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• Mission– The mission of Southwest Airlines is dedication to
the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.
About SouthWest
• More than 37 years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline.
• They began with one simple notion: 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.
• Began as a small Texas airline • Fly to 64 destinations across US 3400 times a day, With over 500 aircraft• Southwest has consistently led the entire airline industry with the lowest
ratio of complaints per passengers boarded • Employees will be provided the same concern, respect, and caring
attitude within the organization that they are expected to share externally with every Southwest Customer.
Offerings• Always the innovator, Southwest pioneered Senior Fares, a same-day air
freight delivery service, and Ticket less Travel.• They Provide low cost flying across the U.S cities• They are so low they compete with car fares• They have a brilliant website which any customer can easily navigate
through• They provide additional offerings such as car/ hotel bookings on their site
booking.• So lowly priced and they still offer discounts• Provide vacation packages to locations like (LA, Las Vegas, Disney Land)• Rapid Rewards - Fly just eight (8) roundtrips in 24 consecutive months
Pricing Strategy
• SWA’s pricing strategy is to charge the lowest possible fare that still enables the airline to make a profit.
• They think that there competition is with automobiles.
• Southwest must keep its operating cost to the bare minimum.
• These fares would not be sustainable unless it is supported by a high passenger load factor
• Operation Simple
It offers a single class, open seating, and no meals. Its aircraft fleet consists only of one type -- the Boeing 737 -- to minimize training and maintenance costs.
• Run its own reservation system, and sells a significant portion of reservations through its Web site.
• It can cut costs in the customer service
Profit Analysis• Analyzed viability of increasing profits by reducing
airfares 20%• Investigated a SWA high volume route for this
analysis (LA / Oakland)• Current route demographics:
Current Passenger Load 70.50%Daily Flights between LAX and OAK 20Market Share 18%Airfare – Roundtrip $118.00 Plane capacity – 737 137
GENERAL INFORMATION
Current SWA CostsCosts for LA / Oakland Route Fixed Per Year
Varible Per Flight
Varible Per Passenger
Crew – Pilots (3 member) 624.00$ Crew – Attendants (5 attendants) 600.00$ Base Fuel 685.00$ Extra Fuel for Weight 1.50$ Ticket Handling 2.00$ Ticket Commissions (Average) 7.30$ Mechanical Maintenance 350.00$ Cabin Service 200.00$ Baggage Handling 150.00$ Landing Fees & Leasing 500.00$ Refreshments 2.00$ Plane 15,175,000.00$ Overhead / Administrative Costs 9,964,500.00$ Total 25,139,500.00$ 3,109.00$ 12.80$
Costs
Price# Tickets Per Year
# Flts Needed per day
Actual # Daily
Flts
Actual # Yearly
FltsFixed Costper Year
Varible CostPer Flight,
Total
Varible CostPer Passenger,
Total
118.00$ 686,200 14 20 7,300 25,139,500.00$ 22,695,700.00$ 8,783,360.00$
106.20$ 861,400 18 20 7,300 25,139,500.00$ 22,695,700.00$ 11,025,920.00$
100.30$ 934,400 19 20 7,300 25,139,500.00$ 22,695,700.00$ 11,960,320.00$
94.40$ 1,000,100 20 20 7,300 25,139,500.00$ 22,695,700.00$ 12,801,280.00$
82.60$ 1,124,200 23 23 8,395 25,139,500.00$ 26,100,055.00$ 14,389,760.00$
70.80$ 1,299,400 26 26 9,490 25,139,500.00$ 29,504,410.00$ 16,632,320.00$
Revenues & Profit Max Profit Point
Max profit point realized with a 15% reduction in ticket price
Max profit point realized with a 15% reduction in ticket price
Price# Tickets Per
YearTotal Cost Per
YearTotal Revenue
Per YearTotal Accounting
Profit Per Year
118.00$ 686,200.00 56,618,560.00$ 80,971,600.00$ 24,353,040.00$
106.20$ 861,400.00 58,861,120.00$ 91,480,680.00$ 32,619,560.00$
100.30$ 934,400.00 59,795,520.00$ 93,720,320.00$ 33,924,800.00$
94.40$ 1,000,100.00 60,636,480.00$ 94,409,440.00$ 33,772,960.00$
82.60$ 1,124,200.00 65,629,315.00$ 92,858,920.00$ 27,229,605.00$
70.80$ 1,299,400.00 71,276,230.00$ 91,997,520.00$ 20,721,290.00$
Yearly Profit vs. Number of Tickets Sold
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
600
,000
700
,000
800
,000
900
,000
1,0
00,0
00
1,1
00,0
00
1,2
00,0
00
1,3
00,0
00
1,4
00,0
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Tickets Sold per Year
Do
llar
s
Total Cost PerYear
TotalRevenue PerYear
TotalAccountingProfit PerYear
Max Profit Point
Cost vs. Revenue vs. Profit
TC
Profit
TR
PROMOTION
•Rapid reward offer•Annual education travel program•Special offers•Celebrity endorsement•Promotional partners•Commercial Ads
Rapid Reward Offer• Get one bonus credit when you fly into or out of Minneapolis/St. Paul!• Receive triple Rapid Rewards® credit and up to 25% off with Alamo®!• Avis® rewards Southwest Airlines’ Rapid Rewards Members with double
credit and up to 40% off!• For a limited time, earn a bonus Rapid Rewards credit at any Best
Western® Hotel!• Budget® rewards Rapid Rewards Members with up to 40% off and up to
double credit!• Receive triple credit at Cambria Suites® hotels• Double up with Dollar®!• Dine your way to Rapid Rewards credits with Rapid Rewards DiningTM.• Up to 20% off & earn double Rapid Rewards credits with Hertz®!• Earn Triple Rapid Rewards® Credits with Hyatt®
• Book smart. Receive double credit at Thrifty®.
Annual Education Travel Program
• Southwest Airlines and the Hispanic Association of Colleges and Universities Open Travel Program for College Students
• Online registration starts from 13 apr 09 till 5 jun 09.
Celebrity Endorsement• Model Bar Refaeli unveiled Southwest Airlines' new
SI One 737 at LaGuardia Airport in New York today.
Promotional PartnersCredit cards
Rental cars
Hotels
Dining Retail
PEOPLE
DIFFERENT CAREERS AT SOUTHWEST AIRLINES
CONTINUE…
CONTINUE…
BENEFITS - THE EIGHT FREEDOMS
CONTINUE…
CULTURECulture: the development, improvement, and refinement of the originality, individuality, identity, and personality of a given people.
Work HardDesire to be the bestBe courageousDisplay a sense of urgencyPersevereInnovate
Adhere to the Basic PrinciplesTreat others with respectPut others firstBe egalitarianDemonstrate proactive Customer ServiceEmbrace the SWA Family
Have FUNMaintain perspective (balance)Celebrate successesEnjoy your workBe a passionate Team player
PLACE
SOUTHWEST AIRLINES TOP TEN AIRPORTS
• Low cost
• Un tapped market
• Less facilities
• Comparatively less luxuries
KEY POINTS
THE SOUTHWEST EFFECT AND CODESHARE AGREEMENTS
• Morris Air
• Muse Air
• Iceland Air
• ATA Airlines
• West Jet Airlines
• Volaris
ROUTE-MAP OF SOUTHWEST AIRLINES
NON-STOP SERVICES
Process Southwest has built a successful business on an unusual model: Flying multiple short quick trips into the secondary (more efficient and less costly) airports of major citiesUses only one aircraft type, the Boeing 737
Tickets cannot be purchased through common online venues and a minority are booked through travel agents.
Southwest's tickets are issued directly by the airline over the phone or online at the company's website.
Southwest allows passengers to change reservations without additional cost.
Refunds can be made online where you need to cancel the reservation or you can do so by calling the reservation number.
Customers are not assigned seats; rather, they are assigned to one of three "boarding groups“
Southwest offers no aisle or window seat assignments
Extend no upgrades nor preferred boarding status to their most frequent travellers
Southwest historically allowed three pieces of luggage to be checked in free as opposed to the limit of two on the domestic flights of some other U.S. airlines Southwest served smaller meals than the meals served by full service airlines, with shorter flights receiving single small snacks and soft drinks, and longer flights (with a duration of about 3 hours or more) meriting "Snack Pack"s of pre-packaged goods.
In the 2000s these meals in a bag typically exceed the food served on full-service airlines.
There are several flights that are at least of two hours long whereby you are served with peanuts and pretzels. If you are on a non stop flight, then a packaged snack will be served. Other complimentary tea, coffee, non alcoholic drinks are also available but some product such as beer, wine may be charged.
Provide no lounges with free drinks
Physical Evidence
Southwest is known for colourful boarding announcements and crews that burst out in song.
“Marvin Martinez, a bellman and front desk agent at the San Antonio River Walk Marriott, says, “We all bring out smiles in our own special way. Me, I’m a performer. Every day I’m on stage in front of my biggest fans, my guests. When I walk into the lobby, I’m on! I’m an aggressive hospitality animal. My guests always leave satisfied.”
An Birds Eye View