Southwest Airlines' no-layoff policy and employee commitment strategy

SW Airlines

Company Background

Southwest Airlines is a U.S. based airline carrier and the world's largest low-cost carrier. It was formed in 1967 and, as of 2012, had almost 50,000 employees operating about 3,500 flights per day. The company grossed $17.1 B. In 2012 with its fleet of Boeing 737s, resulting in net income of $620M, or 36% (SW Airlines, 2013). The company is the world's largest operator of the Boeing 737s with over 550 currently in service. The company has an outstanding safety record, and is considered to be one of the 10 safest airlines globally (in Depth, 2012).

Historical Perspective

Southwest has the fewest complaints in the airline industry, the award for the most on-time flights, and best baggage handling. For these achievements, it won the industry's Triple Crown award for Best Airline five times in a row (Fortune 100 Best Companies, 2011. Even after the 9/11 crisis, SW had to cut flights by 20%, and while most other airlines cut staff, SW was willing to lose money to protect its people (Aboutsouthwest; southwest.com). The culture of the company was shown by SW's CEO Jim Parker, who noted, "Clearly we can't continue to do this indefinitely, but we are willing to suffer some damage, even to our stock price, to protect the jobs of our people" (Gitell,2003, p. 242). This resulted in the company maintaining a presence in the market, a great deal of positive publicity, employee loyalty, and a cultural commitment to using a difficult time to increase its presence in the market and show that it was committed to its employee culture.

SWOT

In the highly competitive airline industry, while not the largest company, the company that seems to glean the most press for providing innovative solutions and customer service is Southwest Airlines.

Strengths

Weaknesses

Opportunities

Threats

Strong fleet and firm operating stance as low-price leader

Limited routes, about 60 cities in the U.S.

International expansion

Intense and rapid competition

Friendly and professional staff

No product segementation (first class, coach, etc.).

Expand current flight distances and locations

Price fluctuations and dependence on foreign fuel

Four decades in the industry, market share and consumer trust

Limited cargo or freight space

Aquired Air Tran

Media issues that translate into stakeholder doubts

Economies of scale while still providing value and service

Heavy dependence on Boeing

Growth of U.S. traffic by 4% per annum through the decade; recovery of tourism

Regulations and barriers in marketplace

Central Issues for SW Airlines

Like many carriers, SW is plagued with issues surrounding fluctuating fuel prices based on foreign oil, a lull in the transportation market, and some recent negative publicity. SW cannot do much about the price of fuel or the national economy, but is responsible for its position on corporate social responsibility as well as adhereing to its mission statetment. In fact, in scanning documents about Southwest, one finds that they have been accused of being insensitive to the issue of larger built passengers. It appears that, at times, SW requires large passengers purchase two seats or not fly. Of course, as with most controversial issues, there are layers of issues surrounding this controversy: are Americans becoming larger? Are SW seats smaller to squeeze more profit into a flight? What are the safety ramifications of a larger person in a single seat? Is the comfort of other passengers an issue? Are there moral and ethical principles at work here, or is SW Airlines just selfish and greedy? (Netter, 2009).

Analysis shows that Southwest, and most of the major airlines have not reacted with fairness with their seat sizes; Americans are growing larger, but seat distance and sizing remains equal to, or smaller, than 3-4 decades ago. This is unfair and unethical because it punishes everyone, not just the obese. It is not uncommon in the airline industry, particularly after fuel became expensive to charge for excess baggage weight. The airlines each have different policies and procedures, weight limits, etc. Thus, if we think about it, excess girth and/or weight is quite similar. Tickets are issued based on a per seat limitation -- a client should comfortably fit into a seat. In this way, each person will be relatively comfortable. Principles of utilitarianism dictate that it is not just the obese person's considerations that must be addressed, but also those of fellow passengers. These other passengers paid for a seat/ticket, and thus should not be placed in a position of discomfort because the person next to them takes up more than 1 seat's space. In addition, safety and accessibility issues may be problematic. There is certainly a great deal of subjectivity when dealing with issues of this nature. The flight crew must make decisions about people, luggage, age, demeanor, etc., so issues of who and who not to allow on the aircraft should be clearly outlined in a company document.

Alternatives and Potential Solutions

SW employs a focus strategy, which strategy concentrates on a limited number of target markets. It is sometimes known as niche marketing, and allows a firm to tailor its marketing mix to the needs of a specialized market, thereby doing a better job of meeting the needs of that market. Firms that use focus strategy are often more successful when they target a market that is not as vulnerable to imitative competitors. Since 1988 SW has had a single driving paradigm: "dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit" in line with this policy, there is nothing unfair or immoral about asking an obese passenger to purchase two tickets, both in fairness to the other passengers and safety.

Implementation Plan

SW can immediately institute a height/weight ratio for all passengers for its seats, and then begin a program in partnership with Boeing, that uses modern ergonomic engineering to allow seats to fit larger passengers. In the final analysis, the company trusts the flight crew to be responsible for the safety and comfort of the entire passenger component. The flight crew has no choice but to base their decisions on what is the best possible safe solution for the greatest number of people; along with the corporate responsibility of maintaining a profitable business entity. Certainly, to make the situation fairer the policy must have dual tabs: height v weight in a given situation. This allows for procedural fairness; distributive fairness over time, and that despite the potential embarrassment to the overweight passenger, the safest and fairest outcome would be to adhere to the rules about purchasing two seats under identified criteria.