cost structure in the airline industry and consistently offers the lowest and most of all simplest fares. Southwest holds one of the best cumulative customer satisfaction records. Southwest Airlines provides low-fare air transportation service among 64 airports. The major secret behind their continued success seems due to their low-cost model since competitors cannot match Southwest Airlines’ low prices. This can force a competitor into bankruptcy.
However, it was not just the choice of its business model that made Southwest Airlines such a successful company but the way they execute their business model through perfect strategic alignment. What makes Southwest Airlines’ key business purpose such a powerful one however, is not just the very clear definition of their key business purpose, but certainly also what the company and its leaders do with it. Their simple but effective key business purpose is the guiding principle for Southwest Airlines’ strategic goals, business strategy, organizational infrastructure, their company culture.
Management decisions are made by everyone in the organization, not just the head executives. The company does not put much emphasis on structure; instead, employees are encouraged to think freely without constraints such as titles or official mandates.
The operations function an integrated system that obtains the necessary inputs, transforms them to make them desirable for the customer, (‘adds value to them’).”(Dilworth, 1996 p. 3) Southwest Airlines applies the operations integration to the functions that forecast and meet demand and help the company earn a profit for the most part it flies only short-haul distances.
The initial goal of Southwest has not changed: to become the major short-haul carrier and to offer fares below those imposed by the “brand-name” carriers. Despite its low fares, “last year alone its profits totaled $179.3 million, a 16 percent jump from the year before.” (Enbysk, 1995 p. 1)The first quarter of 2000 shows even further growth: “Total operating income for the first quarter 2000 increased 15.5 percent to $1.24 billion, compared to $1.08 billion for the first quarter in 1999. Revenue passenger miles increased 17.5 percent…resulting in a load factor of 66.8 percent….Herbert D. Kelleher…stated: ‘We are extremely satisfied with our strong first quarter…Despite significantly higher jet fuel prices, which were more than double year ago levels…our first quarter 2000…exceeded estimate.” (SW, p. 1)
Kelleher mentioned the time saved by not assigning seats, and saving money which reflects lower pricing in other ways, as well: “Amenities are frills. If you want your baggage on time, fly southwest, if you want a mint, fly someone else.” (Enbhysk, 1995 p. 2). In a slightly less formal statement, Kelleher talked about his airline’s operations success: “We like mavericks…people who have a sense of humor. We have always done things differently. You know, we don’t assign seats… the reason is you can turn the airplanes quicker at the gate. And if you can turn an airplane quicker, you can have it fly more routes each day. That generates more revenue, so you can offer lower fares.” (Kelleher, 2000 p. 1) Southwest’s planning included not merely the technology of modern jet planes, but researching consumer demand. Operations management relies on a simple strategy: Southwest has not overreached itself, in terms of destinations, and length of trip legs. The average leg now is 394 miles, with flights of 600 miles making up barely 2.5% of the total schedule. (www.southwest.com, 2000 p. 3)
By relying on a single type of plane- the Boeing 737, maintenance costs are significantly lowered, and the durability of this 737 allows southwest to use its planes an average of 11.5 hours a day, compared with the industry’s average, of 8.6 hours. Southwest’s cost per available seat mile is the lowest in the industry. It also has one of the youngest fleets of any airline: 7.9 years on the average.
By not relying on hubs, like most major airlines, point to point service meant greater convenience for passengers on direct flights, less waiting time for planes on the ground, and a far faster turn-around time: 15 minutes, compared with the industry average of 45 minutes. Part of the faster turn-around is operations management’s decision to utilize less-crowded airports, i.e. Houston’s Hobby, Chicago’s Midway, Raleigh, NC, Albany, NY, and Long Island’s MacArthur Field. Operations devised this by realizing that dependability will create demand. “The best service in the business” (Dilworth, 1996 p. 67) is not merely a puffed-up advertising slogan. As Dilworth (1996, p. 69) points out, operations management helps companies succeed by “becoming excellent at the right things.”
Careful selection of new markets has provided success for Southwest as it opened Florida, Baltimore, and now Long Island, and an expected shuttle service between Long Island and Boston. In other words, Southwest arrives where customers already are, rather than spending time and effort to build traffic. Southwest has also shown a profit for 23 straight years.
Another innovation is the Southwest’s “ticket-less travel”- including fare specials offered only on the Internet. “Based on published accounts, in terms of revenue, Southwest ranks as one of the largest e-commerce sites…More than 25% of Southwest’s first quarter revenues came through www.southwest,com, and we are well on the way to exceed $1 billion in e-commerce revenues for the year 2000,” (SW Public relations, 2000 www.southwest.com ). Electronic ticketing not only reduces crowding at regular ticket counters, it also enables planning of flight schedules, seeing demand raise on particular routes, certain destinations, and even times of the day and days of the week. It is this combination of planning, smooth operations procedures and understanding and meeting customer demand that, for the fifth year in a row, “Southwest has won the ‘triple crown’ of having the best on-time performance, best baggage handling, and fewest customer complaints.”(Enbysk, 1995 p. 1)
With the entire dollar and other revenue and mileage and destination statistics out of the way, just what is it about Southwest’s marketing strategy that brings people on board, even when they could fly competing airlines that have been forced to meet the lower prices. For one thing, it is the sheer number of short-haul departures. Southwest can make money on them, by not having to plan schedules to feed passengers into some sort of hub long-range arrivals or departures.
Operations excellence goes well beyond the supply chain. There is the loyalty of employees. “Southwest has one of the lowest turn-over rates in the industry, approximately 4.5% a year. Southwest is considered by many to be one of the best companies to work for in the country it is in the top ten in The 100 Best Companies to Work for ” (Freiberg, 1996 p. 7) When you don’t have to spend money and time re-training new hires, that money goes for customer service and operations.
Kelleher, earlier, referred to turn-around time as making money. It was suggested when the airline began, and because nobody had tried a 10 or 15-minutes turn-around, there was nobody to say it couldn’t be done. It was, and still is, being done. As Kelleher, who likes to be the company’s spokesman as often as possible, says: “Our turnaround time isn’t the result of tricks, but the result of our dedicated employees, who have the willpower and pride to do whatever it takes.” (Freiberg, 1996 p. 57) People come out of nowhere and the whole area around the plane is abuzz. Then, in a matter of minutes, their job complete, the swarm of people disappears and the plane pulls away.” (Freiberg, 1996 p. 59)
Southwest passes on its strategies of success to its suppliers. All of them are told, in no uncertain terms: do what you’re good at. By using only a single type of aircraft, the total number of suppliers is vastly decreased. By not serving food, again, there is no need for expensive meal planners, caterers, catering trucks, or the installation of expensive in-flight kitchens. A single type of aircraft also reduces the need for training mechanics, and operating maintenance facilities on more than a single type of jet plane. It is a sort of reduced bureaucracy and levels of management at the company, since there are so few exceptions to specific needs: whether handling suppliers, payment of invoices, bank credits, insurance, etc.
The marketing philosophy is also evident in the guidelines it has for hiring employees. Southwest looks for “real” people, not pretentious ones. “Southwest feels that people who are trying to be something they are not will feel too much stress in their lives and that stress will spill over to the passengers.” (Freiberg, 1996 p. 72) There is also a Kelleher “secret” behind his employees’ loyalty. To Kelleher, “customers come second, employees come first. His idea is to treat employees right, and with care and concern, and that will then transmit it to the passengers. (Donnelly, 2000 P. 53)
There are also personal ways to create a marketing plan that covers goals of profitability, employee satisfaction, and customer service. The airline, although it is still growing in terms of planes, destinations, and passenger-miles, still remembers what got it to this point: make it more convenient and less expensive, for people to travel- whether they have to or want to.
It would be difficult to provide a means of improving the current operations management and planning at Southwest. It is a good example, as was stated at the outset, of integrating operations functions to improve the excellence of the finished service- in this case, on time arrivals and departures.
How southwest airline can improve these Quality processes
I recommend that the following can be done to improve the quality process in southwest airlines:
Leaders must understand that their role is to serve others, and not vice versa. Leaders are to be facilitators by equipping employees with the tools and information they need to do their jobs fast and efficiently. This shall attract passengers by flying convenient schedules, get passenger to their destination on time, make sure they have a good experience, and affordable charge fares.
When it comes to ‘agility’ the company should focus on two elements in the organization that is bureaucracy and strategic planning and work on how to improve your competitive edge by becoming more agile. Designing an organization structure that facilitates good strategy execution such as decentralized organization structures is paramount. Employee-led initiatives should be common where employees have substantial authority and decision-making power. Frontline employees and managers are expected to spend at least one-third of their time out of the office, walking around the facilities under their supervision, observing firsthand what is going on, listening to employees and being responsive to their concerns. This enables provision of safe and comfortable air transportation in commuter and short-haul markets, from close-in airports, at prices competitive with automobiles and buses and to involve customers and employees in the product and the process, making the airline a fun, profitable and quality experience.
I believe that every individual values making a difference. When people see that their contributions are valued, their dignity and self-respect will soar. Instead of feeling like cogs in a machine or numbers in a spreadsheet, they feel that their work is important and workplace the place to be. To know that their work counts makes them feel that they count This type of empowerment method ensures that core values such as treating individuals, employees and customers with Dignity, respect and caring loving attitude are enhanced.
Creating an orientation towards results seems like a subject too obvious to mention. Unfortunately – especially in larger organizations – many people lose track of what is happening at the front lines or of what the company is expecting from them, and they don’t know anymore how to focus or what to focus on. A Leadership course that emphasizes on a management style based on coaching and courage, rather than supervising or enforcing rules and regulations should be up held .Courses on safety, communications, stress management, career development, performance appraisal, decision making, and employee relations should be incorporated. Emphasis on value of people keeps employees happy then they will keep customers happy. Culture is the glue that holds the organization together. It encompasses beliefs, expectations, norms, rituals, communication patterns, symbols, heroes, and reward structures. Colorful personalities employees reminder to be friendly should create a unique love based atmosphere hence enhances focus on the company objectives.
Empathy is the ability to understand and share the feelings of others, adaptability is the ability to adapt own behavior to the needs and expectations of others. Both for sure are key prerequisites for creating the culture of trust and ownership needed to develop an unbeatable competitive edge. Business travelers who more time-sensitive than price-sensitive and wanted weekday flights at times suitable for conducting business as well as price-sensitive leisure travelers who wanted lower fares and had more flexibility about when to fly should all be catered for to outcompete other airlines.
It is essential for Southwest Airlines to expand on their existing achievements. Better serve customers by improving their routing system. Offering enhanced accessibility and minimizing delays.
How the company can improve its performance by improving its quality processes.
Good leadership would motivate the employees to value their work and hence enhance focus on Customer & Customer Satisfaction. By presenting a happy face to passengers and displaying a fun loving attitude, the company will ensure passengers have a positive, fun flying experience. Complaint letters will be seen as learning opportunities for employees and reasons to consider making adjustments and hence the quantity of passengers will increase tremendously.
I terms of agility employee come first and customers come second. The employee will be hired based on attitude and trained on skills. Each job category should analyze to determine the specific behaviors, knowledge, and motivations that job holders need and the desired traits. A trait common to all job categories is teamwork. Recruiting, Screening, and Hiring of Southwest’s supervisory positions will be filled internally hence developing leadership and communication skills for low level management. The Leaders would receive training in every department over sixth-month period putting together a strong management team
Empowerment of employees creates high self esteem and dignity and this improves the work output. Provisions such as frequent company-sponsored parties and celebrations, charity benefit games and work offs are motivating. This enables achievement of happy employees. If employees are satisfied, dedicated, and energetic, they’ll take real good care of the customers. When the customers are happy, they come back. And that makes the shareholders happy”.
Creating an orientation through on job education on Southwest culture and management practices training and retraining employees is needed to maintain skill-based competencies. This improves the employees’ confidence in serving the customers hence better service. As a result the number of passengers increases and so does the company profit.
Empathy and adaptability enables improved customer relation hence improved quality of services offered. This attracts more customers and hence increases productivity of the company as well as improving the company reputation.
The challenges facing the company in achieving higher level of excellence.
Flying on Southwest Airlines is not the most comfortable way to go. Usually, the planes are jammed full of vacationers and families including children, as well as business travelers. Seats are crammed together. There is no advance seat reservation system. The crowds at the departure gates are usually enormous. There is no reserved seat for each passenger or first class section, fancy clubs at terminal not even meals.
The airline industry suffered a major blow from the terrorist attack of September 11th, 2001 and the 2008/2009 economic crisis, the company is still holding strong; while other airline companies are in debt or have gone bankrupt. The terrorists attacked the World Trade Center and the Pentagon, shook the whole country. This preceded three-day shutdown of flights, sudden erosion of passenger traffic and strict new security measures in major airlines which threw them into a financial crisis and triggered a struggle to revamp flight schedules in response to decreased passengers. Investor worries about almost empty flights, higher costs from added security measures, and a clouded financial future for the whole airline industry caused airline stock prices to decline. The impacts were that many scrambled to institute a host of security, some tried to cut fares to attract passenger to fly others laid off employees and number of flights cut.
The company is not widely distributed since the Southwest flies to 62 cities in 32 states in America and few others out of America like Australia. The services offered by the company have an increasing demand all over the world hence the need to venture new markets.
Suggestions on how the company could overcome the challenges
The Southwest Airlines fleet consists solely of Boeing 737s and offers only economy seats. They should therefore consider purchase of other type of air crafts that can offer first class for those who need it. Southwest Airlines also do not offer in-flight meals, only peanuts and other snacks which I think can be up held if it remains a short-haul airline but if it considers long distances them meals should be in cooperated for customer comfort. Customer service is the only strategic marketing tool a carrier can use to pull passengers from an established airline.” (Donnelly,2000 p. 53) Thus, southwest should maintain and improve the careful planning and its successful marketing strategy as well.
When faced with the insecurity issue Southwest avoided layoffs and stuck to its mission of caring for its employees. It was felt that avoiding layoffs in the face of a dramatic decline in demand would jeopardize short-term prospects. Southwest Airlines was able to operate their business relatively undisturbed. However, the delivery of new aircraft on order was deferred and a temporary freeze on hiring until of employees was put in place.
By updating and revising the external conditions that raise need for more services gradual expansion into new geographic markets is important. Adding flights in areas where rivals were cutting back service could give southwest airline the upper hand.
In conclusion, the strengths of the company are low price tickets, low operating costs, good customer service, high frequency service, productive pilots and ground crews. The opportunities include ability to add scheduled flights and market share growth. However the company also has threats such as big companies that emulate southwest and difficulty in securing new gates at existing airports and it major weaknesses are that it doesn’t serve international flights and has one type of airplane
Annual Reports for Southwest Airlines, Inc. accessed via www.southwest.com
Dilworth, James B.: Operations Management (1996) New York: McGraw-Hill Publishers
Donnelly, Sally B. “Flying Sybaritic Skies” TIME Magazine, May 1, 2000
Enbysk, Morrie: “Southwest Airlines Succeeds By Sticking to Basics”, Washington CEO Magazine, 1995
Freiberg, Kevin and Jackie Freiberg: Nuts! Southwest Airlines’ Crazy Recipe for Business and Personal Success (1996) Austin TX: Bard Press
Kelleher, Herb: (2000) “I’m a Maverick” www.southwest.com
Southwest Public Relations Office: “Southwest Airlines on Pace to Exceed $1 Billion in Internet Revenue for 2000” www.southwest.com
Southwest Public Relations Office: “Southwest Reports Record 1st Quarter, 2000” April `18, 2000, www.southwest.com