The Analysis of the Business Strategy and Mission of Southwest Airlines

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Warm Red suggests the passion of the company and their warrior spirit of delivering ex-cellent services to their customers (Southwest Airlines). Sunrise Yellow signifies the beginning of a new chapter in Southwest’s history. The Summit Silver shimmer adds modern-day energy to the lively design and encompasses the jewel theme of the logo. The color intensity is enhanced in order to showcase the excitement and energy associated with the company’s brand. Proudly dis-playing the Heart logo on the bellies of their planes is a new way of showing the world their hard work, dedication, and passion (Southwest Airlines). It is also a representation of the employees’ heart of service to their customers. In fact, the new name for the lively design is “Heart”. The in-terior of the plane is also expected to change with silver heart logos on the front bulkhead. The seat design will not change. The specialty planes will also change into the new “Heart” design.

Earlier this year, the company announced several leadership changes. The retirement of Chris Wahlenmaier as Vice President of Customer Support & Services and James Ashworth who previously worked as the Director of Customer Support & Services was promoted to replace him (Southwest Airlines, 2019). Landon Nitschke was also promoted to Senior Vice President of Technical Operations whose major roles are overseeing the Engineering departments and mainte-nance operations which care for more than 750 aircraft carriers. Justin Jones was appointed Vice President of Tech Ops Planning & Performance, whose responsibilities include business intelli-gence, fleet planning, field services, and reliability maintenance, amongst others (Southwest Air-lines, 2019). Mark Wibben was promoted to Vice President of Engineering and Programs, Kurt Kinder became Vice President of Maintenance Operations, Erika Linford was appointed Vice President of Technology – Commercial Portfolio. These are just a few positions listed, but essen-tially there were changes in almost every office. The Southwest Company says that they have the strongest leadership in their history; leaders with a capability of assuming their roles effectively and increasing the success of the airline.

As the airline struggles to increase their sources of revenue, CEO Gary Kelly, stated that three things will be taken off the table: assigned seating, baggage fees, and ticket-change fees. Regarding the assigned seating, he said that, “Let me be very blunt, we are not looking at assign-ing seats right now. We are not talking about assigning seats now. And we're not talking about looking at it sometime in the future (Gilbertson, 2018, par.4).”

He acknowledged that open boarding often discourages some potential customers and did not completely rule it out. He continued to point out that the company is neither thinking about baggage fees or change fees (Gilbertson, 2018). Instead, the airline focuses on other in-come-generating initiatives such as Early Bird Check-in. The airline did not report any updates on Hawaii flights services.

What Happened

Southwest Airlines makes more trips per day and this increases deterioration on parts such as the engine. At some point, CEO Gary Keller, was required to answer questions on whether the low-cost model endangered the lives of the passengers (Friedman, 2018). Aviation safety experts reported that there was no reason for alarm and that in the 47-year history of the organization no deaths had been reported. In 2016, the aircraft’s engine blew over Florida due to metal fatigue of the engine but no death was reported (Friedman, 2018). In 2018, the second case of engine breakdown was reported, and it led to the death of a 43-year-old mother who was blown out of a broken window (Friedman, 2018). Considering that the company has a large fleet, experts say they would not consider Southwest Airlines to be unsafe because of these cases.

Ethical Issues: after the Pennsylvania accident that resulted in the death of one passenger, investigators found that there exists mistrust between the mechanics and suggested that this could risk the passengers’ lives. The FAA found that the Southwest supervisors discouraged the mechanics from reporting some aircraft hitches (Friedman, 2018). In Dallas, one mechanic was questioned for discovering corrosion which was not on any of the assignments. This action par-ticularly raised concern as it did not make any sense to respect the line of duty and ignore the safety of the passengers. In another post, Geske (2018) reports the five major scandals that this company has been associated with. These issues were flight delays, baggage issues, engine prob-lems, price increases, and safety violation.

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In 2017, Southwest Airlines had a challenge of digitalizing their activities. This would mean that the employees would switch from using logbooks, whiteboard, and radio to digital communications. The major part of this migration was the OpsSuite which is a web-based pack-age that handles many tasks to ensure that the customers arrive safely to their destination. Unlike most of their competitors who use laptops and tablets, Southwest still had not made any effort to digitize their operations perhaps due to a large amount of money required (Ungerleider, 2017). However, there is hope that by 2020 there will be significant work improvement and software development that will boost their earnings. David Loose, who is a senior technologist in the com-pany, suggested that the worst enemy of any airline is delays. OpsSuite helps the airline to effec-tively deal with issues such as cancellation and bad weather by providing timely information to the personnel and enhancing communication between different departments (Ungerleider, 2017). OpsSuite is being used by Southwest to manage turns, gates, tarmac delays, and also as a tie for persons with the Baker system. The system also helps search alternative routes for passengers in case their flights are canceled or delayed.

Some political issues that may arise are the, “political stability and importance of Regional Airlines sector in the country's economy, risk of military invasion, level of corruption - especially levels of regulation in services sector, bureaucracy and interference in Regional Airlines industry by government, legal framework for contract enforcement, intellectual property protection, trade regulations & tariffs related to Services, favored trading partners, anti-trust laws related to Re-gional Airlines, pricing regulations – are there any pricing regulatory mechanism for Services, tax-ation - tax rates and incentives, wage legislation - minimum wage and overtime, work week regu-lations in Regional Airlines, mandatory employee benefits, industrial safety regulations in the Services sector, and product labeling and other requirements in Regional Airlines” (Department).

Success and Failures

The success of Southwest Airlines is felt in all parts of the world. The airline has managed to win over more passengers and therefore increase their profitability. The company is able to re-duce turnaround time and therefore is able to make more trips compared to all other airlines in the industry. The big question is: what exactly makes this company succeed despite the stiff competi-tion in the industry? Cost leadership is a quality that sets Southwest Airlines apart from the com-petition. Cost leadership means that a company is able to offer its services at the lowest cost. No-tably, cost and prices are two different terms; a company can provide low-cost services but still be the most profitable (Schleckser, 2018). The company depends majorly on Boeing as their ma-jor supplier and this cuts maintenance cost since the planes are all the same. The plane employees begin cleaning the plane even before all the passengers arrive and this saves on the turnaround time. In addition, the boarding time for the Southwest airline is faster than other airlines and this implies that more revenue is realized. Ashutosh (2011) suggests that there are three factors that have contributed to the huge success of the airline: process, people and physical evidence. In or-der to encourage the employees, the company planned an annual event where employees could be recognized and appreciated for their length of service and/or outstanding performance. Other factors such as team building, collective decision making, profit sharing, training, and positive attitude also aided the success of the airline (Ashutosh, 2011). The process involved in the flights is standardized- low cost and efficient, and this is an incentive to the customers. The physical evidence which is the design also has an influence on the customers. The heart design, for exam-ple, reduces the intangibility problem which in turn increases their success.

Vision and Mission

The Southwest vision is to become the world’s most loved, most flown, and most prof-itable airline” – Gary Kelly (Evans, 2019, par. 3). Acquisition of AirTran Airways served as the entry point, building an international sales and operational capability was the most complex un-dertaking in the Company’s history, SWA used Leadership alignment methods to reinforce the vision and establish International as the top priority.

Change Leadership

In 2016, Southwest Airlines (SWA) hosted the ATD Dallas Chapter Meeting on how Change Management was started and how it has evolved at Southwest, presented by Lori Win-ters, Senior Director of Change Leadership. Winters stated that one should tell a story with their change management project plan. A typical project plan has milestones and tasks, but Lori and team have created a visual of the steps of a change management project represented by a bridge, which represents how the project will move from 'today' to 'tomorrow'. The Change Manage-ment Bridge:

  • Bridge from “Today” to “Tomorrow”
  • Planks - stages of the plan (or 'capabilities' at SWA)
  • Side Rails - Communication & Training (support the capabilities)
  • Crossbar - Project Team Health; SWA ensures team 'health' by having a kickoff at each phase and celebrating at the end of each phase

To propel Change Leadership at SWA, they’re shifting to the following model. Figure 3 (Win-ters, 2016):The Mckinsey 7S Framework is made up of hard elements and soft elements. The hard el-ements consist of strategy, structure, and systems. These are elements in the organization that can’t be changed easily. The soft elements consist of shared values, skills, style, and staff. These are elements that can be changed easily. The strategy of Southwest is very unique, it focuses on providing service with the lowest prices. They have a twenty-minute turnaround policy which allows flights to board and leave very quickly. Changes in customer demand were softened by the unique staff that Southwest has. The main system that keeps Southwest going is its Human Resources system; it ensures that the culture of the organization remains strong. This is important because it’s one of the factors that keep customers returning to Southwest. Southwest’s values include quality, reliability, action, informal communication, and feedback. All of these values contribute to the customer service orientation of their organization. Southwest has a very unique style that it has set for itself. Decision making is decentralized at Southwest. This decentralized decision making is good for the organic culture of Southwest. Southwest strives to keep its em-ployees involved with decisions. Employees seem to be more cooperative than competitive. Southwest is a family oriented organization that enforces its culture to the customers using its employees. The Southwest staff is like a family; Southwest employees get together voluntarily in order to do community service projects. The strongest skills that are represented by the South-west employees are customer service skills.

Southwest prides itself on giving the customer a great flight experience. “Operational innovations can be more difficult to implement than product innovations. Potential users can see and touch a new product—a smartphone, for example—and they can try it out for themselves. An operational innovation, however, has to be implemented before anyone can really see how it is going to work—a streamlined process that will reduce time to market. This means that the benefits can take time to appear.

Convincing others of the value of an opera-tional innovation, therefore, is not always straightforward. Business culture undervalues opera-tions, which are seen as boring and low status. Operations are not as glamorous, or as easily un-derstood, as deal-making or new technology and are therefore not regarded as a source of com-petitive advantage” (Palmer). As previously shown in Figure 3, SWA is shifting to this new model in order to propel their Change Leadership. “Disruptive innovations can be more difficult to implement than sustaining innovations, as they are often viewed as risky. Note that drastic change involving disruptive innovation can jeopardize an organization’s business model and core capabilities. A further challenge is that disruptive products and services are often not as good as those in current use. The service provided by the low-cost business model of Southwest Airlines may not be as good as that of conventional carriers, but is simpler, more accessible, and cheaper” (Palmer).

In contrast with disruptive innovations, it is easier to convince others of the value of sus-taining innovations, which make existing processes, products, and services work better. Rogers (1995) argued that the probability of an innovation being accepted is increased when it has these properties: Advantageous when compared with existing practice, Compatible with existing prac-tices, Easy to understand, Observable in demonstration sites, Testable, and Adaptable to fit local needs.

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