Study On Low Cost Airlines And Carriers Management Essay

Low-cost bearer, is alleged no-frills air hose or budget air hose is an air hose that adopts the low cost schemes in all respects of concern, such as the gap of air hoses, pick of secondary airdrome, ways of selling tickets, and on-board service. For case, individual type of aeroplane, simple menu strategy, direct gross revenues of tickets, unreserved seating, without many traditional rider services, use secondary airdrome, short flights, fast turnaround times, simplified paths with point-to-point theodolite, low labour cost with multiple functions and etc. Such a scheme will cut down the monetary value to a lower degree and so the cost they have saved will profit the rider, and it will assist to accomplish the win-win facet. Low-cost bearer had changed the traditional thought of air travel, is a high degree of ingestion, into a speedy and economic air travel. The construct originated in the United States, follow by Europe and later to Asia.

The Implementation of the above programs of action can non be executed by the other low cost air hoses. Every air hose tries to be alone in itself with methods of difference changing from allotted seats to operation of more than one type of aircraft. Bing even after implementing the best of the schemes the operation costs of the air hoses is significantly high while in contrast the air hose offering inexpensive menus to pull riders does non favor the air hose industry a batch. These are the typical scenarios any low cost air hose bearer is confronting all over the Earth and with increasing rivals the state of affairs is jus taking a downhill incline.

Most, booming low-priced bearers strive to offer a modicum of auxiliary benefits runing from winging the riders on the stipulated clip and offering the invitees with excess baggage infinite and/or more legroom. The authoritative illustration of offering a great value low menu in its concern category subdivision can be demonstrated by AirTran, whereas live in-flight telecasting can be found in Frontier and JetBlue air hoses. The advantageous place of US Airways can be credited to its widespread path web together with its array of international finishs.

The tendency of the low-priced bearer air hoses was really initiated by Pacific south west on May the Sixth, 1949 in the United States of America. With existent operation of its fleet of air hoses get downing in 1971, South west air hoses continued to add net incomes in its histories books from 1973 onwards. With The Airline Deregulation Act of 1978, it was barely a affair of clip that the theoretical account saw itself being implemented in assorted parts of the world.In the state of Ireland it was RyanAir which truly extracted the full capablenesss of the theoretical account and started doing immense net incomes since its origin in 1991 followed by easyJet which setup its counters in 1995.The development of the ‘Low-cost ‘ air hoses was merely about to detonate in Asia and the Oceania with major air hose giants such as AirAsia from Malaysia and Virgin blue from the Australia doing the most of the new theoretical accounts in their several paths. The low-priced bearer theoretical account is appropriate internationally, while deregulated markets are most disposed for its fleet range. In 2006, fresh low-cost bearers were announced in Saudi Arabia, Mexico and besides in the sub-continent of India.

Customers consider the monetary value of the ticket they are paying as one of the most of import factors when choosing an air hose and, this is the one country where the conventional ‘full service ‘ air passages are non able to vie with the low-priced bearer air hoses. To be fair on the conventional air hoses portion, the immense construction cost of their operations hamper them from viing with the low cost air hoses on a monetary value point of position. From 2001 to 2003, when the air power concern was shattered by terrorist act, war and SARS, the majority bulk of conventional air hoses faced heavy losingss while low-priced bearers normally held on to the net income

Majority of the bearers decided to originate their ain no-frills air hoses, as the instance of KLM ‘s Buzz, British Airways ‘ Go, Air India ‘s Air India-Express and United ‘s Ted, but have found it hard to avoid cannibalising their nucleus concern. Exceptions to this have been bmi ‘s bmibaby, germanwings which is controlled 49 % by Lufthansa and Qantas ‘s Jetstar all of which successfully operate alongside their full-service opposite numbers.

For vacation intents, budget air hoses besides contend with seat-only charter aeroplanes. However, the inaccessibility of hired planes ( chiefly depending upon the length of stay ) marks them as one of the least front-runners with the tourers.

As the competition among the budget bearers has increased in the last twosome of old ages, the degree of competitory stiffness among the assorted bearers have besides increased. They non merely have to vie among themselves but besides have to vie with the other traditional bearers. The American Airline industry, to get by with such conditions, has implemented fluctuations to the theoretical account being used in pattern. For illustration, while Frontier Airlines and JetBlue Airways advertises satellite telecasting. In Europe, the accent has remained on cut downing costs and no-frills service.In 2004, Ryanair announced proposals to extinguish lean backing seats, window blinds, place headrest screens, and seat pockets from its aircraft. ( Sydney Morning Herald 17 February 2004 ) .

The domestic deregulating of the air hose industry prompted a figure of upcoming air hoses to interrupt into the air power sector, but the period which followed it was one which lead to a bulk of them being seized or acquired. It was this clip where the big fully fledged domestic air hoses ruled and displayed domination in the air hose sector. But it was non until southwest Airlines entered and revamped the whole scenario of the sector. Following this was a period when the meeting and consolidations of the air hoses started on a immense graduated table, which led to the creative activity of a geographically wide hub and spoke web of systems. Even the entry of the new air hoses failed to deteriorate the consolidation processes. This eventually gave manner to a period where no new air hoses was ready to originate their house and this in bend made the critics of the air hose industry to inquire that the three major web bearers were holding such a immense fastness that the domestic competition looked to be threatened. Then there were Southwest air hoses which was the lone air hose which stood any opportunity in disputing the big networked bearers.

By the terminal of 1992 Southwest was still the merely low cost bearer, but it had expanded to the point that its markets portion reached 21 per centum of domestic rider traffic, compared with 13.7 percent four old ages before. Southwest ‘s really low operating costs and success wherever it operated left no uncertainty about its ability to go on to be competitory.

As it turns out, in add-on to its ain direct competitory effects, Southwest had another of import impact. It provided a design for successfully viing with big web bearers. The anchor to this success is low costs. While a figure of new entrant bearers today have different concern constructs, many of the more successful have one thing in common that allows them to vie efficaciously. This common dominator is really low operating costs. Since early 1993 legion other low cost bearers began service. These bearers are spread outing quickly in figure and in size.

By 1994, Southwest and several low cost new entrant bearers competed in markets that accounted for 31.5 per centum of domestic traffic. Merely nine months subsequently, the twelvemonth ended September 30, 1995, riders going in markets with low cost service accounted for 38.6 per centum of entire traffic. This speed uping growing rate shows no marks of decelerating down.

SWOT Analysis

Potential resource strengths and competitory capablenesss

Potential resource failings and competitory lacks


Corporate Culture – LUV and FUN

Highest employee compensation degrees in the industry


Low Cost Operation

Thin Staff Operation


Efficient Utilization of Assetss

Customer service being secondary option


Maximize Human Resource

Highly Unioned Employee


Single Aircraft Type – Boeing 737s

Hazard of Single Aircraft Supplier


Distribution Efficiencies

Tickets Oversold


Simple Fare Structure

Not able to acquire the consumer for a unit of ammunition trip thereby losing the 2nd trip to a rival


know-how or competences


High capacity use


Potential market chances

Potential market menaces


Airline ‘s fuel hedges

Fuel costs


Point-to-point operations

Natural catastrophe such as Hurricanes


Drop in competitory capacity

Bequest bearers consolidation ( amalgamation )


Rapid capacity grow

Alternate Transportation system


Strong trade name and loyal client

Stealing traffic from other LCC ( JetBlue, AirTran )




demand for Boeing narrow organic structures in Asia and Europe is strong, doing it hard to procure bringing places before 2010


Industrial R & A ; D

The amplified one-year costs associated with Airline security steps.


Drawn-out cyberspace adverts

Potential resource strengths and competitory capablenesss

Corporate Culture – Love and Fun

Peoples like to work in an gratifying environment. If the work environment is really earnestly and purely concern, they might fire out. Southwest promote love and merriment at work. For farther promoting love and merriment corporate civilization, Southwest stock listed on the New York Stock Exchange as “ LUV ” ( Southwest 1997 ) .

At Southwest Airlines, Customers and Employees are their top precedence. Herb Kelleher of Southwest Airlines says, “ Our payroll checks say ‘from our clients ‘ because we want our people to retrieve that it ‘s non some add-on in an office that produces the cheque ; it ‘s our clients. ” ( Southwest 2006 )

Southwest spirit to clients was the key, as one Southwest director put it, “ Our menus can be matched ; our aeroplanes and paths can be copied. But we pride ourselves on our client service. ” ( Sunoo 1995 )

Southwest has initiated “ The Nuts about Southwest ” web log with the end to give readers the chance to look inside Southwest Airlines and to interact with Southwest. The bloggers from cross-section of the company construct a personal love and merriment relationship with readers. ( hypertext transfer protocol: // )

Low Cost Operation

No excess on-board service

In order to file away low cost and fast turnaround clip, on-board catering, amusement, reserved place, more stewards and air hostess, and other complimentary services are eliminated, and replaced by optional paid-for on-board nutrient, drink, and amusement. Furthermore, they will sell duty-exempt goods in the flight to increase income besides.

Single Passenger Class

Because of low cost schemes, Southwest will non put concern category, but individual economic system category to hold more travellers. Besides, they narrow the place infinite to incorporate more seating usage to the full the aeroplane cabin.

Efficient Utilization of Assetss

Quick Turnaround clip

Short flights and fast turnaround times to let maximal use of planes. This is to do certain the aircraft utilized invariably, which in bend maximizes grosss.

Secondary airdromes

Southwest Airlines is utilizing less engorged secondary airdromes or the corners of major airdromes to avoid air traffic holds and taking advantage of lower landing and parking fees. Passengers are sent to their finishs by shuttle coachs.

Unreserved seating

Time is money. Southwest Airlines will non offer service for travellers to reserve the place because it will cut down the embarkation clip to look into the Numberss and the clip that land crews have to cover with the embarkation process. There is no place allotment, you merely sit where you like. Furthermore, they use fictile and reclaimable get oning base on balls to salvage the cost. All the intent is to simplify the process to turnaround fast, so at that place seldom to see tonss of clients wait in line in forepart of the counters of Southwest.

It is besides in order to turn a plane every bit shortly as possible. It can salvage about 20 proceedingss than the mainstream air hoses because the longer the waiting clip at a gate, the more it costs an air hose. More day-to-day operations at a gate, fewer Gatess are needed and substructure costs are reduced. The airdrome bureaus will seek to collaborate with them to supply good service.

Maximize Human Resource

The employees are working in multiple functions in order to restrict forces costs. Every scheduled flight merely has three flight attenders after the aeroplane lands, two of the flight attenders have to clean the cabin and one work as gate agents to look into or roll up the flight tickets for the riders of following flight. The aircraft commanding officers have to clean the cabin if that is necessary. Therefore they do n’t engage cleaners and excess workers. Flight attenders besides sell repasts, drinks, and duty-exempt goods after the aircraft is taking off. Besides that, as the Southwest Airlines merely three individuals to take attention of the flight tickets but the norm of the mainstream air hoses are 50 to 60 individuals.

Furthermore, Southwest Airlines pays pilots and flight attenders per trip, switching what could be a fixed cost to a variable 1, he says. JetBlue has taken this a measure farther by using reserves agents who work from place. They are busy during peak times and receive excess compensation. In downtime periods, they are off responsibility and non paid. “ This allows two things: you are non paying people when they are non needed and two, it allows people flexibleness and pick. ”

Southwest Airlines brand policy picks that give people inducements to cut down cost at every chance.

Single Aircraft Type

To maintain costs of equipment down, Southwest Airlines is utilizing a individual type of aeroplane, Boeing 737. Alternatively of different types of aeroplanes therefore employees, spares, equipment could be replaced each other to cut down staff preparation costs enormously. This minimizes the cost of keeping different aircrafts, and brings economic systems of graduated table when purchasing parts for aeroplane fix in big figure.

The ground of Boeing 737 is preferred due to its low operating cost and fuel ingestion. Southwest can salvage the cost of devouring energy of altering flight and can take the mass clients to many different finishs within 3 hours. These aircrafts are smaller than usual, therefore it can set down and takes off in the secondary airdromes, does non necessitate to set down and take off in the primary airdromes because the airdrome landing fees at major centres remain really high.

“ Southwest Airlines operates some 360 aircraft, ” said Williams. “ It handles its ain line care and outsources its heavy care, yet it still has lower care costs than any of Europe ‘s air hoses. ”

Distribution Efficiencies

In order to diminish distribution costs, Southwest Airlines has their ways to salvage the costs, avoiding fees and committees paid to go agents and corporate engagement systems, or other “ in-between work forces ” .

Direct channels

Southwest Airlines stress on direct gross revenues of tickets to clients short-circuiting travel agents without a jobber or a ticket agent, particularly over the Internet. This saved Southwest Airlines 5 % to 10 % of each menu, a nest eggs no other air hose enjoyed. Peoples can buy the ticket by naming or traveling to the air hose, or traveling on the sole web site and paying the menu by recognition card.

No Collectible Computer Reservation System

There is a usual manner to book the place by mainstream air hoses computing machine reserve systems ( CRS ) , but its cost is high which paid a fee for each reserve, Southwest Airlines is maintaining off the channel.

Own Booking Request Reservation System

Southwest Airlines being the first air hose client of the Sabre Basic Booking Request reserve system, which allowed travel agents to suit the reserve demands of our Customers straight.

Ding! Discounts Directly To Customer Desktop

Since the 1990s, Southwest has been running a telecasting ad run based on the phrase “ Wan na acquire away? ” The commercials present amusing, abashing state of affairss in which people find themselves desiring to “ acquire off ” . Most ads are accompanied by the sound cartridge holder “ [ ding ] You are now free to travel about the state ” . The PA “ donging ” has become synonymous with Southwest Airlines, and inspired the name of an online ticket offer plan, “ Ding! ” . “ Ding! ” brings deeper price reductions straight to client desktop of their pick and acquire unrecorded updates from the metropoliss.


Travelers will non depend on the CRS, but a verifiable codification from Southwest Airlines. Southwest Airlines ain reserve system that used no tickets. Ed Stewart, a Southwest interpreter, compared the new system to those used by auto lease bureaus. “ You show up at the ticket counter and you have a verification figure, and we give you a get oning base on balls and off you go, ” he said ( The New York Times 1994 ) . The operating manner is to profit both the travellers and Southwest Airlines because of the less paper work and the fast embarkation clip.

Simple Fare Structure

Southwest Airlines prefers to follow simple menu construction, stress point-to-point theodolite, and adjust the menu with demands. The monetary value construction of Southwest Airlines is lower than mainstream air hoses. It is wholly different to the mainstream air hoses with offering the flexible and high menu tickets. Merely supply-and-demand rule dominates the monetary value and this makes the monetary value attractive to frequent circulars. Besides that, it besides can alter the monetary value anytime to accommodate to the demands of off-season and high season. Cheaper tickets by booking early where there may merely be a smattering of seats available on each flight at the advertised deal menu ; the earlier you book the larger the economy. The best monetary value scheme there is in footings of selling and hard currency direction.

Know-How or Competences

There will ever be other air bearers that try to retroflex Southwest Airlines unique concern scheme. But the truth is, Southwest Airlines “ invented ” competition in the air hose industry, hence, we know how to manage competition from other bearers. Unlike other bearers, the Employees of Southwest Airlines cognize how to hold FUN while turning a net income – it genuinely is the Employees of Southwest Airlines who set us apart from the remainder. ( Southwesterly Media, 2006 )

Potential resource failings and competitory lacks

Inconvenience Booking

The promotional menu must be booked on-line because agents are difficult to happen. Not all clients know how to entree cyberspace.

No Business Class

For greater capacity, Southwest Airlines provides merely economic system cabin place and narrow seating.

No Services for Particular Needs

No services are provided for riders who need linking flights or wheelchairs.

Simplified Service

In order to be low cost and turning planes fast, no repasts, drinks and bites for free, no place reserve and free seating. Therefore, merely flies to finishs within four hours.

Poor Quality Perception

Southwest Airlines usage monetary value as a market place. Customers may unnaturally associate low priced tickets with hapless quality flight equipment and hunt for more expensive tickets that are associated with better and safer air hose equipment.

Small Legroom

The smaller the aeroplane is ; the smaller legroom is. Boeing 737 have smaller legroom even compare with other low-priced bearer normally use Airbus A320 aircraft.

High labor cost

The labour cost of Southwest Airlines is normally lower than the mainstream air hoses, possibly merely about 40 per centum of them ( Anon, 1997 ) . Due to many grounds as the staffs are younger, there are no extra costs on senior staff or those retired staff.

Potential market chances

As the budget air hoses put together a construction of service on demand they imagine and invent the better scheme. Traveling a cargo from A to B is the stone underside easiest construction within motor cargo hauling.

International gateways is missing of low-cost secondary airdrome and the focal point of the new airdromes on their function. The demand is at that place. Therefore, the budget air hoses choose the short draw, “ point-to-point ” service between midsize metropoliss and secondary airdromes as its primary market focal point to diminish the costs. The point to indicate service agencies if you are doing a journey that involves a alteration of plane, you will hold to look into your baggage in for each leg of journey. In add-on, with some air hoses, if your firs leg is late you will non be transferred onto another plane if you miss the 2nd. So it is wise if the riders would look into with each air hose their policy on lost connexions. It can see against losing low cost connexions with air hoses.

Fuel Hedging

Southwest Airlines locked in lower jet-fuel monetary values with its scheme of purchasing beforehand jet-fuel contracts. Southwest is 85 % hedged at monetary values capped at $ 26 per barrel of oil for 2005, 65 % at $ 32 per barrel for 2006, more than 45 % at $ 31 per barrel for 2007 and more than 25 % at $ 35 per barrel for 2008. To fudge so extensively, an air hose needs ready hard currency to put, and Southwest ‘s biggest rivals are hanging onto hard currency to sit out their continuing losingss. Continental is an utmost illustration ; it has no hedges in topographic point at all. “ It ‘s really expensive to fudge right now, ” says CFO Jeff Misner. “ I sure wish I had some coverage out at that place, ” he adds, but given the cost, hedge does n’t do “ economic sense ” for Continental. CEO Larry Kellner notes, nevertheless, that the company had no 2004 hedges at this clip a twelvemonth ago and still injure up with a $ 70 million hedge addition for the twelvemonth.

Handiness of Secondary Airports

There are few secondary airdromes in major centres.

Airport Extract Low-Cost Carrier

In add-on to making lower cost installations specifically for low-cost air hoses, airdromes will get down to unbundled their services and the resulting charges so that air hoses can choose and pay merely for those services that are required. This unbundled intervention of airdrome services can cut down costs to air hoses, place unwanted airdrome services that can extinguish, and wages air hoses for more efficient usage of airdrome installations.

Low Airline Fare

Non-business riders, leisure traffic price-conscious concern riders, are in consideration of low air hose menu. The rise of low-priced bearer all offer low rewards and pay less airdrome fees. For case, the rewards of low-priced bearer flight attends are lower so the mainstream air hoses ‘ about 60 % , it could salvage tonss of costs.

Alternate Income

Although Southwest Airlines do non supply repasts, drinks and bites, it is really another manner to gain money. There are advertizements of assorted merchandises in side the cabin and outside the fuselage which is in order to acquire the advertizement disbursals to increase the income ; the flight attends even can hold committee for selling nutrient and drinks on the aeroplanes. This net income will promote the flight attends ‘ willing of selling merchandises.

Low Fare Service Competitiveness

After the 911 terrorist act, the costs of the security and insurance of the mainstream air hoses are lifting aggressively. This state of affairs provides an chance of development for the low-cost bearer. The latest probe showed that there are 60 % Asiatic travellers, which include workers, pupils, instructors and many business communities, are willing to take the low-priced bearer air hoses to their finishs. Today, one of every seven domestic riders is winging because of the increased fight ensuing from low menu service.

Positive Impact

The low menu stimulated demand has really positive deductions for the air hose ‘s industry labour force, and promotes significant economic growing to the benefit of consumers, local communities, travel related industries, and the aerospace industry.

Potential market menaces

Needs For Higher Servicess

Southwest Airlines usage monetary value as a market place. Customers may unnaturally associate low priced tickets with hapless quality flight equipment. Therefore, in order to hold riders ‘ assurances, Southwest could be forced to cast its minimalist cost construction by supplying higher services such as tickets and luggage transportation.

On the other manus, monetary value is non the key to everything. Peoples, some non concentrating on price-sensitive clients, still have emotions, which can be stronger than monetary value motive because the pricing is non the key to medium- to long-run success.

Deficit of Available Airplanes

Southwest may confronting an unexpected job ; a deficit of available aeroplanes. And the deficit is besides forcing up renting costs at a clip when air hoses are already hurt by record high fuel monetary values. Lease rates have increased between 10 % and 15 % since the start of the 2004. Other low-priced bearer have selected Airbus. Over the last six months, the state of affairs has gone from one of glut for these 100 to 150 place aircraft to one where there are really few available for rental. Current leases for new A320 aircraft scope between US $ 250,000 and US $ 350,000 a month depending on the length o the rental.

AeroStrategy ‘s Stewart, is the sensed hazard of purchasing everything from a individual provider. This article was published in the September 2003 issue of Overhaul & A ; Maintenance.

Fuel Cost

The fright of an oil hiking remains. Southwest Airlines has been sharply hedged against lifting oil monetary values over the past twosome of old ages, locking in fuel monetary values good under $ 40 per barrel. That spared Southwest Airlines the squeezing from higher energy monetary values that hit other bearers. Unfortunately, those hedges are stoping, so Southwest faces higher energy costs even though petroleum monetary values have fallen. ( Robert Walberg, Street Patrol, Jan 2007 )

Unpredictable Factors

What if the unpredictable factors, like 911, the war in Iraq and the SARS work stoppage happen once more? During the sensitive clip, the travelers normally choose to remain in their ain states to see their security. Can Southwest go through the trouble with low incomes?

Undertaking 2

On the footing of the critical factors identified in Task 1.

a ) Draw decisions refering the company ‘s overall state of affairs.

Company Situation Analysis

Strategy Grid Model

Scheme Options Method

2002~2005 Revenue V ASK/M

Group Mapping

B ) Suggest actions for bettering the company ‘s scheme.



Undertaking 3

Human Resource patterns of Southwest Airlines that jointly show the company ‘s focal point on its employees.

Employees Come First, Customers Come Second

Most company rule ever client semen foremost but Southwest operative rule was that employees come foremost and clients come 2nd. This reflected direction ‘s belief that presenting superior service required employees passionate about their occupation and knew the company concern their wellbeing and committed to supply occupation security. Southwest ‘s thesis was “ Keep employees happy, so they will maintain clients happy ( Thompson et al. 2004 ) . Important of employees has been reflected in Southwest 2004 Annual Report. Southwest has changed forces section ‘s name to People Department in 1989 and the section caput with rubric of frailty president of people. This happens similar with Starbucks. Starbucks recognizes rivals can retroflex merchandises, but they can non retroflex people. Therefore, Starbucks seeks to link foremost with employees and 2nd with clients. There is no better interpreter for a company, merchandise, and trade name than person who is happy with their occupation and respected by their employer and equals. A happy employee will in bend, make clients happy. ( Moore 2006 )

Hire Attitude, Train Skill

Love and Fun is about attitude but hard to alter person ‘s attitude, so engage for attitude and train for accomplishment ( Freiberg K and Freiberg J 1996 ) . Harmonizing to Sunoo ( 1995 ) , Southwest Chairman Herb Kelleher says the company looks foremost at persons ‘ sense of wit in measuring their possible tantrum with its corporate civilization. The air hose ‘s repute as a merriment workplace allows it to enroll and turn without utilizing recruiters or employment bureaus. Beside that, Southwest looked for people that reading people ‘s emotions and reacting in a truly lovingness, empathic mode. Southwest is interested in people who truly enjoyed meeting with people, motivated to assist other people and enjoyed their occupation ( Thompson et al. 2004 ) .

University for Peoples

The course of study involved everyone included new recruits, employees, and leading irrespective new or experienced. The leading courses focal point on coaching and promoting instead than supervising or enforcing regulations and ordinances. All employees received client attention developing including pilot. Southwest emphasized on people development by offering many classs including corporate civilization. Employees ‘ orientation plans called “ The Southwest Shuffle ” featured many of Southwest employees knaping about the merriment they had on their occupations and other exercisings that corporate civilization has informally communicated. ( Thompson et al. 2004 )

Career Advancement

Employees are encouraged to use for supervisory places. Most of the supervisory places, 80 % ~ 90 % were filled by internally ( Thompson et al. 2004 ) . Internal people will be appreciate and understand the demands under them and bask the regard of their equals and higher directors. Targeted Selection procedure will use that similar to test new recruits in order to better the opportunities of fiting the right people to the right occupations. This provides an chance for the employees grow together with Southwest and career way to bask and experience great to be at Southwest. All freshly promoted leaders have an chance to develop leading and communicating accomplishments every bit good as operation in every section over a six-month period to guarantee that they could execute their occupation. Department caputs, equals and subsidiaries provided 360-degree feedbacks. People Department analyzes the feedback and decides specific assignment for each campaigner ( Sunoo 1995 ) .

Highest Employee Compensation Levels In The Industry

Southwest ‘s wage graduated tables were at degrees near to the industry norm and its benefit bundles were good relation to other air hoses. Harmonizing to a 1997-98 study, Southwest ‘s pilots earned, on norm, about 10 per centum above the industry norm.

Southwest introduced the first profit-sharing program in the air hose industry for senior employees in 1973. Most Southwesterly employees had the program in 1999. By 2001, Southwest farther develop the program into 12 different stock option plans for assorted employee groups, a 401 ( K ) employee nest eggs program that included company-matching parts, and a profit-sharing program that covered virtually all employees and consisted of a money purchase defined part program and an employee stock purchase program. About eight to twelve per centum of base wage represented in recent old ages. With paysheet tax write-off, employees take parting in stock purchases at monetary values equal to 90 per centum of the market value at each paysheet period. Southwest employees owned about 10 per centum of Southwest ‘s outstanding portions. ( Thompson et al. 2004 )

Harmonious with Union

Southwest Airlines is one of the most extremely nonionized air hoses in the United States, brotherhoods represent about 88 % Southwest workers. However, Southwest Airlines has been more successful at making understanding with their labour brotherhoods in much less clip. Southwest direction encouraged brotherhood members and negotiants to research their pressure issues and behavior employee studies before each contract dialogue. Southwest ‘s contracts with the brotherhoods stand foring its employees were comparatively free of restrictive work regulations and narrow occupation categorizations that might hinder worker productiveness. All of the contracts allowed any qualified employee to execute any function-thus, pilots, ticket agents, and gate forces could assist burden and unload luggage when needed and flight attenders could pick up rubbish and do flight cabins more presentable for riders get oning the following flight. ( Thompson et al. 2004 )

Job Security

Today, barely you could happen a company gives you comfy of experiencing “ Work Till Retirement ” . Southwest ‘s direction sustains and nurtures the corporate civilization with no-layoff policy, built up considerable good will with brotherhood over the old ages by avoiding layoffs ( Brooker 2001 ) .

When Southwest eventually received permission to run in 1971, it had four Boeings and less than 70 employees, hardly adequate to run. When it could non run into paysheet, the company had to do a pick: sell one of its planes or put off people. It decided to make the former and asked its employees to cut turnaround clip at the gate from 55 to 15 proceedingss. The tradition of Southwest employees, from pilots to rage agents, fliping in to make what is necessary in order to assist the company was born. ( Donlon 1999 )

Management by Walking Around and Open Door Policy

Southwest ‘s director spend at least one-third of their clip out of office, walking around the installations under their supervising, detecting firsthand what was traveling on, listening to employees and being antiphonal to their concerns. This technique normally employed by effectual leaders to remain informed about how good the Strategy executing procedure is come oning by doing regular visits to the field and speaking with many different people at many different degrees.

Directors are responsible to be at that place listening to people and available to people in individual, non via a suggestion box. Southwest strongly believed that must be antiphonal to flight attenders or client service agents, when they need to derive entree to person who can give them resources and replies ( Freiberg K and Freiberg J 1996 ) .

Employees are encouraged to convey up concerns, sentiments, and suggestions for cut downing costs and bettering efficiency. New protocols for takeoffs and landings that conserved fuel by pilot and no company logos on rubbish bags are good illustration that salvaging an estimated $ 250,000 yearly. Employees suggest that buy the parts and piece the PCs themselves for half the monetary value of a new Personal computer, salvaging the company $ 1 million. Southwest clerks who came up with the thought of making off with paper tickets and switching to e-tickets. ( Thompson et al. 2004 )

Colleen Barrett, Southwest ‘s president, had articulated the company ‘s policy some old ages earlier: “ No Employee will of all time be punished for utilizing good judgement and good old common sense when seeking to suit a Customer – no affair what our regulations are. Let ‘s start propensity towards our Customers once more – non off from them. Let ‘s get down promoting our line employees to be a small more flexible and to take that excess minute to suit particular demands. Let ‘s get down promoting our Supervisors to give our Customers the benefit of the uncertainty. ”

Simple four beds of direction between a frontline supervisor and the CEO enable beltway to acquire things done instantly and efficaciously. Southwest ‘s authorization, allow employees comfortable in doing their ain determinations and set abouting their ain attempts.

These patterns have contributed to adept executing of the company ‘s concern scheme, right up to the present twenty-four hours.



The staff and direction of Southwest Airlines is a competitory advantage but non a “ premier beginning of competitory advantage ”



Undertaking 4

Southwest Airlines ( SWA ) and AirAsia ( AA )

Market Similar Market Dissimilar

1. Lower Fare Price Range 1. Regional ( SWA ) and International ( AA )

2. 2. SWA, High Frequent

3. 3. SWA, On Time

4. 4. AirAsia Focus On Leisure

5. 5.

6. 6.

Business Model Similar Business Model Dissimilar

1. Vision 1. Southwest merely P2P, AirAsia Hub

2. ARS 2. Regional ( SWA ) and International ( AA )

3. Code Share, Southwest with ATA. AirAsia with? ? ? 3. AirAsia owned terminal LCCT

4. Southwest Vacation Package and AirAsia Budget Holiday 4. AirAsia more options – Samarium

5. 5. AirAsia ain Academy and Maintenance Hub

6. 6. AirAsia pattern two aircraft type, Boeing 737 & A ; Airbus 320 alternatively individual aircraft type


Interconnectivity in Asia

Air Asia has an advantage in that the continent has about no interregional main roads and no high-velocity international rail. There is a batch of sea in between. Air travel is the lone manner to develop interconnectivity in Asia.

Business Model


Normally the low-cost bearer sell tickets from their Web Sites in order to salvage the costs and the promotional menu must be booked online. However, Air Asia of Malaysia works with Singapore Post Office in order to allow the clients buy the tickets in the station office. Therefore, the clients non merely can book on line, but besides book the tickets through phones or direct messages from cell phones. This provides one more good manner to allow clients to purchase tickets more convenient.

Two Type of Aircraft

Air Asia have two type of aircraft, Boeing 737 and Airbus A320. A320 aircraft is large different from others. It has a capacity for 162 riders, offer riders fixed seating and a fixed characteristic legroom of 32 inches- a full four inches more than what a typical low-cost bearer offers.

Low labor cost

The labour cost of Southwest Airlines is normally lower than the mainstream air hoses, possibly merely about 40 per centum of them ( Anon, 1997 ) . Due to many grounds as the staffs are younger, there are no extra costs on senior staff or those retired staff.

The first Budget Airline in Asia, AirAsia, is based in Malaysia. Originally founded by a government-owned pudding stone DRB-Hicom, the to a great extent indebted air hose was purchased by former Time Warner executive Tony Fernandes ‘s company Tune Air Sdn Bhd for the symbolic amount of one ringgit on December 2nd, 2001.

Fernandes proceeded to engineer a singular turnaround, turning a net income in 2002 and establishing new paths from its hub in Kuala Lumpur International Airport at breakneck velocity, underselling former monopoly operator Malaysia Airlines with promotional menus every bit low as US $ 2.50.

In 2003, AirAsia opened a 2nd hub at Senai Airport in Johor Bahru near Singapore and launched its first international flights to Indonesia. As of December 2004, AirAsia and its associated companies operated 26 Boeing 737-300 flights to Macau started in June 2004./

In December 2004, AirAsia ‘s Indonesian associated company AWAIR was relaunched with Jakarta as its hub. AirAsia besides ordered 40 Airbus A320 to replace their ageing Boeing 737-300 fleet and the first Airbus A320 is expected to get in January 2006.

AirAsia ‘s air hose finishs are Brunei, Alor Star, Johor Bahru, Kuala Lumpur, Kota Bharu, Kota Kinabalu, Kuala Terengganu, Kuchimg, Labuan, Langkawi, Miri, Penang, Sandakan, Sibu, Tawau, Bangkok, Hatyai, Phuket, and Singapore. Most finishs are in South-east Asia.

Although AirAsia merely has being runing the concern for about four twelvemonth till now ( 2005 ) , 1 million riders traveled per twelvemonth. AirAsia besides claimed their operating cost is lower than other air passages in Asia, for about a half of per centum, hence, AirAsia can offer the low-cost trip for the Malaysians or other state ‘s citizens in South Asia.


( include merely beginnings cited in text )

Type your Bibliography/References in a tabular array utilizing unseeable gridlines. This enables you to screen alphabetically, utilizing Microsoft Word: Table – Kind. Use single-line spacing, with one line infinite between points. The illustrations below screen most types of paperss you will meet. Pay careful attending to spacing ( one infinite after all punctuation Markss ) and to the usage of rubric instance and sentence instance in rubrics of books, sub-titles of books, diary articles, and journal rubrics. Do non warrant the right border. Consult Van Aswegen ( 2006 ) , every bit good as Harvard for Dummies ( for short cuts ) .

1. The Guardian, Ryanair cuts lean backing seats ; suitcases following to travel, Sydney Morning Herald, 17 February, 2004, viewed 9 February 2007,

2. SWA in a Nutshell, Southwest Airlines Press Kits, 9 September 2006, viewed 28 January 2007,

3. Thompson A A, Strickland A J, 2004, Strategy Management Concepts and Cases, 13th edn, McGraw-Hill, Irwin.

4. Moore J, 2006, Tribal Knowledge: Business Wisdom Brewed from the Grounds of Starbucks Corporate Culture, Kaplan Business, United Stated of America.

5. Freiberg K L and Freiberg J A, 1996, Nuts! Southwest Airlines ‘ Crazy Recipe for Business and Personal Success, Bard Press, United Stated of America.

6. Gross T S, 2004, Positively Hideous Service: How to Delight and Astound Your Customers and Win Them for Life, 2nd edn, Kaplan Business, United Stated of America.

7. Sunoo B P, 1995, How merriment flies at Southwest Airlines, Personnel Journal, June 1995, Vol. 74, No. 6, pp. 62-73.

8. Brooker K, The Chairman of the Board Looks Back, Fortune, 28 May 2001, pp. 62-76.

9. Donlon J P, Air Herb ‘s Secret Weapon, Chief Executive ( US ) , July-August 1999, pp. 32-39.


11. Bennett, Randall D. and James M. Craun, 1993, The Airline Deregulation Evolution Continues: The Southwest Effect, Office of Aviation Analysis, U.S. Department of Transportation, May 1993,

12. Cupertino, California, USA.

13. Southwest Airlines Implements SAML with Oblix NetPoint

14. August 13, 2003

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16. “ Southwest Airlines ‘ history of success is built on giving our Customers a ‘positively hideous ‘ degree of service. Systematically acquiring them to their finish on-time is a large portion of that, ” said Brian Buege, director of Application Frameworks, Southwest Airlines. “ By deploying Oblix NetPoint integrated with SAML, our mechanics can pass more clip maintaining our fleet airborne and our flights on-time instead than seeking for lost watchwords or related information. A SAML-integrated individuality and entree direction substructure delivers important concern benefits, including decreased administrative costs and increased productiveness. ”

17. Gross T S, 2004, Positively Hideous Service: How to Delight and Astound Your Customers and Win Them for Life, 2nd edn, Kaplan Business, 1 September 2004, United Stated of America.

18. Robert Walberg, 2007, Southwest: Great air hose, bad investing, Street Patrol, 11 Jan 2007,

We took a great thought and made it wing

Read on to happen out more about this small nouveau-riche three-jet air hose and how it got off the land to go one of America ‘s largest and favored commercial air hoses in history:

( Table A.A The south west clip chart 1971-2005, source- hypertext transfer protocol: // )

As you can see, we ‘ve been busy these past 35 old ages. And we promise that the following 35 will be merely as fun-filled and exciting as the last. We ‘ve accomplished rather a spot, and along the manner we ‘ve earned a rubric no other air hose in the industry can claim: The lone shorthaul, low-fare, high-frequency, point-to-point bearer in America. We are proud of our achievements, and it merely goes to demo that clip truly does wing when you ‘re holding merriment!


1. Aviation Week & A ; Space Technology hypertext transfer protocol: //

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