Southwest Airlines originally began operation in 1967, but as Air Southwest Co. in 1971 its name was changed to Southwest Air Co. The purpose behind its foundation was to provide passengers with a cheap means of air travel within Texas. Today they have a fleet of 550 Boeing 737s and 37000 employees. Although it's a relatively small, domestic airline, taking passengers to 73 American cities, but it provides remarkable customer satisfaction. Its $178 million Net income provides a good estimation of its profitability. The company has a high position in the Fortune 500 companies and the Department of Transportation's survey of customer satisfaction placed it at number one. Its complaints ratio per passenger is the lowest among all airlines operating in US.
Southwest Airlines originally began operation in 1967, but as Air Southwest Co. In 1971 its name was changed to Southwest Air Co. The purpose behind its foundation was to provide passengers with a cheap means of air travel within Texas. Today they have a fleet of 550 Boeing 737s and 37000 employees. Although it's a relatively small, domestic airline, taking passengers to 73 American cities, but it provides remarkable customer satisfaction. Its $178 million Net income provides a good estimation of its profitability. The company has a high position in the Fortune 500 companies and the Department of Transportation's survey of customer satisfaction placed it at number one. Its complaints ratio per passenger is the lowest among all airlines operating in U.S.. Its popularity among customers as well as employees is legendary. The airline empowers employees with decision making rights for immediate resolution of problems. The airline boasts of: close interdepartmental connections - departments exchange gifts, a strong leader, open door policy for employees and strict accountability. The airline answers consumer letters regularly through personalized responses (Bunz, U.K & Maes, J. D, 1998).
Analysis
Current Trends in the Airline Industry: The airline industry in U.S. has also suffered from effects of recession, however now the industry is facing a rapid increase in demand for air travel. To cope with this increase in flights and planes is needed. Secondly, airlines are forming links with firms providing related services, such as travel agencies, resorts and cab service. There is a new focus on environmentally responsible flying. Airlines in Europe are required to submit carbon dioxide emission reports and U.S. airlines are buying eco-friendly fuel. They are trying to come up with ways of reducing carbon dioxide emission. Increased travel incentives bring 15% more sales and create around 2.4 million jobs which makes them popular among airlines. Unions are being given more power (Dirk, T. 2012).
Southwest is one of the top six airlines to have seen an increase in passengers, numerically a 12% increase. The company already has many links with distributors and hotel owners, it even has its own gift card on which passengers are given points for using a sister concern of Southwest, like a hotel, a cab company etc. these points are calculated to provide passengers with a chance to travel free. So Southwest has the incentives covered. Adding eco-friendly fuel will just up their sales further. The airline is employee friendly and has many unions, for pilots, for cab service, for maintenance personnel.
Organizational Structure: The head of the company is the CEO, Gary Kelly, then there is a CFO and departmental Directors. There are around 9 directors in the firm. The CFO, has under her the management of 'Airport Affairs', 'Financial planning', pricing and 'revenue management.' Trans Airways has its own separate division, it is an airline that was merged into Southwest. This department controls sales and technology issues. The Directors and 11 departments are all answerable to the CEO (The Official Board, 2012).
Human Resource Management Issues: HRM is fast becoming the most important industrial concern. The main concerns of any HR department are: improving performance, lowering costs plus motivating and satisfying employees.
Human Resource is responsible for recruiting, promoting and training employees. The company itself aims to provide the best quality service with a warm, friendly attitude. Southwest's company philosophy is that customers come second to employees- the most important members. They believe that if the firm takes care of the employees will take care of the company and in Southwest employees introduce creative, innovative ideas and a 'fun culture' that has helped increase profitability. The aim of the airline was to maximize profits and they have their own pocket in the market that is affordable air travel to people who did not afford it in the past. The airline flies short, domestic flights and smaller airports, to save costs. Southwest management has strived to engender employee loyalty. Their introduction of Ticketless travel, they had a limited fleet of technicians -- which saved on training costs. They also introduced computerization, they have other tradeoffs that are made in favor of low fare. The company has a wonderful employee satisfaction record, in this respect it is one of top Fortune 100 companies and has remained continuously profitable for over 50 years (Hall, A. 2007).
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