Operations Management at Southwest Airlines


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Case Details:

Case Code : OPEA004
Case Length : 9 Pages
Period : 2003
Organization : Southwest Airlines
Pub Date : 2004
Teaching Note :Not Available
Countries : USA Industry : Aviation

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Operations

Southwest's business model revolved around providing safe, reliable, and short duration air service at the lowest possible fare. With an average aircraft trip of roughly 400 miles, the company had benchmarked its costs against ground transportation. But Southwest believed that cost leadership should not dilute the quality of service. According to analysts, who had been tracking Southwest closely, the airline's approach had a lot in common with the approaches taken by cost leaders in other industries. Southwest pursued a blanketing strategy similar to that of the famous US retailer, Wal-Mart. When Southwest decided to serve a new city, it typically scheduled flights from the new city to two, three or even four destinations at which the company had previously established itself.

Southwest did not commence a service between any two cities until it was able to devote the planes and personnel necessary to operate at least five to six flights a day. Like Toyota, which manufactured small batches of cars in a cost effective way, Southwest had developed competencies in turning around aircraft quickly.

Looking Ahead

Southwest planned to add two more nonstop flights between Baltimore and Houston by 2004. With the additional flights, Southwest would offer a total of four daily nonstop flights between the two airports. 

Southwest planned to connect with a new daily nonstop service between Spokane and Las Vegas on January 18, 2004. Southwest also had plans to add one daily nonstop flight between various cities from April 4, 2004. These included Chicago midway and Ft. Lauderdale/Hollywood, Chicago midway and Orlando, Chicago midway and Columbus, Baltimore/Washington and Columbus (A total of 12 flights daily).

Southwest confirmed, it would start a new service from Philadelphia on May 2004, with daily nonstop service to Chicago midway, Las Vegas, Orlando, Phoenix, Providence, and Tampa Bay.

Exhibits

Exhibit I: Southwest Building Blocks of Operational Efficiency
Exhibit II: Southwest: Anatomy of a 15-minute Turnaround

 

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