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This savings on fuel has also given Southwest more funds to invest in programs to reduce turn-around time of their jets between flights .
Southwest Airline's Internal Weaknesses passenger provider market. To do this they will have to concentrate on adding new services that can expand their services more profitably in the freight markets, supply chain services industry as FedEx and UPS have successfully done, and also continue hedging fuel contracts to save on this largest expense category. Southwest also needs to consider how it can be more effective in branching into entirely new markets, of which the AirTran acquisition opens up for them. The future of Southwest will be defined however by how well the company can make all these diverse factors work together to deliver an exceptional customer experience.
As with any company the size of Southwest, they have several weaknesses, with the most significant being their heavy dependence only on passenger traffic as their primary source of revenue. Despite efforts to move into logistics and supply chain services, the company is still struggling to gain significant success in more profitable business services markets (Kumar, Johnson, Lai, 2009).
Despite having an employee base that has the lowest turnover and highest levels of morale, Southwest also has one of the most rapidly declining sales-per-employee revenue levels for U.S.-based airlines (Kumar, Johnson, Lai, 2009). One of the factors that contribute to this is the fact that Southwest has more ground crew members than other airlines, an investment the company makes to attain the rapid MTTR figures mentioned earlier. This weakness however is also tied to the fact that the company has been struggling to break out of being a passenger-only airline.
Opportunities for Growth
Southwest needs to take the exceptional skills they have in logistics and apply them to the areas of business freight and transportation services. The logistics strengths of Southwest could more than outclass the regional freight forwarders and providers according to industry experts (Carter, Rogers, Simkins, 2006). The company could also create a more effective approach to selling supply chain management services as well based on this strength (Carter, Rogers, Simkins, 2006). Creating a supply chain practice as UPS has done would also help the company to alleviate the declining revenue per seat issue and also position them to move into more lucrative business-to-business markets as well.
Conclusion
References
Christopher P. Ball. (2007). Rethinking Hub vs. Point-to-Point Competition: A Simple Circular Airline Model. The Journal of Business and Economic Studies, 13(1), 73-87,116.
Bernoff, J., & Li, C.. (2008). Harnessing the Power of the Oh-So-Social Web. MIT Sloan Management Review, 49(3), 36-42.
David a Carter, Daniel a Rogers, & Betty J. Simkins. (2006). Does Hedging Affect Firm Value? Evidence from the U.S. Airline Industry. Financial Management, 35(1), 53-86.
D'Aurizio, P.. (2008). Southwest Airlines: Lessons in Loyalty. Nursing Economics, 26(6), 389-92.
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