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Southwest Airlines - Business Environment

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Southwest Airlines - Business Environment

* Southwest has encouraged its employees to identify with others at the company to be able to deliver great customer service. They try to make the organization an enjoyable place to work. The employees are willing to do more to help customers, as is borne out by an agent looking after a passenger's dog for two weeks while he went on vacation.

* It has thrived on its strategy of low airfares, frequent flights, and simple pricing approach in contrast to its competitors.

* The company poses as a strong competitor to the premier surface transporters because they offer much quicker travel at affordable prices.

* The company does not want to be a part of the reservation system of any other airline. They encourage their customers to book their tickets themselves cutting down on transaction processing and introducing more clarity in the system. The travel agents therefore find it difficult to book tickets of Southwest Airlines.

* The organization stands for customer service, hard work, equality, cost consciousness, and fun.

* The organization has a very flat structure with few hierarchies, allowing few long drawn formal channels of communication, and is completely customer centric.

Source of Southwest's competitive advantage

* The organization believes that the biggest competitive advantage is their people. It is the employees who make a difference for them and they are treated as one big family.

* The Company flies point to point rather than using a hub-and-spoke system. This provides direct non-stop flights and reduces delays and total trip time. It eliminates the need to have to take connections to fly to smaller locations.

* Southwest's pilots fly more hours per month, at lower pay than the industry average (70 hrs pm at $100000 compared to 50 hrs pm at $200000)

* Southwest flies to under utilized airports close to large metropolitan areas. These airports are less congested than most major airports. This contributes to Southwest's ability to sustain high employee productivity, ensure reliable on time performance and achieve high asset utilization.

* They achieve high resource productivity by employing fewer agents at gates, incorporating simple boarding processes, having no airfreight or hub services and with a short cleaning time.

* They do not serve any meals on the flight as this adds almost $40 to the cost of each ticket.

* Aircraft turnaround time is kept at 15 minutes, as against an industry average of 35 minutes.

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