Airlines Analysis: Southwest Air Cooperation

Southwest Airlines Co.
Name
Institutional Affiliation
Southwest Airlines Co.
Introduction
Southwest Air cooperation (SWA) was started in 1966 by a group of Texas investors and incorporated in 1967. SWA was started as Air Southwest Company after Lamar Muse, Herbert Kelleher, and Rollin King came together to contribute an initial capital of $560,000. In 1971, Air Southwest launched its first that connected in Houston, San Antonio, and Dallas (SWA, 2018). In February 1968, SWA asked for permission to operate in some specific routes but even after Texas Aeronautics Commission (TAC) granted them their wish, three major competitors opposed the move by filing a suit. In December 1970, the U.S. Supreme Court ruled the case in favor of Air Southwest after Kelleher took it there. In 1973, the company posted its first profit and began RUSH cargo service. In 1975, Air Southwest went public as its shares started selling on the American Stock Exchange. In 1976, Air Southwest was renamed Southwest Airlines Co. The company’s shares migrated to the New York Stock Exchange in 1977.
The Airline Deregulation Act enacted by the Congress in 1978 led to significant changes in the nature of America’s airline industry. By this time, SWA was free to expand its operations. Instead, Southwest planned conservative growth because of the high risks of large debts. It became started offering no-frills and low-cost services (Field, 2015). This airline also offers free meals and passengers can sit where they want. The company operates in major cities and minor airports as a way of avoiding congestion. SWA uses the low-cost structure through non-union labor. They focus on attracting leisure and business passengers from competing airlines by charging lower fares. SWA has entered new markets from time to time (SWA, 2018). They also shunned the baggage fee used by other top companies to increase revenue. The company has almost 400 among the newest jets in America, whose average age is 9.6 years. This research paper provides an analysis of Southwest Air’s economic, structural, and competitive characteristics during the pre-and post-deregulation period.
Various Route Structure and Products
Currently, SWA operates seven customer support and services centers across major cities such as Houston, San Antonio, Albuquerque, Oklahoma, Atlanta, Phoenix, and Chicago (SWA, 2018). However, Southwest’s main routes are major cities within Texas State. The company’s customer representatives book an average of 69,380 reservations per day, 487,000 per week and 2.1 million in a monthly (SWA, 2018). In 2017, the company enplaned around 158 million clients or an average of 13 million onboard passengers per month. They also moved more than 166 million pounds of cargo. Nonetheless, the company operates over 4,000 flights per day during peak seasons.
Since de-regulation, low-cost SWA has been acutely tied to the leisure traffic than most of the companies in the industry. Many visiting families and of tourists have always taken advantage of Southwest’s low fares. However, after mid 2000ws, SWA made a sharp turn(Bhaskara, 2014). The company evolved its simple no-frills model of business that targeted leisure customers as well as independent small business passengers to come up with a more complex hybrid product (SWA, 2018). This focuses on growing SWA’s share of corporate travel coming from Fortune 2000 companies.
Recently, the major products and tools that Southwest has tailored and developed for their customers are Business Select and Early Bird Check-In. “Business Select, which allows passengers early boarding, priority check-in and security lanes, a premium drink, and twice as many Rapid Rewards points per dollar spent,” (Bhaskara, 2014). In short, Business Select fare is meant to appeal to economy-minded passengers. Additionally, Business Select customers have the opportunity to enjoy earn extra Rapid Rewards, early boarding privileges as well as a free alcoholic beverage when they travel with Southwest. The “Bags Fly Free” campaign as well as strategic fare deals resulted in collective consequence for the company for some and made a difference for the airline company. In the simplest explanatory sense, SWA believes in doing business differently. Early Bird Check-In automatically checks passengers in as well as gives them a comfortable boarding position where they can earlier and easy access to the overhead bins.
Additionally, SWA offers Rapid Rewards which is a frequent flyer revenue-based program for redemption and both earnings. This comes with a guaranteed admittance to inventory. Another product is SWABiz. This is a product where travelers have a direct access corporate booking engine (Bhaskara, 2014). It also includes a tool that helps manage meetings and monitor air travel, car rentals, and hotel. They also offer LiveTV and WiFi. These are the factors that have helped the company to achieve a “double-digit growth” from one year to another.
Airline Departments and The Role of Each
Southwest is a passenger airline and it provides planned air transportation in America. The organizational structure of the company changed drastically after the airline company entered into a strategic merger by acquiring AirTran in 2010. In November the same year, the company also terminated another agreement they had with WestJet. They took this drastic turn because they wanted to provide connecting service between Americas and Canada (Field, 2015). Later in 2011, SWA acquired AirTran Holdings International Cooperation. Both of them have the same SIC Code: 4512. Besides this, SWA has the SIC Code: 4731, a Freight Air Transportation.
Figure SEQ Figure \* ARABIC 1; SWA Routes
The executive leadership includes the Chairman of the Board and CEO, President, Chief Operating Officer, Executive Vice President Corporate Services, Executive Vice President and Chief Financial Officer, Executive Vice President and Chief Revenue Officer, and the Executive Vice President Daily Operations in that order (SWA, 2018). From this, SWA definitely uses a Functional organizational structure. Therefore, all the decisions are made takes at the top levels. In this way, the upper management has total control over the airline. Top management also enjoys clear occupation trajectory for workers, from the bottom (junior-level) to the top positions. The company also enjoys a sense of efficiency and stability by utilizing the functional structure because, in this way, every employee uses similar processes. It is also a good opportunity for a large corporation like SWA to enjoy economies of scale.
Figure SEQ Figure \* ARABIC 2: SWA Departments
The functional structure may cause poor communication between departments. For instance, the SWA departments may find it hard to together to avoid inter-departmental conflicts. On the other hand, customers tend to become more frustrated because there is a low level of cooperation as the functional organizational structure of SWA requires them to work with several departments (SWA, 2018). Thus, hi...