Analysis on Southwest Airlines

Abstract

Airline companies are facing many challenges keeping their cost down and profits up. Some of the main issues are gas prices and pilots pay. CEO of Southwest Airlines, Gary Kelly, has been able to work with fuel companies to provide one of the lowest costs for gas than any other company. With his great knowledge and social personality, he has been a very effective leader for Southwest. The company's core competencies is treating their customers with respect and showing them that they are valuable and treating their employees even better.

Analysis of Southwest Airlines

When talking about big airlines, the main companies that come to peoples' mind are Delta, United Airways, and American Airlines. But looking into their finances, these three companies are more in debt that any other. Southwest Airlines has been able to produce the best results out of all the airlines. As stated in Fortune 500, "United parent UAL filed the largest bankruptcy in aviation history ($25 billion in assets) in December 2002. That's big. American is weighted down with nearly $18 billion of debt on its books. That's pretty big. And finally, the three large airlines lost a total of some $5.8 billion last year. That's big too" (Serwer, 2004). On the other hand, Southwest earned $442 million in 2003 and had a market capitalization bigger than all its competitors combined of $11.7 billion. What makes Southwest so successful?

One of the main reasons for the great success is their corporate culture. Rollin Kig and Herb Kelleher started the company with a simple notion: "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" (We Weren't Just Airborne Yesterday, 2010). As stated in the interview with CEO Garry Kelly, Southwest follows four basic rules: keep cost down, fly all the same planes so parts and maintenance is fairly simple and cheap, treat their customers like kings and queens, and treat their employees even better (Destination CEO Video, 2010.) This is a great way to keep everyone happy and gain loyal customers who will come back to fly with the airline, and in turn giving them more revenue.

These core competencies of the company have proven to work as Southwest Airlines is one of the most successful airlines. Southwest.com states that "Since 1987, when the Department of Transportation began tracking Customer Satisfaction statistics, Southwest has consistently led the entire airline industry with the lowest ratio of complaints per passengers boarded" (We Weren't Just Airborne Yesterday, 2010). Also, when employees are happy with the company, a lot will be willing for the company because how they are treated and