Airlines

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Southwest Airlines 2008 |

Group A1 |

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Aakanksha Shukla (14F102)

Pradnya Jakhadi (14F140)

Sriram Swaminathan (14F155)

Sachin Kudva (14F145)

Nikhil Nayak (14F137)

Problem Statement

How can Southwest Airlines continue to maintain its business model of providing excellent customer service, despite the prevalent tumultuous condition of the US Airlines industry?

PESTLE

Political:

* The airline industry was highly regulated till 1978, after which the Airline Deregulation Act was passed, which allowed many new firms to enter the market.

* The government regulations for operators of old aircrafts meant higher maintenance and replacement costs.

* The Open Skies Agreement which allowed European carriers to operate in US was expected to increase competitive pressure.

* There were lawsuits to prevent new airlines from flying certain routes as a result of severe competition.

Economic:

* Rising fuel costs (Fuel cost consisted of about 17% total operating cost of Southwest Airlines in 2004 but the limit increased to 31% in 2008).

Social:

* The customers could be categorized into the business segment and the leisure travelling people. The business segment are those who are willing to pay a higher amount as fare and the leisure travelling people pay a discounted fare.

* Employees were highly motivated as they were in harmony with their labor unions.

Technological:

* To map customer demand the airline industry relied on technology for efficient operational management.

Legal:

* Post 9/11, the security and safety regulations were tightened in airports to ensure the safety of the customers.

* With the formation of the US Transportation Security Administration, airport security screening was put into federal hands in the US.

SWOT Analysis

STRENGTHS

* High profitability

* Providing premium customer service

* Successful brand recognition and loyal...