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Southwestern (the industry (categories (major carrier, national carrier,…

- - - - long-haul routes where more profitable and hence was favored by established players
      - short-haul routes where served by existing regional carriers and new airlines
    - - increased competition where the new entrants had cost advantage due to retained pot-to point model and lower debt than established players
      - price competition
    - - players where fragile due to a decade of marginal profitability
      - a lot of airlines filed bankruptcy
      - a lot of new entrants due to the large supply of used aircraft human capital relatively cheep
        
        low fare low frill carriers
  - - - advantage
      - disadvantage
      - nonstop flights between city-pairs
    - - advantage
        
        easier to fill large aircraft flying long distances
        
        cost economies
      - disadvantage
        
        reduced utilization of aircraft from waiting to collect passangers
        
        capital investment in hub facilities
        
        need for larger ground staff
      - feeder flights from outlying cities to a central hub city
  - - - fuel
        
        fixed
        
        uncontrollable
        
        high variability
      - labor
        
        semi controllable
        
        fixed
  - - - airline-within an airline concept
- - - - minimal amenities
      - high capital utilization
        
        turn around times 15-20 average 55
        
        used smaller less contested airports
        
        planes made about 10 flights/day double the industry average
      - short-haul point-to-point
      - high frequency
      - does not coordinate baggage transfers
      - cut out the travel agent
      - does not offer seat assignments
      - no first class
      - no meals
      - youngest fleets
      - only one airplane model
      - 7.08 cents per seat mile
    - - sense of humor
      - flat hierarchic
        
        pilots can be found assisting at a boarding gate
      - internal publications
        
        what positively outrageous service looks like at southwest airlines
      - triple crown
        
        rating highest at
        
        on-time performance
        
        baggage handling
        
        overall customer satisfaction
    - - price
        
        viewed the automobile as its primary competitor
      - promotion
        
        painted planes
        
        frequent flyer program
    - - employer
        
        profit sharing plan
        
        10% of stock
        
        low turnover
        
        top 10 best companies to work for
        
        80 % of promotions being internal
  - - - carried more passenger than any other airline in top 100 city pair markets
    - - fourth quarter 1994, record low stock value
        
        conversion of acquired Morris air corporation
        
        price competition with airline within airline initiatives
- - - - shuttle by united
      - continental lite
    - - discontinue Oakland Ontario
      - increased fare prices 10%
    - - Did the fare increase signify a major modification in united strategy?
      - what implication does this entail for southwest?
      - are the decisions of withdrawal an increased prices linked?
  - - - consequences
    - - consequences
- - - - operations
        
        points of diffrence
        
        offers first class
        
        WILMA
        
        replicate southwesters operations
      - mission
        
        goals
        
        reduce operation costs from 10.5 to 7,5 cents per seat mile
        
        achieving 20 min aircraft turns
      - employees
        
        motivational classes to emphasize team-work and customer service
    - - boosted advertising and promotion budget
        
        value proposition
        
        "The low fare Airline"
        
        21-day advance fare
      - pricing
        
        United was 5-10 % higher