Southwest vs. Lufthansa
quality management
Creating value through quality management
Southwest Airlines is famed for having one of the most unique business models and philosophies of any airline. It began as a ground-breaking organization that offered bare-bones, low-cost services to passengers. Flight crews were entertaining and responsive to passenger needs, and even though no in-flight meals were served, customers flocked to Southwest. The company openly advertises that it selects its employees because they have a certain 'attitude' and are willing to joke, be silly, break into song, and have 'fun' with their jobs. Although a larger percentage of its employees belong to unions than any other major carrier, it has never had a strike. Employees are the best-paid workers in the industry, but costs are kept low: "Since Southwest has about 30% fewer employees per aircraft than its network competitors, it has the lowest non-fuel C.A.S.M. (cost per available seat mile) of any of the major carriers" (Brancatelli 2008). Even management ranks are lean: "but well compensated and, most importantly, productive. I once calculated that the top executives of Southwest generated 10 times more revenue per dollar of compensation than did the C-suite types at some of the network carriers" (Brancatelli 2008).
Southwest began as a regionally-focused airline, eschewing a wide-ranging outreach and instead stressed frequent, direct flights to popular places:...
That minimizes the time that planes sit on the ground at crowded, delay-prone hubs and allows the average Southwest aircraft to be in the air for more than an hour longer each day than a similarly sized jet flown by a network carrier" (Brancatelli 2008). Southwest has streamlined the type and size of its planes to save money. "Unlike the network carriers and their commuter surrogates, which operate all manner of regional jets, turboprops, and narrow-body and wide-body aircraft, Southwest flies just one plane type, the Boeing 737 series. That saves Southwest millions in maintenance costs -- spare-parts inventories, mechanic training and other nuts-and-bolts airline issues. It also gives the airline unique flexibility to move its 527 aircraft throughout the route network without costly disruptions and reconfigurations" (Brancatelli 2008).
Southwest focuses on minimizing the time it takes to get people in the air -- until recently, it adopted a 'cattle call' style of boarding with no priority seating. It has no different 'grades' of classes and no assigned seats. It is simple and democratic in its services. However, passengers are pleased because of the high levels of quality and low prices. Keeping prices low, minimizing all extraneous costs through streamlining and passing value onto the customer requires close monitoring of costs. The final key component of Southwest's business model is its fuel-hedging…
