SOUTHWEST AIRLINES: THE ROLE OF HUMAN RESOURCES IN IMPLEMENTING BUSINESS STRATEGY AND HIRING PRACTICES

Southwest Airlines Co., established in 1971 by Rollin King and Herb Kelleher, began its operations with only three Boeing 737 aircrafts. It is headquartered in Dallas, Texas(Hawkins, Misra, & Tang, 2012). Southwest is well known as one of the largest low-cost carriers. With this strategy, the company has dramatically grown up and deeply rooted in the US airline industry. Now, Southwest Airlines Co. operates 633 aircrafts to 93 domestic cities and the highest number of passengers used Southwest Airlines to fly around U.S in Jan 2014 (Hawkins, Misra, & Tang, 2012). To accomplish more than 40th consecutive years of both profitability and competitiveness, Southwest Airlines Company is constantly trying to find the routes to differentiate itself from other domestic carriers (Hawkins, Misra, & Tang, 2012).

What is Southwest's competitive strategy? What are the sources of its success? How does it make money in this business?

At Southwest Airlines, the company’s business strategy has a positive effect on the training they provide to their employees. Southwest Airlines is a Texas based airline that started up in 1971 (Corporate Fact Sheet). Over the years the airline has been recognized for its outstanding customer service and its low airfare fees. Due to their excellent customer service, the company has been ranked number one in customer satisfaction in 2013 by the U.S Department of Transportation. In. 2015, Southwest airlines was recognized as one of the Best Places to Work in the Glassdoor Employees’ Choice Award. The reason that Southwest airlines is recognized for all these great things is because they obtain a good organizational control over the airline.

Southwest Airlines represents a rather unique organizational force that has driven the company to success since its inception in 1971. One of the most unique features about the organizational structure is that it is largely decentralized and employees are openly welcomed to express their opinions on a wide range of organizational issues. However, despite the "hands off" management strategy, the company consistently ranks as one of the top airlines in regards to customer complaints; in 2008, for example, the company received 0.25 complaints on average for every one hundred thousand passengers who used the aviation services (Triangle Business Journal, 2009). This analysis will look at some of the organizational factors that have contributed to the success of Southwest Airlines over the course of the last few decades.

In 1967, Rollin King and Herb Kelleher founded Southwest Airlines to link the cities of Dallas, Houston, and San Antonio (Parnell, 2014). However, Southwest didn’t schedule its first flight until 1971. In 1989, Southwest revenue passed $1 billion and were the first airline to have a homepage on the internet to sell their tickets (Parnell, 2014). According to Parnell, Southwest saves more money selling tickets online than they do sell them through an agent (2014). In addition, Southwest is the largest airline to carry the most passengers and their Rapid Rewards program is considered the favorite among others in the industry (Parnell, 2015). It’s also the reason why they’ve been profitable “38 consecutive years” (Parnell, 2014). In 2001 when

Up until 2001, Southwest Airlines (SWA) was the only consistently profitable US airline and dominated the airline industry’s “Triple Crown”; with the fewest delays, complaints, and mishandled bags for the years 1992 – 1996 (Oliva & Gittell, 2002). It routinely outperformed its competition in profit, customer satisfaction, and employee satisfaction. SWA also consistently offered the lowest fares in the industry while driving up passenger traffic in markets which it entered. SWA would point out that their net impact was to offer the “freedom to fly” to a larger segment of the traveling public, expanding the overall market rather than just taking market share (Oliva & Gittell, 2002). The U.S. Department of Transportation published a report in 1993 documenting the “Southwest effect,” which showed when SWA announced service on a new route, other airlines serving that route almost immediately reduced their fares by an average of 65% and sometimes caused increased passenger traffic by up to 500% (Oliva & Gittell, 2002).

There are several reasons why Southwest Airlines is so successful. One of the many reasons is that they are known for having one of the lowest prices in the airline business. They try to keep everything as simple as possible: no meals, no assigned seats, and only one class service A second reason why they are successful is because Southwest only has one type of plane they fly, the Boeing 737 series. With only having one type of plane, it saves them million on maintenance cost. They would save time and money having to train their employees to work on/operate one type of plane instead of three or four. Another reason why they are successful is because they have an enjoyable workforce. Southwest has the most unionized workforce in the nation. Their employees are the highest paid in the industry because Southwest knocked away benefits and salaries.

Southwest Airlines began from a modest humble beginning, a small airline company servicing mainly secondary airports rather than high-traffic airports. Southwest Airlines made its mark like the common worker climbing from the bottom of the industry through the ranks to become a major competitive force in the domestic segment of the U.S. airline industry. It had weathered industry downturns, dramatic increases in the prices of jet fuel, cataclysmic falloffs in airline traffic due to terrorist attacks and economy- wide recessions, and fare wars and other attempts by rivals to undercut its business, all the while adding more and more flights to more and more airports. (coursehero 2016) Since 2000, the number of passengers flying Southwest Airlines had increased by more than about 42 million annually, whereas the number of passenger traffic on domestic routes declined for carriers like Delta, American Airlines, Continental, United, and US Airways.

Southwest Airlines (Southwest) is a domestic US airline that provides short haul, high frequency, point-to-point, and low-fare service to and from 60 airports in 59 cities across 31 US states. From humble beginnings in 1971, this airline with only four passengers per flight, and airhostesses wearing hot pants and white go-go boots, has evolved into a leader in the airline industry with unsurpassed employee loyalty. Southwest 's unique and relaxed corporate culture has created a highly successful airline business that has shown a profit for 30 consecutive years. This paper will examine corporate

From 1972 to 2002, Southwest Airlines stock returned more for their shareholders than any other stock in the same time period (Collins, 2006, Hospital Strategy IV: Southwest Airlines and thinking outside the box). Many companies have begun to take notice of the Southwest model; a model that allows Southwest to thrive while many of its contemporaries are faced with financial difficulties. The success of Southwest Airlines can be attributed to their structure. This structure has made it possible for Southwest Airlines founders Rollin King and Herb Kelleher to create a culture that was unique and ahead of its time: a people first culture. This culture is supported by Southwest 's human resource practices. Every aspect is dependant upon each

This proposal addresses the needed steps to be taken in order for Southwest Airlines to see continued growth in the airline industry. Southwest Airlines has been able to remain one of the most profitable airlines in the industry for an extended period of time. Even with the hindrance of the 2001 terrorist attacks involving airplanes and the U.S recession of 2008, Southwest has continued to see strong revenue growth. Meanwhile, other companies were experiencing major losses and in some cases folding. Southwest Airlines has capitalized on the company’s strength of being the top low cost

Southwest Airlines was incorporated in 1971 and started its operations with three Boeing 737 aircrafts for three cities of Texas, namely Huston, Dallas and San Antonio. Southwest Airlines earned six Triple Crown awards for the month in the years 1988, 1992, 1993, 1994, 1995 and 1996. It is making profit for last thirty two consecutive years (Carter, Rogers, & Siskins, 2004).Moreover Southwest Airlines is a success story of point to point low cost carrier of United States covering 97 destinations in 42 states with a fleet of 550 Boeing 737 aircrafts and operating 3200 daily flights. Acquisition of AirTran Airways in the year 2011 was also a landmark achievement for the airline. However Southwest Airlines does not offer the traditional services of food on board and special lounges on the airports, none the less it is well placed in the aviation industry (Southwest Airlines). The business is well known for their strategy and approach in hiring capable employees as well as

487). In 1994, Southwest was known to be the eighth largest airline company in the U.S.; as noted by their revenue. According to the case “Southwest recorded net income of $179.3 million on total operating revenue of 2.6 billion in 1994” (p.487). This level of success was reached after the company had been in business for over two decades. This milestone reached by Southwest was extremely hard for other companies to reach so this helped Southwest in the quest for a sustainable competitive advantage. Since their origins in 1971, Southwest has prided itself as a company on delivering great customer service to its passengers. According to the case, “Southwest’s attention to customer service was embodied in the attitudes of its people” (p.487). When flying with Southwest the plane crew members could be seen actively involved in assisting customers, making each flight overall a very pleasant experience. The company’s attention to customer service, according to the case “won the annual ‘triple crown’ of the airline industry for the third consecutive year by ranking first among major carriers in the areas of on-time performance, baggage handling, and overall customer satisfaction” (p.487). Along with excellent customer service, the company has been known to pride itself

Despite historic successes, Southwest Airlines is facing certain challenges threatening future financial security. Firstly, Southwest’s traditional competitors have formed strategic mergers with other carriers, increasing their efficiency and lowering costs. These mega-mergers include Delta/Northwest, Continental/United, and American/US Airways. Secondly, smaller companies such as JetBlue, Alaska, and Sprint have been able to enter the industry successfully and are directly competing with Southwest’s low-fare focus. Lastly, though Southwest has been praised in the past for being innovators in embracing technology and automated processes, its lack of updating to the newest and more efficient technologies are a cause of concern according to some customers and critics.

Airlines battle for competitive advantage by giving customers unbelievably low fares at an irresistible price.