Southwest Airlines Term Project

Services Marketing Dr. J. Chris Lin Fall, 2008

Group 10
Yi-Ping Dani Judy Joy Ann Peter ran! Ted

We tell our Employees we are in the Customer Service businesswe just happen to provide airline transportation. It is a privilege to serve your air travel needs. Southwest Mission Statement.

"uestion 1#
A$ Targeting the niche mar!et Southwest !irlines" secret to its success is ver# straight$orwar%. Southwest clearl# %e$ines its e&isting 'ur'oses, which is to 'rovi%e the lowest $ares $or (usiness an% leisure travelers traveling (etween states. )nstea% o$ com'eting with large*scale airlines to $l# international routes, Southwest $ocuses on +'oint*to*'oint, interstate short tri's, an% more on ma&imi-ing the 'ro$ita(ilit# than $ocusing on market share. .his strong vision outweighs the allurement o$ international $light market, kee'ing Southwest airline concentrate% on its own niche to gain 'ro$it. %$ &ost-consciousness Since low $ares have (ecome its selling 'oint, %ecreasing the cost (ecomes ver# im'ortant. Southwest !irlines tries to save mone# (# sim'li$#ing its o'erating 'rocess. /tili-ing strategies such as having +0ne t#'e o$ aircra$t,, +cash*register recei'ts as tickets,, +no com'uter reservation s#stem, an% +no meal service, are some e&am'les o$ its low cost strategies. &$ Speed and '((iciency Southwest knows that air'lanes generate revenue onl# when the# are in the air. !ccom'anie% with the +'oint*to*'oint, strateg#, Southwest chooses to o'erate (# the most e$$icient wa# o$ a%o'ting the conce't o$ +high average velocit#, instea% o$ conventional +hu(*an%* s'oke, s#stem. D$ )igh Ser*ice "uality Furthermore, Southwest un%erstan%s that its +low $ares, strateg# cannot (e achieve% at the sacri$ice o$ goo% service. Southwest %e$ines the essence o$ its (usiness as service, stating, +1e are not an airline with great customer service. 1e are a great customer service organi-ation that ha''ens to (e in the airline (usiness., !ccor%ing to the $ive %imensions in S2345/!L, Southwest has great 'er$ormance in the %imensions o$ relia(ilit#, res'onsiveness, assurance, an% em'ath#. '$ lat +rgani,ation 6a7 Southwest has a lean structure an% in$ormal co%e o$ con%uct. .he leanness lea%s to the cross*$unctional communication. 2m'lo#ees can connect with managers or even the 'resi%ent imme%iatel# whenever the# want to %eliver o'inions an% suggestions. )ts hierarch# is 8uite sim'le so that %e'artment su'ervisors can manage em'lo#ees ver# well an% (oth si%es can maintain goo% an% %irect communication. 6(7 Southwest reali-e% that the real ownershi' o$ an organi-ation %oesn"t come $rom how much stock one owns. Southwest claims, +0wnershi' is the result o$ (elieving that #ou can make a %i$$erence, then acting on that (elie$ in ever#thing #ou %o., Southwest em'owers its em'lo#ees to solve service 'ro(lems in a timel# manner

; without asking su'ervisors $or 'ermission. .he# are encourage% to o$$er e&traor%inar# service an% their 9u%gments are truste%, whether the# are $light atten%ants or engineers. 6c7 Southwest (elieves the more em'lo#ees know, the more the# care. .he most u'%ate% in$ormation a(out Southwest is easil# availa(le $or ever# em'lo#ee. )t lets em'lo#ees know the 'ro$it o$ Southwest is not onl# the 'resi%ent"s concern, (ut also relate% to #our em'lo#ment securit#. )$ ever# em'lo#ee un%erstan%s how the com'an# makes mone# an% how a single customer woul% in$luence on the 'er$ormance o$ 'ro$ita(ilit#, the# woul% know their service to each customer mean a lot. )n this case, the# are more eager to suggest solutions $or re%ucing cost an% the $ront*line service 'rovi%ers can (e in a (etter 'osition to 'rovi%e (etter services. $ Success(ul -nternal .ar!eting 6a7 .he Southwest culture is to serve 'eo'le in a $un an% innovative wa#, (ut at the same time, make 'ro$its. Southwest"s human resources %e'artment, also calle%, .he :eo'le De'artment,, has its own 'rinci'les to select em'lo#ees. .he motto is, +2m'lo#ees are hire% $or attitu%e an% traine% $or skill., 6(7 Southwest (elieves that it shoul% satis$# its em'lo#ees $irst an% then the# woul% satis$# its customers. .he secret $or the success o$ Southwest !irlines is that it never sacri$ices ha''# em'lo#ees in or%er to satis$# customers. )n other wor%s, Southwest uses the Market*Focuse% Management Mo%el. )t (elieves that the com'an# shoul% trust an% stan% on its em'lo#ees" si%e (ecause sometimes customers might (e wrong. 6c7 Southwest lets ine&'erience% workers (e hire% as interns to learn $rom a goo% well*e&'erience% em'lo#ee $or a 'erio% o$ time. .his is %one so that a new(ie can o(serve the essence o$ Southwest culture $rom the %emonstration o$ the e&'erience% one. )t also trains em'lo#ees to 'ut their own shoes on other colleagues o$ %i$$erent %e'artments. .he# have the chance to e&'erience other %e'artment"s work so that the# can un%erstan% others" %i$$iculties an% (ecome more willing an% natural to hel'. !lso, managers o$ten come to walk aroun% to work with the $ront line em'lo#ees to un%erstan% their working an% %i$$icult#. 6%7 Southwest tries to let em'lo#ees know that it is not a com'an# (ut a (ig $amil#. .he 'ro$it sharing 'lan is an e&am'le. !lso, Southwest 'romotes cele(ration. 2ver# #ear, there are man# times to cele(rate $or the new o'ening o$ an air'ort or $or someone to (e the (est server o$ the #ear. .he# care a(out each other an% even the 'resi%ent can know some(o%# is sick an% nee%s encouragement. G$ Success(ul '/ternal .ar!eting 6a7 Southwest %oesn"t 'romise one thing an% %eliver the other. Southwest is ver# care$ul with the 'romotion an% a%vertising it %elivers to its customers. Southwest a''lies risk re%uction strateg# to its a%vertising. Southwest tells customers %irectl#

? what it can o$$er, such as the lowest 'rices an% e&ce'tional service, (ut %oes not 'romise an# meal service< utili-ing this strateg#, customers woul% not have the wrong e&'ectations. =owever, Southwest o$ten uses an, +/n%er 'romise an% over %eliver, strateg# to %emonstrate its relia(ilit#. 6(7 )ts a%s attract customers" attention in the ver# (eginning an% create some kin%s o$ humor to im'ress them. 1hile $acing com'etitors, Southwest %e$en%s itsel$ also with correct truth (# a humorous tone in the a%s. Southwest kee's its stance while re$lecting its culture an% goo% 8ualit# in a%s. )$ Success(ul -nteracti*e .ar!eting 6a7 >ecause o$ the success o$ internal marketing, em'lo#ees o$ Southwest are satis$ie%. 2m'lo#ees 'rovi%e service $rom the (ottom o$ their hearts, an% the# o$ten think that this 'er$ormance is 9ust +%oing the right thing., 6(7 )n the moment o$ truth or critical inci%ents, the# are willing to 'rovi%e e&tra services even though it might not (e their %ut#. 6c7 Southwest encourages em'lo#ees to e&ert in%ivi%ualit# while 'rovi%ing service. .he# regar% ever# customer as s'ecial guests an% give them 'ersonal attention accor%ing to their s'eci$ic nee%s. .hus, the# are more ca'a(le o$ creating a +legen%ar# service,, which might (e (e#on% customers" %esire% services. S0+T analysis (or Southwest Airline A$ Strength 6a7 Concentrating on the niche market 6(7 Cost*consciousness 6c7 S'ee% an% 2$$icienc# 6%7 =igh Service 5ualit# 6e7 Flat 0rgani-ation 6$7 Success$ul )nternal Marketing 6g7 Success$ul 2&ternal Marketing 6h7 Success$ul )nteractive Marketing !ll the success $actors mentione% a(ove are the strengths $or Southwest. !ll o$ these are com(ine% to (e the strong culture o$ Southwest which is %i$$icult to (e co'ie%. %$ 0ea!ness 6a7 Sticking to its niche $orces Southwest to think small an% make e$$ort to sim'li$# the (usiness o'eration. 6(7 Consistent low $are has (een alwa#s an a%vantage $or Southwest airline. =owever,

@ a +small com'an# +o'erating strateg# an% the 'romise to kee' 'rice low also inhi(it the com'an# $rom e&'an%ing. .o some %egree, Southwest is limite% to e&'lore more 'ossi(ilities. &$ +pportunity Short*haul (usiness traveler market is a 'otential market. :oint*to*'oint tri's (etween cities are a new niche in airline in%ustr#. )t"s eas# to un%erstan% that an#(o%# can o$$er high $ares an% high service 8ualit#, an% low $are with 'oor service. =owever, Southwest is committe% to 'rovi%e low $ares with great service. )t"s unusual an% 8uite %i$$icult in the in%ustr#, which also %i$$erentiates Southwest $rom other airlines an% gives Southwest more o''ortunities in the airline in%ustr#. D$ Threats 0ther large*scale airlines coul% o$$er lower $ares to com'ete with Southwest. 1ith the im'rovement o$ other groun% trans'ortations, Southwest might $ace the %ecline in customers" nee% $or a$$or%a(le short*haul carriers.

"uestion 1#
Ser*ice Gap .he %i$$erence (etween a customer"s e&'ectations o$ a service an% 'erce'tion o$ the service actuall# ma%e. Most 'assengers woul% e&'ect that an airline com'an# woul% im'ose one 'articular seat 'er 'assenger, (ut $or Southwest !irlines, 'assengers can choose their seats accor%ing to the in se8uence o$ the time that one checks in to (oar%. .his ma# cause 'assengers who want to choose seats that ena(le them to stretch their legs or seats that is along the aisle, or (esi%es the win%ow to consi%er other airline com'anies in or%er to reserve seats accor%ing to their own 're$erence. 1ith chea' tickets, new customers ma# assume that Southwest !irlines might 'er$orm services less 'ro$essionall# (ase% on low training (u%gets or ac8uire chea'er $acilities to lower the cost. .his ma# 'revent the com'an# $rom earning (usiness $rom 'ickier travelers. !lthough this kin% o$ customer woul% (e ha''# to 'a# less $or tickets, the# ma# not (e willing to en%ure 'oor service or have 'oor e8ui'ment. Ser*ice "uality 3elia(ilit# . Southwest !irlines is keen to kee' its 'romises. For e&am'le, the# have remaine% its low $ares ever since the# starte% to o'erate the $irm. 2. .he com'an# has esta(lishe% a goo% 'ersonnel an% communication channel which allows messages to circulate 8uickl# within the com'an#. .he a%vantage o$ this is that all the em'lo#ees are 'ermitte% to %iscuss the 'ro(lem together an% work out a solution that is welcome% (# ever#one. Customers are more likel# to have the service 'resente% to them correctl# %ue to the $act that it has (een well %iscusse%. ;. Southwest %oes not use the more tra%itional Ahu( an% s'okeA $light routing s#stem that is a%o'te% into most other ma9or airline"s o'erating s#stems. Southwest 're$ers the A:oint to :ointA s#stem instea%. .his means that Southwest can serves more cities with more $lights than other airlines a %a#. ?. .he com'an# insists on an error*$ree recor%. Southwest !irlines uses the >oeing B;B $or all their aircra$t which has sim'li$ie% training, maintenance an% groun% o'erations $or the com'an#. .his %ecision is 'ro(a(l# the reason wh# Southwest !irlines has never ha% a 'assenger $atalit# %ue to an acci%ent.

B 3es'onsiveness . 2m'lo#ees are su''ose% to answer the 'hone within the $irst ring o$ the call, making sure that their customer has 'eo'le answering to them. 2. Southwest !irlines em'lo#ee"s are selecte% accor%ing to their 'assion $or the 9o(, an% there$ore shows the willingness an% rea%iness to 'er$orm a service. ;. Southwest !irlines allows their em'lo#ees to make ma9or %ecisions on their own, giving them the authorit# to s'eak out lou%, an% also grants 'ermission to %eal with s'ecial circumstances the might occur %uring the $light. !s a result, most o$ their em'lo#ees can give 'rom't service when nee%e%, without having to wait $or their (oss to re'ort (ack (e$ore the# are allowe% to reme%iate the situation. ?. !ll the em'lo#ees o$ Southwest !irlines work as a (ig $amil#, an% ever#one in the crew share the res'onsi(ilit# o$ cleaning u' the aircra$t, an% ena(ling their 'lanes to have the take*o$$ again a$ter a s'en%ing ver# short 'erio% o$ time a$ter the groun% %ut#. Southwest !irlines have, in $act, 'ioneere% a ra'i% turnaroun% service on kee'ing its aircra$t on the groun% $or less than twent# minutes. >esi%e the $act that the# have all the 'eo'le working to get the 'lane rea%# $or the ne&t $light %es'ite o$ the original %ut# , Southwest !irlines has also gone into the e$$ort o$ change the internal %esign o$ the aircra$t in or%er to s'ee% u' the time o$ groun% %ut#. !ssurance . )n DD@, Southwest !irlines starte% a non*ticket 'olic#, which remove% the 'ossi(ilit# o$ customers losing their ticket (e$ore (oar%ing the 'lane. 2. 2m'lo#ees o$ Southwest !irlines are consistentl# u'%ate% with the $irm"s (usiness o'erations an% have su$$icient knowle%ge to answer 8uestions that might (e arouse% (# customers. ;. Southwest !irlines tries to create an image that the# care $or the 'assenger. Some o$ their slogans inclu%e AJust :lane Smart,A A.he Some(o%# 2lse /' .here 1ho Loves EouA an% A.=2 Low Fare !irlineA. .he airlineFs most current slogan is A! S#m(ol o$ Free%omA, all has the traits that Southwest !irlines are in #our shoes thinking what is (est $or #ou. ?. Southwest !irlines has a relia(le sa$el# recor% that makes customers $eel that heGor she will not (e in risk or %anger. @. 0$$ers convenient o'erating hours. 2m'ath# . Southwest !irlines tries to make things sim'le $or customers so that the# will not (e con$use% (# its s#stem. Southwest !irlines %oes not reserve

8 seats $or customers so that customers will not have to go looking $or their seats, (ut instea% 'assengers can choose the seats that have not #et (een taken. 2. :assengers on the Southwest !irlines have one less reason to $eel sick (ecause Southwest !irlines onl# serves 'eanuts, an% not $ull meals. 1ith less $oo% in their stomach, 'assengers are %e%ucing the risk o$ e&'eriencing a 8ueas# stomach %uring a 'lane ri%e. .angi(les . Southwest !irlines an% .he Mark .ravel Cor'oration entere% into an agreement to give customers an o'tion to (u# com'lete vacation 'ackages. .hese 'ackages inclu%e the $light tickets, hotel accommo%ations, trans'ortation o'tions an% gui%ance that #ou might nee% %uring #our tri'. 2. .he em'lo#ees o$ Southwest !irlines have worke% har% to make their a''earance innovative an% a''ealing $or their 'assengers. ;. !lthough is no in*$light entertainment, Southwest !irlines is known $or color$ul (oar%ing announcements an% crews that (urst out singing. .he crew tries to catch #our attention in 'ursuit o$ living u' #our travel on the 'lane. .his might (e one o$ the reasons wh# Southwest !irlines can maintain such a high customer satis$action. ?. .ickets use% to (e ma%e out o$ 'lastic which can (e rec#cle% an% use% over an% over again.

&ustomer 2alue :ro%uct 4alue . Southwest !irlines (ecame one o$ the $irst airlines com'anies to have a we( site. 2. Southwest !irlines serve% smaller meals rather than the meals that are serve% (# $ull service airlines, with small snacks an% so$t %rinks $or shorter $lights an% meriting the customers with ASnack :ackA o$ 're'ackage% goo%s $or longer $lights. )n the 2000s these meals t#'icall# e&cee% the $oo% serve% on $ull*service airlines. Service 4alue . Southwest !irlines has $ought against the %evelo'ment o$ a high*s'ee% rail s#stem in .e&as in or%er to (ring convenience to its customers. 2. Southwest !irlines has (een 'ersistentl# increasing the num(er o$ gates an% is constantl# on the search $or unrestricte% $lights to new %omestic %estinations which allows 'eo'le to choose the air'ort closer to their $inal %estinations. ;. Customers are le$t to choose their own seats on the 'lane, which hel's the airline to (oar% 'assengers $aster. )n a%%ition, the com'an# also has a ra'i% turnaroun%

D rate which altogether gives 'assengers an image that Southwest !irlines can make a ra'i% recover# a$ter a $light. .his is i%eal $or customers who are in rush to get somewhere taking the 'lane. :ersonnel 4alue . Southwest !irlines lets it em'lo#ees (ecome one o$ the sharehol%ers o$ the com'an#. >esi%es meriting the em'lo#ees $or their har% work, it also motivates em'lo#ees to 'ut their e$$orts in making the com'an# a more 'ro$ita(le com'an#. /n%er this s#stem, em'lo#ees act on their own accor% to treat customers well, %ue to the $act that their $ate is connecte% more inse'ara(l# with the com'an#. )mage 4alue . Southwest !irlines have constantl# 'romote% themselves to (e a low $air airline in the term o$ 'ricing. )t has trie% to e&'lain to their customer that the# are not o$$ering a s'ecial (argain $or customer, (ut rather that the# are selling the tickets continuousl# at a low rate. 2ven customers without a lot o$ mone# can now take a 'lane %ue to Southwest"s low 'ricing. 2. Southwest !irlines give a strong image o$ (eing ca'a(le to solve 'ro(lems when the# occur. Southwest !irlines was originall# incor'orate% with man# lawsuits to $ight $or. Some o$ the incum(ent airlines o$ that time 6>rani$$, .rans*.e&as, an% Continental !irlines7 initiate% legal action, which consulte% to legal (attles in or%er to kee' Southwest !irlines on the groun%. )n the en%, Southwest won, an% ha% $rom then on has (een consi%ere% a com'an# that has the a(ilit# to %eal with %i$$iculties. ;. Southwest !irlines is one o$ the worl%Fs most 'ro$ita(le airlines, 'osting a 'ro$it $or the ;@th consecutive #ear in Januar# 2008, giving its customers the goo% image that the# are o'erating the com'an# in goo% han%s.

"uestion 3#
1$ 4ey &haracteristics The heart (or ser*ice Southwest e&ists to serve a 'ur'ose, which is not 9ust to make a 'ro$it ..he# are not $ocuse% on themselves an% their in%ivi%ual %e'artments. .heir $ocus is on servicing the nee%s o$ 'eo'le the# care a(out, even i$ this involves some sel$*sacri$ice. )umor 2ver# em'lo#ee o$ Southwest is creative an% has his or her own 'ersonalit#. .heir original clothing an% %ress, humorous conversations, an% interesting (roa%casting lea% to a rela&ing an% %elighte% atmos'here. )t can relieve the stress an% 'ressure $or 'assengers that take Southwest !irlines as well as create a%%itional entertainment $or ever#one on(oar% without s'en%ing a%%itional mone#. Sincerity .oo much em'hasis on %e$erence can (uil% a wall (etween 'eo'le. )t"s har% to e&'ress ones true sel$ in an environment that is $ocuse% on 'rovi%ing the most 'ro$essional service. )nstea%, Southwest em'lo#ees alwa#s treat ever#one 'ro'erl# with their heart, an% the# %o it not (ecause the com'an# re8uires them to, (ut (ecause the# want to. .his is 'art o$ the Southwest s'irit. 'nthusiasm 5P$16782ver# em'lo#ee o$ Southwest is emotionall#*connecte% with their com'an#, an% as such is willing to %o an#thing $or the (ene$icial growth o$ Southwest. 2ver# em'lo#ee in$ects each other with an e&treme sense o$ 9o# an% satis$action< there$ore as a result, customers are also in$luence% (# the em'lo#ees" %elight an% are, conse8uentl#, ma# also $eel ha''iness. .his is how Southwest (ecame one o$ the most e$$icient airlines. 1$ Satis(action with Southwest 'mployee9s perspecti*e# :ela/ed wor! en*ironment Just as wearing one"s $avorite clothes can hel' let someone rela&, Southwest !irlines also has man# wa#s to let their em'lo#ees rela& as well. .here are ga%gets, games,

an% other creative outlets rea%il# availa(le on 'lanes an% in the cor'orate o$$ices to make it eas# $or em'lo#ees to engage in (reaks. =aving a humorous time cuts %own on the time s'ent on $eeling stresse% an% creates a work environment that is interesting an% $un. )old the new in(ormation .he more em'lo#ees know, the more the# care a(out the com'an#. )$ em'lo#ees are arme% with latest in$ormation, the# are more likel# to make a correct %ecision. )t is also im'ortant to let em'lo#ees hol% im'ortant 'ieces o$ new (ecause it allows them to $eel that the# are im'ortant, an% within a communit# o$ 'eo'le who also care. .his allows the em'lo#ees to $eel a sense o$ sel$*con$i%ence. )ori,ontal organi,ation .he lea%ers o$ Southwest are not in a 'rominent or unreacha(le 'osition. !n# em'lo#ee can enter their o$$ices to %iscuss an#thing at an# time. )$ there are suggestions to (e ma%e, the lea%ers are there to hear them. .he lea%ers also, sur'risingl#, hel' with groun% work such as (aggage han%ling. .his t#'e o$ organi-ation allows Southwest em'lo#ees to $eel $ree to %o their 9o( an% continuousl# im'rove u'on whatever nee%s to (e im'rove% without man# restrictions or 'ressure. Trust 5p$ 1;<8 Southwest has con$i%ence in its em'lo#ees" a(ilities to make wise %ecisions. .his trust grants its em'lo#ees a ver# elastic sense o$ $ree%om to %o what the# $eel is right. Due to this sense o$ $ree%om, Southwest em'lo#ees work har%er an% are a(le to %o their 9o(s the wa# that the# think is the (est when uni8ue situations arise. -nspire each other Southwest em'lo#ees are $ull o$ morale an% work to ins'ire one another within the organi-ation. Southwest has esta(lishe% !" I#ES Maga-ine, in which em'lo#ees who see a colleague o$$ering 'ositivel# outrageous service are encourage% to write u' the scenario $or all other em'lo#ees to rea% a(out in the maga-ine. 2ver# #ear there is an awar%s ceremon# that is hel% to encourage e&ce'tional service an% through this, hel'ing the em'lo#ees to un%erstan% the value o$ Southwest even more. &ustomers9 perspecti*e# Price .he 'ur'ose o$ the low 'rice $ares is to allow almost an#one to have the o''ortunit#

2 to travel (# 'lanes. Southwest is ha''# to %evote their (est e$$orts $or their customers. !ll 'assengers are welcome, (e it $ull*time workers, single 'arents looking to s'en% time with their se'arate% chil%ren, or 9ust travelers looking to go somewhere where the# have not (e a(le to a$$or% to go (e$ore. Southwest also has the a(ilit# to increase the num(er o$ $lights that the# serve 'er %a# instea% o$ raising their $ares. .his allows ever#one to arrive at their %estinations without having to 'a# a higher $are. Simpli(ication /nlike tra%itional airlines, Southwest sim'li$ies its (usiness. Southwest consi%ers customer convenience an% 'rovi%es goo% service. Southwest %oes not rel# on the seat reservation mo%el. )t also takes ver# little time to get tickets an% one can sit at an# availa(le seat when the# check*in. Ser*ice= on time Southwest can turn its 'lane in 0 minutes. 0ne 'oignant e&am'le o$ Southwest"s e&ce'tional turnover s'ee% is when a stu%ent wrote to Helleher, an% tol% him the# were arriving @ minutes late to class, Helleher change% the $light sche%ule to accommo%ate them. .he# are willing to 'a# more to let customers $eel res'ecte%. &ulture Southwest airline has +Southwest s'irit,, which is %ee' in ever#one"s heart. .he# treat each other like $amil# mem(ers. Ioo% inter'ersonal relationshi' an% communication a(ilit# won"t leave with Helleher. )$ Helleher leaves Southwest, the organi-ation woul% still (e a(le to $unction with the same %e%ication as (e$ore. Storyteller Southwest is much more than a one*man show. )t gives o''ortunit# to ever#one to create their own stories. Helleher is a stor#teller, who attracts ever#one an% a$$ects ever#one through him stories. .he com'an# has create% a tri(e stor#teller, (ut surel#, (ase% on the legen%ar# service Southwest has 'rovi%e% over the #ears, Helleher is not the onl# one.

"uestion >#
Des'ite the economic %ownturn in the /nite% States, Southwest"s 'osition will continue to remain unassaila(le (# com'etitors an% in%ustr# environments. Southwest is the lea%er o$ all o$ the airlines in the /nite% States $or its a(ilit# to attract customers (ase% not onl# on its low*$ares an% e&ce'tional service, (ut also on its a(ilit# to change an% evolve as it nee%s to. )n recent #ears, the glo(al 'rice o$ oil has cause% man# airlines to colla'se as airlines were $orce% to raise ticket 'rices an% lose customers. !irlines were also hurt (# low ri%ershi' rates. Southwest !irlines was a(le to overcome these issues, an% it will continue to %o so. )n the greater 'art o$ 2008, the 'rice 'er (arrel o$ oil soare% to the highest that the worl% has ever seen. !s a result o$ this, worl% gas 'rices also increase% an% as such, it (ecame more costl# to o'erate air'lanes. Due to rising oil costs, an% other $actors such as a weak econom# 6lea%ing to 'oor ticket sales7, man# %i$$erent airlines went (ankru't an% were su(se8uentl# a(sor(e% (# other airlines. .his has a$$ecte% man# airlines, (ut the airlines that are the most a$$ecte% are low*cost airlines (ecause the# run on a lower o'erating income com'are% to normal carriers. !lthough Southwest !irlines is also a low*cost carrier, it has e$$ectivel# esca'e% this $ate. Southwest9s oil contracts 5Source# %ailey article under wor!s cited8 . Starting in 2000, Southwest, un%er Iar# C. Hell# as C.2.0., 'urchase% he%ges against higher $uel costs 2. Southwest, through 200D, is a(le to 'urchase oil $or J@ a (arrel ;. 1hile other airlines were $orce% to (ear JD0 (arrels o$ oil, Southwest %i%n"t ?. 0ther airlines ha% to %rasticall# raise their tickets costs to kee' u' with oil 'rices, (ut Southwest %i%n"t as much. Sluggish economy Due to the sluggish econom#, man# 'otential 'assengers are mainl# concerne% a(out 'rice (e$ore other $actors. Southwest is suita(le $or this t#'e o$ customer in the current economic environment. .his is an a%vantage $or Southwest (ecause it is t#'icall# the lowest*cost airline. Southwest !irlines is also 'rotecting its 'osition as the %ominant airline in the /nite% States (# looking into new wa#s that it can continue to evolve. Southwest is not stagnant< it is the onl# airlines in the /nite% States to consistentl# 'ost 'ro$its (ecause it continuousl# grows an% cuts areas that 'osts losses $or them. Southwest is also currentl# looking to tr# new strategies that it has not trie% in the 'astKnamel#, to

? e&'an% service into international travel markets within the ne&t two #ears. Southwest adding stops at airports with good potential mar!ets 50i!ipedia8 . Southwest is continuing to e&'an% to new markets that it %oesn"t alrea%# serve. .he ne&t ma9or market that it is 'oise% to enter is Minnea'olisGSt. :aul in 200D. Currentl#, Southwest %oes not serve an air'ort (etween 1isconsin, all the wa# to 1#oming. 1ith the a%%ition o$ this new 'oint in Minnea'olis, Southwest will %rasticall# o'en u' the regional market, an% in the $uture, 'ossi(l# create more o''ortunities $or a%%itional e&'ansion i$ %eman% calls $or it. 2. Southwest is also continuousl# a%%ing new routes that are %eman%e% Southwest has 'urchase% Lrights" at Mew Eork"s LaIuar%ia !ir'ort, which is consi%ere% one o$ the most convenient air'orts in terms o$ location within the cit#. Southwest ha% 'reviousl# lost its rights there, (ut ha% it reinstate% (ecause o$ 'o'ular %eman% Southwest cuts (lights with poor sales . Southwest is cutting DC %ail# $lights (# Januar# , 200D. 3easons inclu%e $uel costs, the state o$ the econom#, an% 'ractical reasons such as col% weather causing engine 'ro(lems 2. Southwest cuts un'o'ular $lights to $ree u' 'lanes $or more 'o'ular routes ;. Mot ever# route is a success, an% to remove the 'oor sellers means that there is more chance to $in% a new winner. Southwest9s e/pansion into international tra*el under code-sharing . Southwest is 'lanning to e&'an% $rom %omestic travel also to international travel Some o$ the countries in negotiation inclu%eN Cana%a, Me&ico, 2nglan%, an% Cari((ean islan% nations Contracts are alrea%# un%er negotiation, shoul% (e com'lete% (# 20 0 2. )n or%er to co%eshare, Southwest works with other airlines such as 1estJet 6Cana%a7 an% 4olaris 6Me&ico7. )t can then share the routes that these airlines own an% use it $or their name as well. !s o$ Mew Eears 200D, the worl% oil market has once against sta(ili-e%. )t is, however, alrea%# too late $or the %ismantle% airline carriers to re*emerge. Some (ankru't carriers like Delta are currentl# having a secon% chance to o'erate, an% since Delta"s markets inclu%e (usiness travelers as well as t#'ical travelers, it is currentl# 'osting some 'ro$its. /ltimatel#, however, Southwest will (e a(le to maintain its %ominance in the market o$ /.S. air travels (ecause o$ its a(ilit# to grow an% change

@ with the times.

"uestion ?#
Southwest !irlines stewar%esses alwa#s let 'assengers en9o# their 9ourne# (# telling some interesting 9okes an% stories, which make man# customers en9o# their $light, %es'ite lacking other $orms o$ entertainment. )n a longer haul $light, such as in a $ive to si& hour $light, stewar%esses woul% have a ver# %i$$icult time to maintain their enthusiasm. )n such a situation, Southwest woul% have to u'gra%e its $acilities, or hire more stewar%esses such that one coul% take a (reak while the other serves. )t is o(vious, in this case, that hiring more stewar%esses woul% not make sense (ecause the# woul% 9ust take u' 'assenger s'ace. /ltimatel#, this woul% mean that Southwest !irlines woul% have to u'gra%e its air'lanes to inclu%e in*$light entertainment, an% su(se8uentl#, Southwest"s $uture 'assengers woul% have to carr# the (ur%en o$ these costs. Southwest coul% choose to a%% some $orms o$ entertainment without installing costl# e8ui'ment on ever# 'lane. =owever, this strateg# woul% also (e ver# costl# in the long run. 1hen one takes into account that Southwest has over ;00 aircra$ts, it is imme%iatel# o(vious that even i$ Southwest 'rovi%es news'a'ers an% maga-ines, that its %ail# or even weekl# an% monthl# %istri(ution costs woul% 8uickl# a%% u' to (ecome a $inancial (ur%en. )t woul% (e chea'er in the short run to choose maga-ines an% (ooks< however, in the long run, installing electronic entertainment woul% (e chea'er. 3egar%less o$ the choice o$ entertainment, Southwest woul% have to 'a# a lot o$ mone# in or%er to entertain its 'assengers on long haul $lightsKan% the $ares woul% also increase. ! $ive to si& hours transcontinental $light with no $oo% an% movies woul% (e ver# (oring. !s such, most consumers woul% 'ro(a(l# choose to 'a# more $or 'ro'er amenities like movies an% $oo%. ) think having no $oo% or movies is tolera(le $or a $light that is u' to three hours. !n# longer, however, the 'assengers woul% 'ro(a(l# (e willing to 'a# more. !n e&ce'tion to this case might (e i$ saving mone# is the 'rimar# goal. Southwest 'rovi%es nuts as a snack, which is terri$ic $or a short*haul $light, (ut in a long*haul $light, nuts will 'ro(a(l# not (e su$$icient $or man# !merican customers. Ees or MoN Shoul% Southwest !irlines enter long haul $lightsO Yes# Chea' low cost $lights $or $arawa# %estinations o .his is one o$ the main com'etitive a%vantages o$ the Southwest (ran%.

C o Convenient $or consumers traveling $rom L! to MEC, that is also looking $or a chea'er alternatives com'are% to other ma9or carriers. More chance $or 'ro$its %ue to new market o'ening u' o )$ Southwest e&ten%s their (ran% into long haul $lights, it woul% attract (u%get*conscious customers looking $or no*$rills $lights without trans$ers. Mot too man# com'etitors in the low*cost markets $or long*haul $lights o Jet>lue, .2D, .rans!ir, an% 4irgin !tlantic are low*cost airlines< however, the# are relativel# more e&'ensive than Southwest. )t is true, however, that these com'etitors also o$$er man# amenities that are availa(le in other $ull*'rice% carriers that Southwest currentl# lacks. /ncertaint# o$ econom# not so much mone# $or holi%a# travels o Long*haul $lights are ver# costl#, an% the econom# is not %oing well so the leisurel# travel segment has (een hit 'articularl# har%. o 3e%uce% 'ro$its =igh $uel costs 6not a current issue, (ut 'erha's in the $uture7 o )t might (e more costl# to $ill the gas tanks all the wa# $ull in or%er to su''ort longer*haul $lights. Short haul $lights %on"t have this issue. :erha's nee% to u'gra%e entertainment an%Gor serve more than 'eanuts o Longer*term $lights woul% e&haust stewar%esses that t#'icall# entertain, so there woul% (e new $orms o$ entertainment o .he $oo% might have to inclu%e more than 'eanuts (ecause 'eanuts are 'ro(a(l# not enough to sustain a''etites o$ hungr# !mericans $or long 'erio%s o$ time. )n the short*term, might (e more costl# $or 'assengers to travel Southwest than $or its alternatives o )$ Southwest u'gra%es its $acilities, then the costs woul% $irst have to (e 'asse% onto consumers, an% 'erha's later, can %ro'.

@o#

Ees or MoN Shoul% Southwest !irlines $l# internationall# Yes# Co%e*sharing with other airlines can save costs o$ e&'an%ing into this market (# themselves o Southwest %oesn"t have to esta(lish (ran% new customers, (ut can share customers with other airlines. Few low*cost com'etitors that $l# internationall# 6Jet>lue, 4irgin !tlantic7

B o Southwest woul% 9oin Jet>lue an% 4irgin !tlantic in (eing several o$ the onl# !merican (u%get carriers that $l# to international %estinations. .his is a ma9or %raw $or (u%get*conscious travelers that are also looking to go to e&otic locales. )nternational %estinations are %esira(le 'laces to visit $or leisure .he market that their aircra$ts can reach are consi%ere% ma9or holi%a# venues 6e&. Cari((ean, =awaii, 2nglan%, Me&ico, Cana%a7 +Southwest 2$$ect, when Southwest enters a new market an% %ecreases 'rices u' to @0P or more, $lights increase (# u' to %ou(le or 8ua%ru'le the $ormer rates. .he market segment to grow in the $uture o Southwest is one o$ the %ominant 'la#ers in the short*haul markets, an% the# are argua(l# the $avorite carrier in this regar%s. )n or%er to continue growing, Southwest ma# have to look into international travel as well.

@o# Co%e*sharing with other airlines coul% result in (ran% con$usion an% communication issues o Customers can go to the we(site o$ the carrier that Southwest co%e* shares with, an% or%er tickets $rom there. .his coul% cause a %i$$usion o$ Southwest"s own (ran% an% also create con$usion. 3ise in ticket costs (ecause o$ international air'ort ta&es o !merican %omestic air'ort ta&es are %i$$erent than international ta&es, an% in a%%ition, these ta&es are uncontrolla(le to those that $l#. )nternational ta&es that are 'articularl# e&'ensive coul% (e turn*o$$s to the t#'ical Southwest $l#er. More (ags to check, heavier, lea%ing to higher $uel costs an% room $or mistakes o >ecause 'assengers are $l#ing internationall#, 'resuma(l# $or vacation, the# t#'icall# woul% 'ack more. :acking more woul% also result in the 'lane weighing more, an% as such, more $uel is consume%. Long $lights are uncom$orta(le an% Southwest woul% have to u'gra%e cra$ts, entertainment, an% $oo% o .he current >oeing B;B 9ets ma# not (e enough to $l# long*haul $lights, an% Southwest ma# have to look into new o'tions, which woul% raise their costs.

8 o 2ntertainment an% $oo% are two unavoi%a(le issues $or Southwest when it comes to long*haul $lights an% international $lights. .hese woul% a%% costs. Short*haul international $lightsO Like its com'etitors Jet>lue an% 4irgin !tlantic, Southwest coul% look into %estinations $or short*haul $lights as well. )n this wa#, the# can continue using their current 9ets, an% also continue serving 'eanuts, without sacri$icing their current mo%el o$ o'erations an% their culture. Some %estinations that are closer to the /nite% States inclu%eN :uerto 3ico =aiti Cana%a 6.oronto, Montreal, 4ancouver, 5ue(ec7 Me&ico 6.i9uana, Cancun, !ca'ulco, Me&ico Cit#7 +/''er, Central !merican countries 6Iuatemala, =on%uras, Costa 3ica7

)t can (e assume% that most o$ these %estinations are, in the e#es o$ most !mericans, leisurel# %estinations to have $un. .his sort o$ market is also o'en $or =is'anic !mericans looking to have a low*cost alternative to return to their home countries. Cari((ean %estinations such as :uerto 3ico an% =aiti are easil# reacha(le $rom Southeastern /S states such as Flori%a or South Carolina within a cou'le o$ hours. Cana%ian an% Me&ican %estinations have several o'tions $or travel, an% are wi%el# reacha(le $rom man# 'oints as well. )t is $or these reasons that these countries woul% (e the most suita(le ones $or international short*haul travel. Central !merican countries like Iuatemala, =on%uras, an% Costa 3ica are %e$initel# reacha(le with the current aircra$ts, (ut these %estinations are more o$ a matter o$ i$ 'assengers are willing to (ear longer*haul $lights, an% as such, as not as $easi(le.

"uestion <#
-# %rie( introduction to %us &ompany -ndustry in Taiwan 1ith the o'ening o$ the market in DD@, there were not 9ust two (us com'anies 6H/0*H/!MI moto trans'ort an% /(us7 having the right*o$*wa# on the $reewa# 6mostl# on the western .aiwan7< instea%, lots o$ (us com'anies 9oine% the market to com'ete $or which o$ them coul% have the most market share. .hen, .aiwan =igh S'ee% 3ail starte% its o'eration in 200C, an% this ma# 'ut the (us com'an# in%ustr# in a more com'etitive situation $or customers" changing 're$erences. =ence, the (us com'an# in%ustr# in .aiwan now $aces man# struggles such as 'ricing strategies, 'rovi%ing services an% the tangi(le %ecorations an% e8ui'ment, an% so on. )t ma# (e inevita(le that some changes shoul% (e ma%e in or%er to survive. .he target customers in this in%ustr# are 'eo'le who %o not care that much a(out s'ee% an% time, an% 'eo'le who are sensitive to 'rice, like stu%ents an% el%erl#. :eo'le took the (us to travel on the $reewa# $or the two ma9or reasons in the (eginningN a. the rising sense o$ environmental 'rotection6the $un%amental conce't o$ 'u(lic trans'ortation7 (. the lower 'rice com'are% to the 3ailwa# --# Application o( what we learned (rom this course and what (rom Southwest Airlines to Aus company industry and some suggestions (or it$ 1e anal#-e% .aiwan"s (us com'an# in%ustr# (# using mo%els, an% (# %oing so, we $oun% that there are some things that can (e %esire% when (us com'anies 'rovi%e services to its customers. . Servuction mo%el !. )nanimate environmentN Com'anies that are not currentl# lea%ing the market can attract new customers (# making their (uses neater an% cleaner than the lea%ing (us com'anies. .he# ma# also want to 'ost some stickers insi%e the (us, such as on the win%ows, to a%vertise a tele'hone hotline that customers can call to com'lain or 9ust to make suggestions on im'rovements. >. Contact 'ersonnelG service 'rovi%erN .he# shoul% not onl# (e em'lo#ees o$ the (us com'anies, (ut the# shoul% also treat customers as $rien%s. 0ne wa# that the# can %o this is to have the (us %river 'er$orm various tasks such as %elivering hot tea to 'assengers, an% not onl# %rive.

20 C. 0ther CustomersN Setting rules or 'unishments when someone talks on the 'hone ver# lou%l# or a%9usts the volume o$ their 'ersonal .4 to the to', so that the# ma# not hin%er other 'assengers" right or ruin the image o$ the com'an#. D. )nvisi(le 0rgani-ationG S#stemN the com'an# ma# set some rules or cultures to its com'an#, an% this ma# (e mani$este% much clearer when some un're%icta(le inci%ents ha''en. )n other wor%s, the com'an# will have clear 'roce%ures on how to take care o$ inci%ents that %on"t o$ten occur. 2. Service ga' Deliver# ga' an% service ga' are the two im'ortant ga's that ma# a''ear. )na%e8uate su''ort an% em'lo#ees" unwillingness to 'er$orm the 9o( ma# cause a 'ro(lem. >ecause the in%ustr# is highl# connecte% with the service 'ersonnel, an# %etails like contact 'ersonnel having a $oul moo% on their $ace, or i$ a (us %river looks $atigue% an% ill, then the 'assenger"s moo% woul% also (e unha''#, an% 'erha's worrie%. ;. Service 8ualit# 3elia(ilit#N the time o$ each ri%e on the timeta(le shoul% (e strictl# $ollowe%< in other wor%s, 'unctualit# is im'ortant an% the com'an# cannot %ela# %e'arture to wait $or late customers or to $ill u' ga's $or em't# seats to $ill the (us to ca'acit#. 6.his is the same conce't as what Southwest !irlines has %one7 .he lack o$ em'ath#N in%ivi%ual attention is ver# har% to o(tain in this in%ustr#, (ut the (us com'an# ma# tr# to strike a (alance. For e&am'le, the# can o'en the $ront seats to the el%ers, 'regnant women, an% chil%ren, to show that there are 're$erences. .angi(lesN the cleanliness o$ the toilets can (e im'rove%. Some small*scale% com'anies can have the uni$orms ma%e or create (ran% marks $or customers to recogni-e. ?. Servicesca'es Colors o$ %ecorations, the slo'e o$ the armchairs, the height o$ the .4 set, an% so $orth coul% cause carsickness, so the# shoul% not (e overlooke% when %esigning them. @. 0thersN the# can 'rovi%e some $ree %rinks an% sell some snacks to 'assengers. 0hat can Ae learned (rom Southwest AirlinesB 0ne o$ the signi$icant $actors wh# Southwest !irlines woul% stan% out in its in%ustr# is that the# 'rovi%e the service with well*recruite% 'eo'le. !n% i$ the em'lo#ees" moo%s are ha''# an% their attitu%es are res'onsi(le an% 'ositive, certainl# the emotions are contagious to 'assengers. Service innovation is ver# im'ortant, an% we think that all the com'anies o$ the (us com'an# in%ustr# in .aiwan have to reconsi%er their 'olicies 'ertaining to service. 3egar%less o$ consi%ering the human resource $iel%, the training o$ its

2 em'lo#s, or the marketing strategies, ever#thing is im'ortant to (e consi%ere%, an% making mone# shoul% not (e the 'rimar# goalKwhich was the 'revious in%ustrialist view. =umor an% rela&e% st#le o$ service can (e use%, $or e&am'le, smiling at customers or creating a ha''# atmos'here an% letting them have a ver# 'leasant e&'erience o$ taking the (us. .he com'anies shoul% treat their em'lo#ees as human (eings an% $rien%s, not 9ust tools $or making mone#. 0nce the em'lo#ees $eel satis$ie% with their com'anies, the# woul% make a lot o$ e$$orts to 'lease their customers. =iring the right t#'e o$ 'eo'le to suit the culture o$ one com'an# is im'ortant, too. .hen, like what has (een %one (# Southwest !irlines, (us com'anies in .aiwan %on"t have to %istri(ute their workloa% to %i$$erent em'lo#ees to %etails (ecause when one thing ha''ens, each em'lo#ee woul% think +it is none o$ m# (usiness,, an% it woul% severel# hin%er the e$$icienc# o$ one com'an#. .aiwan (us com'anies can also use some innovate% i%eas $rom Southwest !irlines such asN setting an image o$ the com'an# 6like +love,7, an% %evelo'ing some 'ro%ucts aroun% the to'ic. !s Southwest %oesn"t use normal (oar%ing 'ass as the other com'etitors $or the sake o$ convenience, .aiwan"s com'anies can use some value*store% car%s $or the same 'ur'ose. Southwest !irlines calculate% the average s'ee% o$ rate in a%vance in or%er to use the time well to its e&treme, an% this set a goo% mo%el $or (us com'anies. SegmentationN Southwest !irlines $ocuses on the (usiness 'assengers who seek the shortest %istance $light, so the (us com'anies shoul% im'rove its segmentation $or making the most 'ro$it, like the# are $eature% at low 'rice, com$orta(le seats, or the most sto's in .aiwan an% so on. )$ this is not contrive% wisel#, a com'an# ma# lose its customers to its com'etition. Customer retentionN how to touch customers" hearts an% let them %evelo' kin% o$ (ran% lo#alt#. >esi%es 'rovi%ing well*re'ute% service, giving customers some sur'rise is another choice such as telling he or she is the luck# one to get the $ree ri%e, cou'ons or some gi$ts. Legen%ar# serviceN some service that %on"t (elong to the rule, or the s'ecial service like when Southwest !irlines %eci%e% to turn (ack to the air'ort $or an el%erl# citi-en who took the wrong $light. 0r another instance where the manager hel'e% a han%ica''e% 'assenger to trans$er in her 9ourne#, an% so on. 1e (elieve that i$ those (us com'anies have %one these kin%s o$ goo% acts, then what the# have to %o is to recor% them, an% then to 'ass the stor# %own among all sta$$ in the com'an#. Future scenario generationN alwa#s think, 're%ict an% vision the $uture. 1hat woul% ha''en ne&t month or ne&t #ear shoul% (e 'lanne% now. !n% alwa#s (e 're'are% $or the changing o$ the market. )n .aiwan, the e$$icient shuttle (uses $rom

22 one (ig trans$er sto' to local town shoul% (e consi%ere%. Due to the =S3, the market is more congeste% now than ever. .o (e 're'are% to re'l# to the threat re8uires senses an% wis%om. 1orks Cite% >aile#, Je$$. +!n !irline Shrugs at 0il :rices., #$ %imes. 2D Mov. 200B Qhtt'NGGwww. n#times.comG200BG G2DG(usinessG2Dhe%ge.htmlR. Frei(erg, Jackie an% Hevin Frei(erg. #uts& Southwest 'irlines( Cra)y *ecipe +or ,usiness and -ersonal Success. Mew EorkN >roa%wa# >ooks, DD8. +Southwest !irlines., Wi.ipedia. 28 Dec 2008. 28 Dec 2008 Qhtt'NGGen.wiki'e%ia.orgG wikiGSouthwestSairlinesT)nternationalSserviceR.