1. Describe the change in Southwest Airlines boarding processSouthwest Airline takes a distinctive approach in its boarding process. Essentially, instead of giving out allotted seats akin to other airlines, Southwest carries out a policy of open seating. The inference of this is that in the course of the boarding process, the travelers have the freedom to take a seat in any of the available ones. However, in recent times, there have been changes to this open-seating policy. Preceding the 2007 financial year, the travelers in general boarded the planes on a first-come, first-serve basis. However, in 2007, the airline brought this process to its culmination. The new boarding process assigned every traveler a boarding group A, B, or C together with a boarding and the travelers boarded the plane on a sequential basis from A to B and thereafter to C.
2. What was Southwest’s main goal introducing the early-bird check-in?
The main objective of Southwest Airline’s introduction of the early bird check-in was to increase customer service and increased revenue at the same time. The early bird boarding position provides consumers with the chance for better selection of seating in the plane and also earlier access to overhead bin space, providing consumers with the option of augmenting their travel experience while generating increased revenue prospects for Southwest Airlines. It is imperative to note that Southwest Airlines did not have any seating policy but did this on a first come first served basis. This resulted in online companies having businesses of offering early check-in for clients on a charge of $1. When the company came to this realization, this prompted an opportunity for Southwest Airlines to capitalize on these revenues thereby introducing the early bird check-in option (Southwest Airlines, 2009).
3. Explain how Southwest Airlines used the game theory approach to increase its profits.
The Airlines employed the game theory approach to increase the profits generated owing to the $10 paid by the travelers as extra fees. It is imperative to note that a huge percentage of consumers are inclined to pay...
Notably, Southwest Airlines has generated significant profits. For instance, in the 2010 financial year, the financial reports of the company generated an additional $98 million in sales from Early-Bird Check-In, surpassing expectations. In the following financial year, the company’s revenue increased by 44 percent with sales revenues of $142 million (Talwalkar, 2013).
4. What is the outcome of the game involving early-bird check-in?
There are three outcomes involved in this early bird check-in process. Take an example of two passengers being in competition for the best seat on the plane. One of the outcomes is that neither of these two passengers pays for the early bird check-in option offered. This implies that both of the passengers can expect to get okay seats in the seating lottery undertaken by Southwest Airlines. The second outcome is the decision to pay for the early bird check-in provision by the airline for $10. In this case, it implies that the passenger paying for this offer will get a good seat. There is also the third option where both of the competing passengers actually pay for the early bird check-in option given by the airline. In this particular case, both of the passengers end up being positioned in the lottery for priority seats. In essence, the inference of this is that both of the passengers will be in competition within a seating lottery, but the downside to this is that both of the passengers have to pay $10 in order to do this (Talwalkar, 2013).
5. Identify what is the passengers’ dominant strategy.
In delineation, the dominants strategy is one in which yields the best payoff for a player irrespective of the strategies that the other players choose. In the case for Southwest’s early bird check-in process, the dominant strategy for the passengers is paying the $10 for the early bird seats. This is because if the passenger fails to do so, then he or she will be positioned in obtaining okay seats within the seating lottery. In contrast, if he or she actually makes the payment, then the passenger has the…
