The airline industry is currently one of the largest industries globally. The industry is expected to remain stable, mainly due to the increase in the number of people who are flying and the emerging new technologies that are likely to reduce the cost of operations. However, despite a positive growth, the airline industry is now characterized by many challenges that threaten its growth and sustainability. Consequently, many airline companies have failed or halted their operations because of the inability to cope with the challenges (Stevenson, 2012). Nonetheless, the Southwest Airlines Company (Southwest) continues to enjoy success despite many problems and uncertainties facing the industry.
Operational Overview of Southwest
Southwest is successful mainly because of its effective operational strategies. One of its key strategies is cost leadership as the company is determined to offer low-cost flights to all its customers while at the same time providing a hive level of convenience. To maintain low-cost flights, Southwest is using cost-cutting strategies such as using one type of aircraft, fuel save strategies, and it relies on less busy airports. Besides, the company is using blended winglets to reduce fuel expenses (Stevenson, 2012). At the same time, the company is enhancing operation excellence by reducing turnaround time, which enables it to make more flights in comparison to its competitors. To streamline its operations and to encourage early boarding, the company does not assign seat numbers (Stevenson, 2012). Besides, the company does not charge check bags, which makes it attractive to its customers. Therefore, Southwest has excellent operation strategies, which gives it a competitive advantage in the airline industry.
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Southwest ’s success is also is caused by two main factors, which include productive employees and quality customer services. The company creates a favorable working environment for its employees, especially through motivation and training and development programs. For instance, it is the only airline company that shares its profits with employees (Dahl, 2017). Quality customer service is the core competency of the company that is achieved through favorable flying schedules, competitive fares, and excellent customer experience. Highly productive and motivated employees are the reason why the company provides quality customers service. Excellent operation strategies, productive employees, and quality services are the main reasons why Southwest is successful.
Current Economic Condition of Airline Industry
Currently, the economic condition of the airline industry is relatively stable, mainly due to the increasing demand and rapid development in emerging markets in some of the developing countries. The number of people using planes has significantly increased over the last few years. For instance, in 2017, the demand increased by about 6.6% and the trend is likely to continue (Zhang, 2018). The economic growth in emerging economies, especially in Asian-Pacific and the Middle East provide an opportunity for airline companies to expand to the global markets successfully. However, the price of fuel is rising, and this is likely to increase the cost of operations. The rising price of fuel is currently the major economic concern to many airline companies.
The relatively stable economic condition is likely to affect Southwest Airlines. For instance, the increasing demand for flights will force the company to buy more aircraft and employ additional employees (Zhang, 2018). At the same time, to enhance its success, Southwest may be forced to expand into the emerging global markets. Unfortunately, the rising cost of fuel will increase the cost of operations. Therefore, it is important for the company to adjust to the current economic condition in the industry appropriately.
Current Operational Issues or Challenges within Southwest Airlines
One of the main issues that are currently facing the company is the lack of viable expansion strategies. The company ’s top leadership still focuses solely on the US market, even when it is clear that the country’s economy is not expected to grow fast. Southwest only operates in the USA, and this is a challenge, especially if it does not develop strategies to expand to the global market (Stevenson, 2012). As a result, to overcome the challenge, Southwest should expand its operations to the globally. The company should not restrict its operations to the USA market alone, as this poses a threat to its success and sustainability.
Trends for the Future within the Operational Segment
The use of social media to engage and interact with customers is one of the major trends in the airline industry. Many leading airline companies are now using social media sites such as Facebook and Twitter to engage and create a lasting relationship with customers (Koch & Tritscher, 2017). Social media provide real-time interaction with clients, leading to improved customer services.
Increased environmental regulation is a new trend in the industry. Currently, airline companies are heavily charged for environmental pollution. Therefore, to reduce noncompliance expenses, airline companies are adopting green operations. T he future of Southwest depends on its ability to maintain and if possible increase its customer base. Therefore, it should use information communication technologies such as social media to improve customer satisfaction and experience, which result in a competitive advantage (Koch & Tritscher, 2017). At the same time, modern customers are sensitive to ecological matters, especially in developed countries. To attract modern customers, the company should use technologies to reduce air pollution and enhance its environmental sustainability. Southwest should use cost-effective strategies to gain a competitive advantage in the future.
Conclusion
Southwest Airlines is largely successful due to its ability to use effective, cost-effective operation strategies, highly motivated and productive employees, and loyal customers. Low-fare flights and quality customer services have made the company to dominate the airline industry in the USA. Nevertheless, increasing competition from other low-fare airlines and slow economic growth in the USA are threatening the future and success of the Southwest. The success of Southwest depends on its ability to address internal and external challenges.
References
Dahl, D. (2017, June 28). Why Do Southwest Airlines Employees Always Seem So Happy? Forbes . Retrieved from https://www.forbes.com/sites/darrendahl/2017/07/28/why-do-southwest-airlines-employees-always-seem-so-happy/#6c0c1f6d59b0
Koch, S., & Tritscher, F. (2017). Social media in the airline industry: acceptance of social seating. Journal of Hospitality and Tourism Technology , 8 (2), 256-279.
Stevenson, S. (2012, June 12). The Southwest Secret. Retrieved from http://www.slate.com/articles/business/operations/2012/06/southwest_airlines_profitability_how_the_company_uses_operations_theory_to_fuel_its_success_.html
Zhang, B. (2018, April 15). Airlines are making more money than ever-but they're facing a mountain of problems. Business Insider . Retrieved from https://www.businessinsider.com/airlines-biggest-business-problems-2018-4?IR=T
