Southwest to a national pilot’s union. Fuel costs

Southwest clearly has adistinct advantage compared to other airlines in the industry by executing aneffective and efficient operations strategy that forms an important pillar ofits overall corporate strategy.The carrier providedfrequent point-to-point service between secondary airports that are were lesscongested allowed them to have an efficient use of gate times keep costs low,and an efficient operation within airports be seeing as a result.

Operations were designedfor simplicity: an all-Boeing 737 fleet, an absence of meals and seatassignments, an all-coach cabin with no frills, flexible work rules, and anenthusiastic workforce contributed to very short turn times and high aircraftutilization. Also uses one type of aircraft help to reduces training andmaintenance costs as well as contracts with fuel suppliers. They hedgeaggressively on fuel which allowed them to be profitable when other airlineswere losing money.Southwestset its prices very low, typically to compete with the cost of auto travelrather than other airlines’ fares.  Southwest’s pricing structures weresimple and relatively transparent to passengers, with few classes of fares andfew ticket restrictions.

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Southwest Airlines low prices are attributable to noluxuries or unnecessary extras; however, their friendly staff’s culture createsa fun, personable and unique experience for their passengers at low cost fare.Amongthe key success factors for Southwest Airlines are the well-known operational costs and efficiency of thecompany, perhaps the most critical element of the successful low-fareairline business model is achieving significantly higher labor productivity.Other key factor and advantage the airline has over its competitors is that itis the only major carrier that does not belong to a national pilot’s union.

Fuel costs is the second-largest expense for airlines after labor and accountsfor about 18 percent of the carrier’s operating costs. Airlines that want toprevent huge swings in operating expenses and bottom line profitability chooseto hedge fuel prices. If airlines can control the cost of fuel, they can moreaccurately estimate budgets and forecast earnings.

 Employee andLabor Relations is undoubtedly an important key for the company success, Southwesthas been highly regarded for its innovative management style. It maintains arelentless focus on high-performance relationships and its people-managementpractices have been the key to its unparalleled success in the airlineindustry.  The company affords the same respect to its employees that isprovided to its customers.Undeniably, customerservice has played an important role in the success of the airline. The missionof Southwest Airlines is dedication to the highest quality of Customer Servicedelivered with a sense of warmth, friendliness, individual pride, and CompanySpirit.

The customer service that is inherent to Southwest is a part of itsculture. This culture is supported through employee encouragement to do theextra to satisfy the customer.Another important key tobe mention is technology. Southwest utilizes technology in many ways to fulfillits business objectives and maintain its efficient operations, such as: barcodes in boarding passes, software upgrades and RFID, Southwest has emergedvery successful, despite the most troubled times in the airline market.However, it faces new challenges in the face of increasing competition fromother low fare airlines such as JetBlue, ATA airlines, America West. Sincecompetition became a fact Southwest Airlines must address safety concerns to continuebeing considered as a safe airlineOne of the weaknesses ofSouthwest Airlines is related to one point of its strategy.

In certain way,keep insisting in only flying to second tier airports could represent a problemof growth limitation since there are still big cities with a great profit potentialwith no SWA services. Southwest Airlines need to extend flights to furtherdestinations either international or other national markets, as well as applynew technologies to make the travel experience more enticing.