Southwest Airlines is based in Dallas, Texas and is the world’s third largest airline when tallying the number of passengers carried annually (Wikipedia: Southwest Airlines, 2006, para. 1). The company was co-founded by Rollin King and Herb Kelleher on March 15, 1967, initially named Air Southwest until changing the name to Southwest Airlines in early 1971(Wikipedia: Southwest Airlines, para. 2). The airline has surmounted incredible challenges that no other airline has yet achieved; a history of continued profitability year after year since 1973 (Wikipedia: Southwest Airlines, 2006, para. 1). To reduce operating costs, the company operates a fleet consisting exclusively of Boeing 737’s, nothing more or less (Wikipedia: Southwest Airlines, 2006, para. 7). The company has used a “tongue in cheek” approach to attract customers by creating a fun and inviting atmosphere both for its employees and customers (Wikipedia: Southwest Airlines, 2006, para 25). Most people are familiar with the familiar ding and “You are free to move about the country” tagline on Southwest’s commercials (Wikipedia: Southwest Airlines, 2006, para. 27-28). Southwest’s ability to control costs coupled with an uncanny and exciting marketing strategy have helped drive its bottom line profitability and popularity.
Most would consider Southwest’s cost cutting strategy to lie chiefly within its airline operations and ticket pricing, but the company has also made great strides in consolidating its database system, resulting in greater efficiency and profitability for the airline. The company operates approximately four-hundred enterprise applications that handle company functions ranging from aircraft maintenance reservation systems to reservations and ticketing (Wiseth, 2004, para. 19). Southwest migrated all of its applications that utilize Oracle software to one version for simplicity and ease in applying system-wide updates (Wiseth, 2004, para. 21). This strategy represents Southwest’s ability to identify an opportunity for cost savings and greater system reliability and act on it to realize these benefits. Wiseth (2004) explains that Southwest took a proactive approach to the consolidation effort by involving not only the technical experts responsible for the changeover but also the stakeholders using the system (para. 29). The company’s willingness to enlist the expertise of industry experts alongside system users demonstrates the company’s ability to articulate a vision and make it function seamlessly. Southwest also ensured that it educated the stakeholders about the benefits associated with using a unified Oracle platform, while also laying out the responsibilities various work teams would have to ensure programs throughout the company were ready for the Oracle transformation (Wiseth, 2004, para. 34). Southwest demonstrated a knowledgeable approach throughout the entire transformation process by getting input from employees throughout the company, utilizing knowledgeable experts, and planning ahead for the transformation to the unified Oracle platform; a clear indication that the company performed the necessary research before the changeover.
Southwest’s airline operations have varied dramatically from other airlines and helped contribute to the company’s success. Inkpen (2005) reports that Southwest is the only major airline that doesn’t have a “hub and spoke” system (p.3). Brelis (2000) reports that Southwest’s primary aim has never been to capture market share like the other major airlines, but instead the continued pursuit of maintaining low operating costs which in turn provides passengers with cheaper ticket prices (para. 11). Southwest’s history of profitability and general success has recently been termed as the “Southwest effect,” based on the airline’s ability to enter markets with rates that maintain profitability yet centered around cost conscious operations and high aircraft use (Wikipedia: Southwest Airlines, 2006, para. 13). The underlying notion of the Southwest effect is that markets will vastly change when a low fare carrier enters them, resulting in historically large surges of market activity (Wikipedia: Southwest Airlines, 2006, para. 13). In this instance, Southwest’s strategy revolving around simplicity created a name for the company that has acted as a business concept in the airline industry which many other airlines would love to emulate. However, as Southwest’s president and COO Colleen Barrett explains, “They don’t get it. What we do is very simple, but it’s not simplistic. We really do everything with passion. We scream at each other and we hug each other” (Serwer, 2004, p.2). Southwest has certainly conducted in-depth research but in a different manner by setting the standards for the airline industry instead of following them.
Southwest has also demonstrated expertise in handling its most important asset, the employee base that makes the company tick day in and out. Herb Kelleher, the company’s co-founder, takes little credit himself for the success of the company, stating “I am not all that special. It is not like we have some formula here like ‘E equals MC squared.’ It is a tremendous mosaic made up of thousands of people” (Brelis, 2000, para. 17). The company asserts that “employees come first, customers second” ( Brelis, 2000, para. 6). The walls at the airline’s headquarters are adorned with photos of employees at functions such as barbeques and Halloween parties (Brelis, 2000, para. 6). Southwest’s ability to capitalize on its employee resources by maintaining a fun work environment demonstrates the company understands the link between employee morale and productivity. The company also shatters the standard hierarchical framework used by many companies today, allowing employees to go around supervisors for answers if necessary (Brelis, 2000, para. 33). Southwest’s approach to “keep it simple” has been a major contributor to the company’s success (Brelis, 2000, para. 35). Although Southwest maintains simplicity, the company is a complex operation. However, Southwest’s history of profitability has proven it as a leader in the aviation industry.
The simple approach to doing business is imparted throughout the culture at Southwest. However, the company hasn’t skipped a beat in ensuring the necessary research and feedback has been completed in the past. The convergence of Southwest’s various software platforms to a universal Oracle program illustrates the company’s ability to discover cost-savings opportunities and devise a means to achieve a goal. Furthermore, Southwest has created an atmosphere that is fun and exciting for its employees by placing them first. Many companies stress the importance of their employees but the employees feel as if they’re the secondhand cog in the wheel. Not so at Southwest, who readily asserts employees come first. The simple understanding that happy employees equates to a happy and productive workforce are paramount at Southwest. The company also created an industry trend with the “Southwest effect,” illustrating how the entrance of a low-cost airline into a new market will infuse it with new activity. The company should continue to pursue cost-savings opportunities and do things differently than the competition. These are key attributes that have allowed Southwest to stand out from its competition in the past and continual pursuit of new opportunities that are closely scrutinized and researched will allow Southwest to continue on its steadfast path of profitability. “You are now free to move about the country.”
References
Brelis, M. (2000, November 5). Herb’s Way. Boston Globe Online. Retrieved May 22, 2006, from http://people.bu.edu/rgleason/herb_s_wayp.html
Serwer, A. (2004, February 23). Southwest Airlines: The Hottest Thing in the Sky. Fortune Magazine. Retrieved May 22, 2006, from http://www.mutualofamerica.com/articles/Fortune/March04/fortune2.asp
Wikipedia: Southwest Airlines. (2006). Wikimedia Foundation, Inc. Retrieved May 22, 2006, from http://en.wikipedia.org/wiki/Southwest_Airlines
Wiseth, K. (2004, September/October). Southwest’s Strategy for Success: Consolidate! Oracle Technology Network. Retrieved May 22, 2006, from http://www.oracle.com/technology/oramag/oracle/04-sep/o54swest.html
