GROUP CASE ANALYSIS

SOUTHWEST AIRLINES

Due Date:
June 10, 2016

Prepared for:
Clyde Walton

Prepared by:
Shivek Saini
Pushpinder Singh
Jaswinder Singh
Gaurav
Hoshiar Singh

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Southwest Airlines

Group Case Analysis

Table of Contents
Executive Summary.................................................................................................... 3
A.

Industry Environment: The North American Airlines.............................................4

B.

Corporate Strategy............................................................................................... 5

C. Corporate Structure............................................................................................. 6
D. Corporate Culture................................................................................................. 8
E.

Role of Corporate Leaders: In General...............................................................10

F.

Role of Corporate Leaders: In particular.............................................................13

Works Cited.............................................................................................................. 15

Table of Figures
Figure 1 Organizational Structure of Southwest Airlines.............................................7

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Southwest Airlines

Executive Summary
Southwest Airlines was established in 1967 by Herb Kelleher, the former CEO
of the Southwest Airlines was Colleen Barrette, she contributed most of her
career in this airlines. Southwest Airlines is one of the leading airlines
industry and proved as a big competition for other airlines in terms of growth
and profit. Southwest Airlines is conscious about the leaders and leadership.
Southwest is disciplined about the coaching and mentoring. In order to
develop the employees, they prefer to select the people who have
experience about the work and culture of the company. There are various
programs for developing the leaders range from the leadership includes:

Training to everyone
Leadership briefings
Communication about leadership in company bulletins
Presentation by outside consultants

The purpose of the training and development in the airlines to preserve

the leadership and culture in the airlines which can have a beneficial effect
on the growth of the airlines industry. In order to get the success, the
southwest airlines promote the people who work well and get rid of people
who does not perform well in the company. This is the major thing which
contributes to the success of the southwest airlines. There are no big shot
leadership in the southwest, is anybody is unwilling for being a part of the
leadership team, they will be no longer be there. Leaders play an important
role in the success and growth of the company but in southwest airlines
everyone is responsible for the success and profit of the company.

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Southwest Airlines

A. Industry Environment: The North American Airlines

The industry environment is factor which includes the economic, social,
political and managing the industrial market. The North American Airlines
was in profit and had a good graph in growth but besides that the threat of
loss was going on. Many factors were affecting the industry with their
negative impact which includes the increase in the potential interest rate,
strength of the U.S dollars, lowering the value of currency for China and fall
in the oil prices. The calculations for the economic growth for the world is
3.3%, for U.S 2.5% and for Canada 1.5%. Negative impact of the weak
economy also affects the customers services and it reduces the sales and
profit rate. Economic growth plays an important role in the financial
statistical of the airlines industry but the major contribution is of the oil
prices. ALPA, a stakeholder in the airlines accepts the reduction in the oil
prices. Reduction in the oil prices leads to the weak economy which can have
negative impact on the growth of the airlines industry. In the middle of the
2015, U.S mainlines carriers reported profit margins for the current up cycle
and renewed focus on the capacity disciplines leading for the financial
improvements. Due to these improvement stakeholders are earning well on
their investments and the employees were also expecting the benefits and
increase in the salary. The fee for departure (FFD) sector of the U.S airlines
industry has the negative affect due to the following factors:
1. Effect on the hiring and retention of the pilot due to the shortage in the
pilot pay shortages in the FFD sector.
2. Carriers do not have the profit incentives.
3. The total fleet count was decreasing due to the larger seat aircrafts.
4. FFD airlines have some additional burden of the costs aircraft, whereas
other aircrafts were using these costs for other useful purposes.

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Southwest Airlines

FFD the fee for departure is unable to attract the pilots for retention and
hiring because they were offering the lower wages and regional carriers
required to replace the pilots to move to majors. To resolve this problem, the
regional industry is introducing some approaches which can be useful for
this, these three approaches are as follow:
1. Like the other airlines like Endeavor air, Southwest Air, and Envoy air
are reducing the size to use the size of the available pilots, FFD should
also follow this concept.
2. By adjusting the capacity of the larger airplanes.
3. To increase the fleet size so that upgrade time could be reduced.
The regional airlines which are having the increased fleet size are actually
attracting the pilots towards them, since the 2008 to 2009 recession the U.S
air freight business has gone through the change. The market shares of the
U.S air freight has approximately drop with 3 percent of the total
international trade in the year of 2000 to the 1.3 percent in the year of the
2013.

B. Corporate Strategy
Corporate strategy of a company decides its overall working to achieve its
organizational goals. To ascertain profits or the company the strategy should
be perfect which helps the company in the long run.
Southwest Airlines Co. has turned into the dear of the U.S. aircraft industry
(and its speculators) since its initiation in 1966. With an attention on worker
advantages, low airfares and proficient operations, it is known as one of the
best aircraft organizations in the whole business. The company as the most
grounded administration in the whole industry. Whether its suggesting or
benefiting its clients, the company has remained at the top from CEO Herb
Kelleher to the present CEO Gary Kelly in the industry. The part of Southwest
Airlines that isolates it from the opposition is its emphasis on worker joy,

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Southwest Airlines

which streams down to client satisfaction. Southwest representatives have a

portion of the best advantages and pay bundles in the business, and it
appears. While 87% of Southwest workers have a place with a union, there
has never been a union strike at Southwest Airlines. This is a demonstration
of the sort of workplace that has been developed at Southwest. This
satisfaction can be found in the way the representatives treat clients,
transforming everybody into Southwest Airlines evangelists.
Now if we talk in border sense about the corporate strategy of the Southwest
airline so their whole business is based on low cost travel in the whole
industry. Company focuses on the point to point strategy with its
competitors. This helps the organization increase more noteworthy activity
on the majority of its household courses, as it can offer lower normal flight
time. The have strategy to have less toilets and exhibitions on the board that
helps to cut the cost. Company has been adding Boeing 737-800s to its
armada, which have a seating limit of 175 travelers. As per CEO 6 to 7% of
boarding is by the business companies which in total gave company profit of
$295 million in 2013. (Bhaskara, 2014).
The reason Southwest Airlines has swung progressively to business
movement is established in its cost structure. For a great part of the most
recent too many years of the twentieth century, Southwest was developing
at a fast pace. At the point when a carrier is developing quickly it can
counterbalance cost increments on its current system by spreading settled
expenses crosswise over more flights flying machine and destinations. Be
that as it may, by the mid-2000s, that development had to a great extent
decreased. Lower per-gallon fuel costs because of savvy supporting of oil
permitted. Southwest to keep on offering amazingly low tolls somewhere
around 2003 and 2008 even as its ability development impeded. Be that as it
may, today Southwest pays market cost for fuel, and its incomes have
needed to increment appropriately. Besides Southwest is noted for its solid
administration work relations, which has positive and negative effects. From

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Southwest Airlines

one perspective this methodology minimizes the danger of work strife and
expansions worker fulfillment, which Southwest accepts positively affects
administration and the travel experience (Schmidt, 2015).

C. Corporate Structure
Southwest Airlines is a champion amongst the best transporters. It is also
one of the convienet airline among others. It is arranged in the simplicity
market piece which enhances it even. It is a decent case for some other
negligible exertion bearers like Ryanair and Easyjet. I was enthusiastic about
finding what their formal advancement and various leveled structure that
makes it such a powerful air ship.
We along these lines reason that the motivation driving a connection's
structure is to have a systematized strategy for control and correspondence
among the general open join into the business. It likewise picks the position
of a representative in the business. The structure facilitates the surge of
responsibilities and set up the level of power that helpers in decreasing clash
in the alliance.
Its strategy is: "The task of Southwest Airlines is commitment to the most
raised nature of Customer Service went on with a slant of friendliness,
congeniality, solitary pride, and Company Spirit." Moreover, they have an
alternate statement for their HR organization: "We are embarked to give our
Employees a persistent workplace with proportionate open passage to learn
and care. Few more properties that make their framework so strong are
creative ability and improvement.
The principal aim of this airplane is to be a family unit bearer working
straight flights on short-pull courses with a repeat and with low entries. The
essential operative method relies on upon six behaviors which include:
1. compelled explorer,

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Southwest Airlines

Group Case Analysis

2. consistent tried and true flights,

3. short-pull, point-to-point courses between medium estimated urban
zones and discretionary air terminals,
4. low ticket costs,
5. slant, vivaciously useful ground and door groups, and
6. high aircraft use.
The various leveled building of Southwest Airlines is known for being
utilitarian. There are three layers of organization. They consider quality as
their

affiliation

easygoing

which

consolidate

correspondence

and

quality,

feedback.

steadfastness,
As

like

movement,

Southwest,

Work

specialization doesn't keep running as far with different bearers. An instance

of this is to diminish the improvement time, pilots clean the flying machine
which only happens once a while.

Figure 1 Organizational Structure of Southwest Airlines

I was to a great degree enlivened with the relationship of southwest. I have
experienced southwest before and it has reliably been wonderful flight. My
request for Southwest as to their affiliation would be:
1. How might they handle an issue with a hopeless customer on flight?
2. How might they oversee emergencies?

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Southwest Airlines

3. What are a couple of experiences from their flights?

We subsequently assume that the inspiration driving an affiliation's structure
is to have a systematized methodology for control and correspondence
among the overall public incorporate into the business. It furthermore
chooses the position of an agent in the business. The structure coordinates
the flood of commitments and set up the level of force that aides in
diminishing conflict in the affiliation.

D.Corporate Culture
Corporate culture is what a whole organization is bound to work with or is
what organization run by. Talking about culture at southwest so the company
is working on the theme love. Which was initiated by the founder and is
carried on by the present CEO, Gary Kelly. As they think by passing on love
between the co-workers the environment is good with the organization and
also with the clients (Makovsky, 2013).
Company is working on strategies like warrior spirit and servant heart. With
warrior spirit they mean being bold as far as conveying the item. Individuals
go for an assortment of reasons i.e. business, tourism, education etc.
Therefore, the company is always there to make them feel relax and easy
journey. Servant heart means giving full reverence to the customers. For
which they provide their employees with all the tools which they need to
amaze the customers. Basically they are providing a low cost, reliable and
friendly air travel. For Southwest employee satisfaction is above the
customers. The methodology may appear to be eccentric however it
bodes well and is by all accounts working fine and dandy at Dallas airport
that has employed 47,000 people and serves 100 million customers annually.
If we look at some of the achievements made by the company so USA
Transportation Department marked it first in consumer loyalty in 2013, also
ranked second by the Business Insider for keeping best aircrafts and received

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Southwest Airlines

number second position for Airline survey done for customer satisfaction by
the Consumer reports (MOUAWAD, 2010).
Southwest is fixated on putting its employee first. Their administration
focuses on treating their employees in the same manner in which they want
to treat their customers. This is because Southwest consider its employees to
be the customers to the company. So they respect them and give them
importance. Company has created an environment in which they appreciate
the work done by their employees and also reward them for the same. This is
also an example for the other employees to work more hard. With such
strategies company has great Corporate Social Responsibility Stance. As they
are helping the employees even to live better and also helping their
customers to live better lives and do their long distance work very easily and
comfortably with affordable charges. Their strategy to treat their employees
is very hard for their competitors to match with. As it can be seen from their
Halloween party ritual that how they treat their employees. With such kind of
the cultural events it motivates the employees to work with more
enthusiasm. Also as all the top level employees and their subordinates party
together is symbol of equality which also proves that there is no
discrimination. In a nutshell such kind of culture is very lucrative and
beneficial for the company to achieve its organizational goals effectively and
efficiently (Peel, 2016).

E. Role of Corporate Leaders: In General

In view of the meaning of initiative, numerous hypotheses have concentrated
on gathering process authority, conduct approach, aptitudes methodology,
and characteristic methodology. In the most recent decade, more up to date
speculations have gotten to be prominent, including social, change, and
profound administration to help associations adjust to change in an
unverifiable worldwide commercial center in the article, "The Art form of

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Southwest Airlines

Leadership", led a study on ninety administrators to realize which skills were

shared and consolidated in their parts to effectively make an interpretation
of goal into reality in associations, while looking after consistency.
Herb Kelleher's Competencies, Attributes, and Skills: Herb Kelleher is a one of
a kind pioneer with an arrangement of abilities that have made him a legend
at Southwest carriers (SWA), which are:
(1)Set up a society domain in which assorted qualities, pride and regard are
esteemed,
(2)Built up a worth included authority improvement program based the
reasoning "contract for demeanor and train for expertise",
(3)Stayed in contact with workers through viable correspondence and
comical inclination,
(4)Enlivened through duty, putting representatives FIRST,
(5)Made a common vision by impacting workers and

making

an

interpretation of that vision without hesitation,

(6)Created inventive techniques keeping SWA a fruitful aircraft in a focused
commercial center.
Herb Kelleher shared six key individual traits vital for fruitful administration,
which are a sensible insight, great wellbeing, a hopeful mien, a protracted
ability to focus, constancy, and an adoration for individuals. He additionally
properties acquirable aptitudes that are the most donors to achievement,
which are:
(1)Great listening abilities,
(2)Wide information and instruction,
(3)Sound judgment,
(4)Capacity to be an energetic backer,
(5)Capacity to discrete critical from insignificant things,
(6)Capacity to be objective situated with spotlight on needs,
(7)Charming doubt (BABSON, 2013).
Herb Kelleher has seven privileged insights for achievement, which are:
(1)One plane fits all - Boeing 737 arrangement is the main plane they fly
decreasing support costs in the millions,

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Group Case Analysis

(2)Use point-to-point flying contrasted with center and-talked framework

which expands SWA on-time execution above industry normal,
(3)Straightforward in-flight administration implies less down time and an
additional flight for each day,
(4)Basic charge structure with one way tolls lessens many-sided quality for
travelers,
(5)Administration is incline, all around adjusted, and exceptionally gainful,
(6)Extremely cheerful workforce, which is 87% union, and are most
generously compensated in the business. Since, SWA has 30% less
representatives for every air ship, implies the most minimal expense per
accessible seat mile (CASM) contrasted with any of the real aircrafts and,
(7)Forceful fuel supporting (Lucier, 2004).
As per Herb Kelleher two needs, which are representatives and clients, he
trusts officials ought to invest the greater part of their energy with inward
and outside clients. In light of his timetable, he spends around fifty percent
of his time discussing casually with workers and clients contrasted with other
executive's. He likewise trusts the brand of society at SWA would not be
conceivable without reasonable pay for his representatives. He concurs his
representatives are paid above normal compensations, while paying his
officers not exactly contending bearers. To persuade workers and motivate
efficiency, SWA permit all representatives to take an interest in the liberal
benefit sharing.
Kelleher's

trusts

SWA

achievement

depends

on

the

accompanying

methodologies taking into account his authority attributes, which are: (1)
actualize a dream without bounds that spotlights on worldwide contenders,
societal changes, and clients while investing less energy in interior
conventions, benchmarking, and techniques, (2) execute critical thinking
process by lessening the layers from base up and decrease the quantity of
lasting boards of trustees and utilize specially appointed gatherings, (3) build
up rules on basic leadership, (4) include representatives in broadly educating
programs in initiative, bolster, client administration, and different offices to
motivate achievement, (5) don't over examine and study reports and

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Southwest Airlines

spending plans unless they have significant activity or inaction, (6) esteem
workers by praising accomplishments and turning points, (7) rouse and
intention new thoughts from all workers paying little respect to position,
qualifications, and status, (8) include administration and workers in a
participative procedure for taking care of issues, (9) actualize an adaptable
vital arrangement concentrating on issues that defy you, and settle on
choice and activities as indicated by the arrangement, (10) be unassuming,
congenial, moral, led by serving, be reasonable, firm, don't separate,
appreciate individuals, concede botches, don't be ravenous, and have a
great time, and (11) correspondence with representatives to make trust and
regard by putting them to start with, and (12) Hire individuals who have
awesome dispositions, comical inclination, benevolent, and avid to learn
(cote, n.d.).
Southwest Airlines is an organization that qualities uniqueness. By permitting
representatives to act naturally at work, it gives them the opportunity to be
creative and beneficial. Thus, representatives feel enabled, make the most of
their occupation, which means upbeat workers who are less pushed and are
more adept to deal with themselves physically. Kelleher is an incredible good
example, who is an energetic advanced pioneer, who values his workers. As
a powerful pioneer, he has empowered his officials to run their areas of
expertise as fit, while giving the important backing and assets to be
effective.
This sort of initiative has empowered the formation of the administration
benefit chain (SPC) model, which is contains representative fulfillment, client
dedication, and shareholder esteem. In light of this model, Kelleher trusts
benefit and development are animated by client unwaveringness, client
dedication is the aftereffect of consumer loyalty, and consumer loyalty is
made the worth workers make items and administrations to clients. This
empowers chiefs to target new speculations created around consumer
loyalty while augmenting the aggressive effect.

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Southwest Airlines

Herb Kelleher has gained from his encounters, both decidedly and contrarily,
and kept on driving SWA until he ventured down from the CEO position in
2001 he cleared out as a legend. At the season of his takeoff, it was the ideal
opportunity for another pioneer with crisp thoughts and procedures to take
SWA to the following level. Despite the fact that he is no more piece of SWA,
he kept working with SWA as Chairman of the Board until he surrendered
from the board in 2008.

F. Role of Corporate Leaders: In particular

I.

Leaders at Southwest Airlines are made qualitatively to ensure the

supportive culture and increased productivity. The Former CEO, Colleen
Barret believed that the making of leaders starts from the hiring
process which maintains the corporate culture that supports leadership
at southwest. Consistent coaching and mentoring is extremely
important to build such an environment of leadership, says Barret. The
company firmly believes in forgiveness for honest mistakes but never
spare the ill attitude and behavior which creates negative image of the
company. To exemplify, close monitoring on employees is an everyday
work of the managers, to ensure that employees are working efficiently
and those who are not, goes out whereas those performing well
receives appreciation or reward in the form of promotions and so on
(Nahavandi, 2015).
At southwest, different programs are run to create leaders ranging
official leadership training sessions for everyone starting with front
desk employees, to professional consultants providing presentations
and seminars and communicating about leadership on bulletin boards
at company level. The motive of these training sessions are to
establish a culture that supports leadership and its style that can be
effective to produce customer satisfaction because ultimate goal for
southwest airlines is happy customers. Moreover, employees are

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Southwest Airlines

Group Case Analysis

treated with same respect and care as the company treats their
customers which makes the difference and this is how company
promotes healthy and friendly work environment ensuring competitive
II.

output threatening rivals (Nahavandi, 2015).

The concept of fit and leadership developing culture has really boosted
the companys success to heights. Fit here means the one who fits in
the companys culture and the environment to work dedicatedly such
that he or she cares for what he or she does. Moreover, Southwest
build its employees in a way that they love their co-workers and
customers genuinely. The former CEO made a committee of hundred
people to flourish that culture by making the employees learn every bit
of it. Furthermore, this culture committee encourages the task to
reinforce the spirit of Southwest Airlines. Therefore, the joint effect of
fit and leadership culture where all employees are themselves a leader
and strong training guides help the southwest employees to engage
with the company in such a way that they feel it their own success and
pride.
To exemplify, in 1991 air-fuel prices increased so tremendously that it
almost became non-viable for the company to sustain the impact.
However, the southwest employees showed an engagement with the
company as they were built, by voluntarily purchasing fuel for the
company through their payroll deductions. It shows that employees
consider themselves as an important participants and are treated one
in the business and will go out of their way to help the company. One
more case where southwest employees showed full commitment to the
company by creating a ten-minutes plane turnaround in 1972. As the
company wanted to service the same number of routes but had to cut
the number of planes. This could not have been possible without the
dedication

of

employees

working

for

Southwest

(Employee

Engagement Lessons From Southwest Airlines, 2013).

In this way, the concept of fit and creating culture has proven to be
beneficial for Southwest Airlines.

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Southwest Airlines

Works Cited
1. About Southwest. (n.d.). Retrieved from
https://www.southwest.com/html/about-southwest/
2. BABSON. (2013). babson college. Retrieved from
http://www.babson.edu/executive-education/education-educators/babsoninsight/Articles/Pages/Learning-to-Think-Like-an-Entrepreneurial-Leader.aspx
3. Bhaskara, V. (2014, April 22). Forbes. Retrieved from
http://www.forbes.com/sites/airchive/2014/04/22/southwest-airlines-opensfor-business-customers/#60c316d15856
4. cote, B. (n.d.). linkin. Retrieved from
https://www.linkedin.com/pulse/leadership-analysis-southwest-airlines-flyinghigh-bob-cote-phd-mba
5. Employee Engagement Lessons From Southwest Airlines. (2013, Feburary
08). Retrieved from https://experiencematters.wordpress.com:
https://experiencematters.wordpress.com/2013/02/08/employeeengagement-lessons-from-southwest-airlines/
6. Lucier, c. (2004). stratergy - business. Retrieved from http://www.strategybusiness.com/article/04212?gko=8cb4f
7. Makovsky, K. (2013, November 21). Forbes Leadership. Retrieved from
http://www.forbes.com/sites/kenmakovsky/2013/11/21/behind-the-southwestairlines-culture/#467cf97e3fb9
8. Martin, E. (2015, July 29). Business Insider. Retrieved from
http://www.businessinsider.com/southwest-airlines-puts-employees-first-20157
9. MOUAWAD, J. (2010, November 20). The New York Times. Retrieved from
http://www.nytimes.com/2010/11/21/business/21south.html?_r=0
10.Nahavandi, A. (2015). The Art and Science of Leadership, 7th edition. New
Jersey: Pearson.
11.North American Airline Industry Continues on Profitable Path, but Threats
Persist - See more at: http://www.alpa.org/news-and-events/air-line-pilotmagazine/2015/102015/state-of-the-industry#sthash.tN4zKTX1.dpuf. (2015,

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October 01). Retrieved from http://www.alpa.org/news-and-events/air-linepilot-magazine/2015/102015/state-of-the-industry

12.Organizational Structure Analysis for Southwest Airlines Co. (2012, May 07).
Retrieved from http://www.danielihliu.com/blog/2012/05/07/organizationalstructure-analysis-for-southwest-airlines-co/
13.Organizational Structure of Southwest Airlines. (2010, April 15). Retrieved
from https://tortora.wordpress.com/2010/04/15/organizational-structure-ofsouthwest-airlines/
14.Peel, B. (2016). LETU. Retrieved from
http://www.centerforfaithandwork.com/article/southwest-airlines-legendarycorporate-culture-interview-dave-ridley
15.Schmidt, A. (2015, July 29). Market Realist. Retrieved from
http://marketrealist.com/2015/07/southwest-stock-surges-2q15-earningsrelease/
16.The Rise of Southwest Airlines. (n.d.). Retrieved from
http://www.advancebusinessconsulting.com/advance!/strategicalignment/strategic-alignment-business-cases/the-rise-of-southwestairlines.aspx