Southwest Airlines

MARKETING MANAGEMENTSouthwest Airlines: In a Different World

Presented by:-Avishek Bhattacharya

Achintya PRDivya Marwah

Mukul AttriNayana Unni

Prasahant PatroSiddharth Modak

Company Profile• Founded in 1967 by Rollin King, Herb Kelleher and

Lamar Muse• Started operations in 1971 with three Boeing 737s

after winning the lawsuits against them• Well known for its Low Fare policy and low cost of

operations• ‘Airline of the Year Award’ – 2003• Presently operating in more than 60 countries with

over 500 Boeing aircrafts• Came up with a famous policy of ‘Employee First,

Customer Second’

“If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure, they have a good time doing it, people will fly your airline.”

Core Strategy

Differentiation Strategy

OTHERS

Focussed on long route travels.

SOUTHWEST

Mainly, short route journeys.

OTHERS

SOUTHWEST

“Fun-LUVing Attitude” for in-flight entertainment.

Focussed luxury, complementary and in-flight services.

OTHERS

Strictly adhered for a disciplinary and sophisticated travel.

SOUTHWEST

Pets Are Welcome on Southwest(P.A.W.S)

OTHER

Only cash payment, for onboard services.

SOUTHWEST

Cashless cabin (Credit Card only for onboard purchases.

Other Differentiation Strategies

• Low cost meals• Less turnaround time• Employees first, Customer second policy• “Bags fly free” policy• Ticketless travel• Early-bird Check-in, unaccompanied minor

service charge

Cost Leadership Strategy

Hedging

A hedge is an investment position intended to offset potential losses/gains that may be incurred by a companion investment.

SWA used hedging for the following objectives:

• Plan towards profitability.• Plan cash flows.• Lower overall fuel expenses.

OTHER

Multiple types of aircrafts are used

SOUTHWEST

Single type of aircraft is used that is boeing 737

OTHER AIRLINES SOUTHWEST AIRLINES

Followed the point to point Model

Followed hub and spoke model

OTHER

Luxurious travel with lot of in-flight complementary services

SOUTHWEST

Cheap, convenient and in-flight entertainment

OTHER SOUTHWEST

On an average there were six cabin crews.

Maximum three cabin crew

Other Cost Leadership Strategy

• Use secondary airports (Less congested)• Operates in mid-sized cities.• Low cost pricing strategy• No complementary meals• High utilization rate of fleet of aircraft.

Focus Strategy

Targeted two types of traveler: 1) Convenience, time-oriented travelers, 2) Price sensitive leisure travelers.

“Rapid Rewards Programs” for frequent flyers.

Advertising

Other Focus Strategy

• Frequent reliable departures• Try to make air fares comparable to driving

expenses for shorter routes.• Exploring North-East markets• Code-sharing agreements for greater reach.

• Airport La Guardia is used by low cost airlines for domestic, international and transcontinental flights.• One of the smallest airports in United States of America• Southwest paid US$7.5 million to acquire certain assets from bankrupt ATA Airlines in 2008.• Reason: To acquire the operating certificate and New York’s LaGuardia Airport landing slots formerly controlled by ATA.• Southwest got 14 slots, enough to operate seven takeoffs and seven landings per day at LaGuardia.• New York's LaGuardia landing slots are the company’s first entry into the major market.

Bidding and acquiring slots and gates at LaGuardia

SWOT Analysis

Strengths• Strong fleet operations• Dominant market position in North America• Friendly Staff• Best low fare carrier• Largest airlines in the world in terms of highest number of

passengers per year• Recognized as a great value and excellent services• Flexible working hours even though 82% of employees are

unionized• Strong brand image• Highest daily domestic departures than any other commercial

U.S. airline

Weakness

• Declining profits and margins• Heavy dependence on passenger revenues• Heavy dependence on a single producer –

Boeing• Conservative growth strategy• Limited to cities domestically• Operates its own booking service• Does not offer segmentation (business flights,

first class, etc.)

Opportunities

• Recovery of US Airline Industry• Acquisition of Air Tran Holdings• Recovery of US tourism• International Expansion• Longer flights are being introduced• Traveller traffic is expected to grow by 3.5%

through 2019.

Threats

• Intense competition• Regulation restrictions• Price fluctuations in petroleum markets• High unemployment and inflation keeps

travellers from flying• Joint ventures can negatively affect brand

image• Exposure to Shaky American Economy