Published on March 2, 2014
MARKETING MANAGEMENT Southwest Airlines: In a Different World Presented by:Avishek Bhattacharya Achintya PR Divya Marwah Mukul Attri Nayana Unni Prasahant Patro Siddharth Modak
Company Profile • Founded in 1967 by Rollin King, Herb Kelleher and Lamar Muse • Started operations in 1971 with three Boeing 737s after winning the lawsuits against them • Well known for its Low Fare policy and low cost of operations • ‘Airline of the Year Award’ – 2003 • Presently operating in more than 60 countries with over 500 Boeing aircrafts • Came up with a famous policy of ‘Employee First, Customer Second’
Core Strategy “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure, they have a good time doing it, people will fly your airline.”
OTHERS SOUTHWEST Focussed on long route travels. Mainly, short route journeys.
OTHERS Focussed luxury, complementary and in-flight services. SOUTHWEST “Fun-LUVing Attitude” for in-flight entertainment.
OTHERS SOUTHWEST Strictly adhered for a disciplinary and sophisticated travel. Pets Are Welcome on Southwest(P.A.W.S)
OTHER SOUTHWEST Only cash payment, for onboard services. Cashless cabin (Credit Card only for onboard purchases.
Other Differentiation Strategies • • • • • • Low cost meals Less turnaround time Employees first, Customer second policy “Bags fly free” policy Ticketless travel Early-bird Check-in, unaccompanied minor service charge
Cost Leadership Strategy
Hedging A hedge is an investment position intended to offset potential losses/gains that may be incurred by a companion investment. SWA used hedging for the following objectives: • Plan towards profitability. • Plan cash flows. • Lower overall fuel expenses.
OTHER SOUTHWEST Multiple types of aircrafts are used Single type of aircraft is used that is boeing 737
OTHER AIRLINES SOUTHWEST AIRLINES Followed hub and spoke model Followed the point to point Model
OTHER SOUTHWEST Luxurious travel with lot of in-flight complementary services Cheap, convenient and in-flight entertainment
OTHER SOUTHWEST On an average there were six cabin crews. Maximum three cabin crew
Other Cost Leadership Strategy • • • • • Use secondary airports (Less congested) Operates in mid-sized cities. Low cost pricing strategy No complementary meals High utilization rate of fleet of aircraft.
Targeted two types of traveler: 1) Convenience, time-oriented travelers, 2) Price sensitive leisure travelers.
“Rapid Rewards Programs” for frequent flyers.
Other Focus Strategy • Frequent reliable departures • Try to make air fares comparable to driving expenses for shorter routes. • Exploring North-East markets • Code-sharing agreements for greater reach.
Bidding and acquiring slots and gates at LaGuardia • Airport La Guardia is used by low cost airlines for domestic, international and transcontinental flights. • One of the smallest airports in United States of America • Southwest paid US$7.5 million to acquire certain assets from bankrupt ATA Airlines in 2008. • Reason: To acquire the operating certificate and New York’s LaGuardia Airport landing slots formerly controlled by ATA. • Southwest got 14 slots, enough to operate seven takeoffs and seven landings per day at LaGuardia. • New York's LaGuardia landing slots are the company’s first entry into the major market.
Strengths • • • • • • • • • Strong fleet operations Dominant market position in North America Friendly Staff Best low fare carrier Largest airlines in the world in terms of highest number of passengers per year Recognized as a great value and excellent services Flexible working hours even though 82% of employees are unionized Strong brand image Highest daily domestic departures than any other commercial U.S. airline
Weakness • Declining profits and margins • Heavy dependence on passenger revenues • Heavy dependence on a single producer – Boeing • Conservative growth strategy • Limited to cities domestically • Operates its own booking service • Does not offer segmentation (business flights, first class, etc.)
Opportunities • • • • • • Recovery of US Airline Industry Acquisition of Air Tran Holdings Recovery of US tourism International Expansion Longer flights are being introduced Traveller traffic is expected to grow by 3.5% through 2019.
Threats • • • • Intense competition Regulation restrictions Price fluctuations in petroleum markets High unemployment and inflation keeps travellers from flying • Joint ventures can negatively affect brand image • Exposure to Shaky American Economy
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