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Sahil Sethi (13BSP0680)

Am it Kumar (13BSP1038)

Man ish Yadav (13BSP0392)

Deepak Daga (13BSP0209)

Ad it i Jain (13BSP1435)

Deepak Banth ia (13BSP1505)

Shashwat Mishra(13BSP1015)

Utkarsh Shr ivastava(13BSP1230)

Presented By:-

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Southwest Airlines was formed in 1971 to serve inter-city routes in three Texascities.

By 1998, it had grown to approximately 24,000 employees serving 25 states withapproximately 2,500 flights per day.

Southwest operates as a low-cost, no-frills but high customer service airline flyingpoint-to-point, rather than establishing the hub-and-spoke system common to itslarger competitors.

Low turnaround time - The time required for a plane to land and take off again -

which requires a high level of teamwork, coordination, and flexibility amongdifferent employees and occupational groups.

Southwests quality and productivity serve as benchmarks for the industry. It

consistently ranks at the top of the various quality measure - including on-timeperformance, baggage handling, and customer complaints.

The average one-way airfare is $75 .

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After September 11 attacks, Southwest was the

only airline to remain profitable while othersgrounded 240 planes and 70,000 workers.

In 2001, Kelleher stepped down as CEO and wassucceeded by Parker

In 2004, Southwest had 34000 employees and flew

to 58 cities.

In 2004, Parker resigned and Kelly became CEO.

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Technology

Economic Trends

Global Environment

Demographic Trends

Political/Legal Environment

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Threats of New Entrants

Threats of Substitute Products

Rivalry among Competing Firms

Bargaining Power of Suppliers

Bargaining Power of Buyers

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Southwest is the United States only major short haul, low fare, high

frequency, point to point carrier. Southwests average one way airfareis $75 with an average passenger trip length of 441 miles. Southwestflies to 54 cities (55 airports) in 28 states.

1998 Consolidated Financial Statistics:Net Income: $433.4 millionTotal Passengers Carried: 52.6 millionPassenger Load Factor: 66.1 percentTotal Operating Revenue: $4.2 billion

Year end results for 1998 marked Southwest Airlines 26thconsecutive year of profitability. They also received the Triple CrownAward for the 7th consecutive year given by the U.S. Department ofTransportation for having the best on-time performance, bestluggage handling record, and fewest customer complaints.

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Do all of its ticketing (making seats available) throughcomputerized systems

It didntoperate in the hub-and spoke route system

Flew into uncongested airports of small cities, lesscongested airports of large cities

Only drinks , snacks and peanuts are served in Flight.

It doesntcoordinate its services with other airlines

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84% unionized labor force but its labor relations were

excellent

Travel agents had to contact the airlines directly to bookseats

SWA passengers flew non-stop origin to destination. Didnot promote connecting services

Savings in reduced taxi time, fewer gate holds and lessin-air waiting time

Quick Turnaround Time Through Excellent Co-ordinationbetween Various Functions

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Governmentregulations andrestrictions

Fluctuation in gasand oil prices

Operate AtInternational Level

Focus On PopularDestinations

No internationalflight.

Carry small amoutof freight and cargo.

Inconvenience tobusiness customers

Employeesatisfaction

Customer service Low fares Stable profitability Scheduled service Leadership

Strengths Weakness

ThreatsOpportunity

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StrengthsEmployee

satisfaction

Customerservice

Low faresStable

profitability

Scheduledservice

Leadership

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Weakness

Nointernationalflight.

Carry smallamout offreight andcargo.

Inconvenienceto businesscustomers

Capital flexibility fornew technologicaladvances in aircraft

Ability to meet growthdemandCapital

flexibility for newtechnological

advances in aircraft

Ability tomeet growth

demand

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OpportunityOperate AtInternational Level

Focus On PopularDestinations

Operating costs48% lower than inforeign markets

Domesticexpansion in the

mid-west andheartland (37% ofdomestic market

share to othercarriers)

Open Skies

agreementbetween theUnited Statesand the UnitedKingdom wouldcreate an openand competitive

environment

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ThreatsGovernment

regulations andrestrictions

Fluctuation in

gas and oilprices

Operatingrestrictions in

foreign airports

Imitators in

foreign and U.S.markets

Foreigninvestment in the

United Statesairline industry

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POLITICAL ECONOMIC

TECHNOLOGICAL

SOCIAL

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Deregulation in 1978.

Post 9/11 attacks, government helped major airlinesget out of financial trouble.

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No layoff

Under unfavorable economic conditions

People looking for cheaper travel options.

Low cost airlines are better option.

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People trust southwest

Employee trust southwest

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Use of e-tickets.

Use internet to compare prices and find best optionsfor trips.

Use of SWABIZ software

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Green-field venture

into Mexico or Canada

Form equity strategicalliance with Europeanairlines

Product diversification

through creation of alogistics division

Downscope domesticmarket

Maintain focus on

domestic market

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Target Market:

Market Segmentation

cost- and value-conscious consumers. mostly male small business executives travel short distances prefer low cost fares frequent schedules

The other half consists of value-conscious consumers (male, female, families, and senior

citizens)

best value for their dollars

Senior citizens are a sub-segment that receives special attentionthan a loyal customer - customer evangelist

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How the company pr ices i ts new routes?

They look to grow in the market when they enter the city

(quadruple and quintuple the number of passengers in a particular route)

Pricing against the ground transportation as much as against existing air service(atleast 60% below competitive fares)

Low operating costs

On the Oakland-Burbank route, SWA quadrupled the passenger market within twoyears and drove out USAir and United in 3 years time.

They think slightly differently about load factors: Initially higher than average load factors Low priceexpand market faster than they can add equipment Demand outpaces supply Competitors drop pricesthat stimulates demand further Keep adding more service to balance out demand and supply Eventually leads to maturing of load factors

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Southwest Airlines uses price discrimination to fillthe plane with travelers in the most profitable way

Depending on the price of elasticity of demand fortickets

Charge a higher price for business travelers whohave relatively inelastic demands and vice versa

Employee and customer satisfaction

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