1.

Analysis
- Macro (PESTEL analysis) of SouthWest Airlines
Political factors:
 Government regulations: in terms of security, safety, and air traffic
management, Southwest Airlines must to follow strict government rules.
 The political stability of the regions in which the company works is essential
for its success.
Economical factors:
 Fuel prices: the cost of fuel significantly impacts the operating expenses of
airlines and fluctuations in oil prices can influence Southwest's profitability.
 Competitor pricing: the pricing strategies of competitors can affect
Southwest's market share. If other airlines lower their prices, Southwest
may need to adjust its fares to remain competitive.
 Global economic conditions: the overall condition of the global economy
can influence travel demand.
Social factors :
 Traveler experience : passenger expectations regarding the overall travel
experience, including boarding processes, seating comfort, and in-flight
services, can impact airline choice.
 Technology adoption: the demand for in-flight Wi-Fi or entertainment
systems may lead to decreased passenger satisfaction
Technological factors:
 New technology: advances in airplane technology can affect how much fuel
planes use and how expensive they are to operate.
Enviromental factors:
 Climate and sustainability: as people care more about the environment,
there might be rules about how much carbon emissions airlines can have.
 Natural disasters: things like hurricanes can mess up flight schedules and
make it harder for Southwest to run smoothly.
Legal Factors
 Labor laws: Changes in rules about workers and pay can impact how much
Southwest has to spend and how satisfied employees are.
 - Micro (SWOT) analysis
Strenghts:
Southwest keeps expenses down, making it cheaper to operate compared to
many competitors.
The airline focuses on direct flights and quick turnarounds at smaller airports,
ensuring smooth operations.
Southwest has a unique and enjoyable work environment, emphasizing humor
and teamwork.
Weaknesses:
The fleet is aging, potentially leading to higher maintenance costs and a less
attractive image.
Southwest doesn’t offer some conveniences like reserved seating or free meals,
which might limit its attractiveness.
Opportunities:
Exploring new destinations can attract more customers and reduce dependence
on current routes.
Adding in-flight entertainment and modern technologies can enhance the
passenger experience.
Upgrading to more fuel-efficient planes while keeping the current model can save
costs and benefit the environment.
Threats:
New low-cost competitors with modern features can challenge Southwest’s
market share and pricing strategy.
Fluctuations in fuel prices can affect operational costs, potentially decreasing
Southwest's cost advantage if fuel prices increase significantly.
Increasing demands from employees for higher wages and better working
conditions might lead to labor disputes, disrupting operations and increasing
operational costs
Ethical Dilemmas:
Southwest pays employees less but offers stock options; the ethical concern is
whether this compensation approach is fair and supportive of employees' well-
being.
Deciding on strategy changes poses ethical considerations; Southwest must weigh
financial success against the potential impact on employees and its core values.

2. Desicions
Problems
a) Southwest Airlines faces new competition from airlines like JetBlue,
Frontier, AirTrans, Song and Ted, offering similar low prices but with added
benefits like reserved seating and free entertainment.
b) Employees, who were once motivated by the company's underdog status,
are now demanding higher wages and shorter working hours. The
company's stock option plan is losing its appeal.
c) Southwest's fleet of planes may appear outdated compared to competitors.
The company's refusal to offer certain services, such as reserved seating,
may impact its market atractiveness.
Alternatives:
a) Instead of directly competing, Southwest could focus on niche markets or
unique routes, providing a different service that sets it apart from
competitors. This way, it leverages its strengths in specific areas.
b) Implement more flexible compensation packages and recognition programs
that acknowledge and reward employee efforts, aligning with changing
expectations and fostering a positive work environment.
c) Introduce small service enhancements, such as improving seating comfort
or updating in-flight technology, to modernize the customer experience
without compromising the core low-cost model.

Possible solution - modernizing operations and empowering employees for

mutual benefit
SouthWest Airlines need to upgrade the planes with newer, fuel-efficient models
and make small but meaningful improvements to in-flight services to stay
competitive and meet customer expectations. Also, they could implement a
flexible compensation strategy that includes better wages and shorter work hours,
along with recognition programs, to address employee concerns and maintain a
motivated workforce. By focusing on both modernization and employee-centric
measures, Southwest can adapt to the changing market dynamics while
preserving its unique company culture.