Southwest Airlines: How one Airline Positions Itself in a Competitive Market

Business Essentials-Unit 4

April 17, 2004

Southwest Airlines: How One Airline Positions Itself in a Competitive Market

Southwest Airlines is a different kind of airline. It has positioned itself in this manner from inception in 1971. It has defined both its internal and external customers and is committed to them as a business. More importantly, this company has taken on the concept of keeping its employees happy and it will have good outcomes. This has proven to be true.

One may think when entering their website http://www.southwest.com , sure they are promoting their business. Don't all businesses do this? After having read their website and others about them, I was convinced that they really are different. Almost to the degree that I thought how I, too, would like to be a part of such a team. The enthusiasm of each employee and the recognition this business promotes to them is exemplary. As Southwest learned from the beginning, empowering the employees to be creative and getting them involved invokes motivation and spirit. By doing business this way it has kept in their business alive and kicking.

Southwest is built on the principle that employees are expected to take on an entrepreneurial role in being proactive owners who are cognizant of corporate values and confident enough with their empowerment to participate in decision-making and continuous improvement (Stanley).

The mission of the Southwest Airlines to its customers simply states, "The mission of Southwest Airlines is dedication to the highest quality of customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit". Southwest also has a mission statement directed to its employees. It states, "We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines (The Mission Statement of Southwest Airlines). Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer." Southwest used strategy to empower the employees and make every position in their company a leadership role by creating avenues for education and encouraging idea making and implementation for the good of the whole business.

Southwest's performance is based on idea. The idea of not assigning seats in advance to customers keeps the cost of flying down. By using the first come, first serve method Southwest is able to fully utilize the planes capacity. Through careful planning and statistical analysis the airline developed the method in which they would insure the seats would be full. They overbook by a small percentage, knowing that some customers will not actually show for the flight. In the event that this has caused an oversold flight then a customer is bumped. A customer will be compensated if they are bumped, whether voluntary or involuntarily.

In the early days of Southwest, they came up with a promotional idea that has followed them through to today. The business used the idea of love, based on the fact that they loved their customers. The slightly odd idea took off with a red heart as their logo. The catchy phrase was love, such as Love jets with Love machines that were used for ticket sales. They even referred to their snacks they serve as Love snacks ( The "LUV" Airline). LUV is their stock market symbol. Today they still use the word love but have left behind the 70's appearance. The word Love today is used in many of their advertising commercials, letting the customers "feel" the love. Nepotism is not a problem with Southwest as they encourage family members to join the business. This promotes the family environment of the business. Many of their employees are married couples. These are just some of the things that are definitely making a difference in the way this business is done.

Because the employees of the Southwest are so content with their employer they have done excellent jobs. This devotion of the employees has earned them the first "Triple Crown Award" which is an award for getting the best ratings in the area of customer complaints, best baggage handling and best on-time performance. Southwest has earned this over 30 times, with the best record of following 5 consecutive years of 1992-1996 (We Weren't Just Airborne Yesterday). A large sign in the lobby of Southwest Airlines reads (Allenbaugh) :

"The people of Southwest Airlines are the creators of