Southwest Airlines

Presented by – Delix Thomas Devesh Sharma Ekta Sanghvi Eeshani Nautiyal Geostany Jose Gia D’Cunha

About Southwest Airlines • Originally incorporated to serve three cities in Texas as Air Southwest on March 15, 1967, by Rollin King and Herbert Kelleher. • Commenced service on June 18, 1971 with 3 Boeing 737 aircrafts serving 3 cities – Dallas, Houston, and San Antonio. • Changed its name to Southwest Airlines. • Its first flights were from Love Field in Dallas to Houston and San Antonio.

Known for… • The first and most successful low cost airline. • The only major US air carrier that was consistently profitable for 35 years. • Short hops with no-frills service and a simple fare structure. • U.S. leader in number of passengers carried annually. • #1 in Business Week’s list “Customer Service Champs” • Named by Fortune as the best company to work for in America and the most admired airline company in the USA.

Vision To have a conservative increase growth, capitalize and cutback schedules of other airlines. To continue expanding conservatively in long-haul success. Vision Statement To provide the most affordable, reliable, and comfortable air transportation in the world.

New Vision Statement Our vision is to expand our locations both domestic and overseas by being the largest and most profitable airline company to achieve both short and longhaul carriers efficiently and with low cost. Also to be an airline carrier that has the most productive workforce to guarantee the best flight possible for each and every passenger.

Mission • The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. To give ordinary people the opportunity to fly. • To the employees – We are committed to provide our Employees with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.

Mission Statement The mission of Southwest Airlines is to provide excellent customer service and timely air travel at an affordable price for markets in the United States. We commit ourselves to the highest standards of integrity in doing what is best for our passengers, the airline industry, our employees and our stockholders. By using the latest technology in engine maintenance, we ensure safety, efficiency, and keep fuel emissions below governmental regulations. Through this mission, we at Southwest ensure high company spirit and long term financial prosperity.

The Southwest Effect • The success and profitability of Southwest's business model led to a common trend being named after the company. • The key concept is that when a low-fare carrier (or any aggressive and innovative company) enters a market, the market itself changes, and usually grows dramatically. • For example, when fares drop by 50% from their historical averages, the number of new customers in that market may not just double, but actually quadruple, or more. • Has been a major inspiration to other low-cost airlines, and its business model has been repeated many times around the world.

Goals and Objectives • Ensure highest quality customer service in the air or on the ground. • Ready to help customers under any circumstances. • Are there to ensure that you make it from point A to point B safely. • To stay the most successful with low-fare, high frequency point-to-point carrier.

The “Right” People or the “Right” Organization? A Values-Based Organization View of Strategy Fundamental Values or Beliefs

Design Management Practices That Reflect and Embody These Values

Use These to Build Core Capabilities

Invent a Strategy That is Consistent with the Values and Uses the Talents & Capabilities of People/ Organization to Compete in New and Unusual Ways

• What are our basic Principles, Philosophies and Core Values? • What do we believe in? • What policies and practices are consistent with these Values and Philosophies?

•What can we do for the customer better than our competitors? • Given our capabilities, how can we deliver value (EVA) to customers in a way our competitors cannot easily imitate? • Senior management “manages” the values and culture of the firm.

Senior Management’s Role

Southwest Culture • Has been developed from the very beginning – the firm having faced many difficulties. • This has strengthened the culture.

Requirements for the employees

• • • •

To To To To

work hard have the desire to be the best be courageous, to persevere and to innovate display a sense of urgency

• • • • • •

Adhere to the Basic Principles To treat others with respect To put others first Be egalitarian To demonstrate proactive customer service To embrace the SWA Family

• The Fun-LUVing Attitude: 1.To 2.To 3.To 4.To

have fun celebrate successes enjoy the work be a passionate team player

Basic Values or Philosophical Pillars • Value 1: Work should be fun ...it can be play… Enjoy it. • Value 2: Work is important ...don’t spoil it with seriousness. • Value 3: People are important...each one makes a difference.

People Management • The company’s motto: The employees come first, the customers come after them. • One thesis: Keep employees happy‐ then they will keep customers happy. • The employees represent the greatest asset of the firm. • Give people the freedom to be themselves. • Provide a learning environment. • Career development and Growth opportunities. • Communicate. • Forgive mistakes. • Encourage people to act like owners. • Trust and confidence in employees (No HR department - “People Department”)

Principles and Philosophies • • • • • • • • • •

No layoffs Equal opportunities for learning and personal growth Flat/ lean Org. Structure (only four levels) Employees have important inputs - listen to them High participative work environment Care, concern, respect within the organization for employees Catastrophe fund for Employees + Families Hire and we will train/ develop/ mentor Celebrate achievements Have Employees Contests (financial rewards)

Innovation • 1st airline to offer a profit-sharing plan to employees beginning in 1979, employees now own about 10% of company stock. • 1st major airline to offer “ticketless” travel system-wide. • 1st airline to offer online booking.

Focus on Employees A comparative advantage Key Performance Indicator

South West Airlines Industry

Employees come 1st

Yes

No

Motivation

Very High

Average

Job Satisfaction

Very High (85%)

Below Average to Average (50%)

Employment Security

Never had a lay-off

Very frequent lay-offs

Labor Agreement

10 years

1-3 years

Internal Customer

Yes

No

Key Performance Indicator

South West Airlines Industry

Families

Caring

Questionable

Trust and Confidence

Yes

No

Work

Fun

Not Challenging/Boring

Catastrophe Fund

Yes

No

Number of Employees Few

Lots

At the top • Gary C. Kelly – - CEO since 2004. - Chairman since May 21, 2008 - President since July 15, 2008

Herbert D. Kelleher • Gave Southwest Airlines its wings. • The initial battles helped shape Southwest's celebrated culture, one marked by humour, loyalty, and a fierce resistance to corporate bureaucracy. • Persistence was very important. • Focused on ‘out-of-the-box’ thinking and not conventional methods. • “If it's conventional, it ain't wisdom, and if it's wisdom, it's not conventional.”

• Kelleher rejected the conventional notion of putting the customer first. • Style – Listen, observe and encourage. • Knew the names of thousands of employees who held him in the highest regard. • “Clown prince” of the airline industry – loved to make jokes, engage in pranks and corporate antics. • Known for his combativeness.

• “If someone says they’re going to smack us in the face – knock them out, stomp them out, boot them in the ditch, cover them over, and move onto the next thing. That’s the Southwest spirit at work” • “War is hell and I love it so. That’s how I feel. I’ve never gotten tired of fighting.”

Colleen Barrett • • • •

President Kelleher’s legal secretary Listed on “100 most powerful women” Success Tactics: - Commitment to excellence - Initiative - “Do the right thing”

• "We've always seen our competition as the car. We've got to offer better, more convenient service at a price that makes it worthwhile to leave your car at home and fly with us instead.”

Southwest Leadership Expectations • Live the Southwest way • Develop People: - Know your people - Set clear expectations - Communicate consistently - Delegate responsibility; hold people accountable - Encourage strengths; address weaknesses - Provide timely, candid feedback - Build a bench

Continued.. • Build Great Teams: - Identify the right people for the right job - Build and maintain trust among team members. - Encourage vigorous debate and dialogue - Gain commitment to shared goals - Seek diversity - Always be on the lookout for great people.

Continued.. •

Think strategically: - See beyond today’s activities - Act like an owner - Strive for continuous improvement - Understand the relationship between current actions and future consequences. - Embrace problem solving - Translate broad objectives into specific plans

•

Get Excellent Results: -

Focus on safety, low cost and high customer delivery. Meet operational objectives Complete projects on time and on budget Adhere to all internal controls Demonstrate integrity in all actions -

Be honest Be ethical Be trustworthy

“Our People are our single greatest strength and our most enduring long term competitive advantage”- Gary Kelly, CEO, Southwest Airlines

Southwest Airlines Hires the Right People Organization HR Outcomes

Requirements Rewards Career Progression

Match Person KSA’s Motivation ATTITUDE

er utl u C/ s e ul a V

Task Flexibility

Job

Impact

Performance Extra Effort Retention Satisfaction Commitment

SOUTHWEST SOUTHWEST AIRLINES AIRLINES EMPLOYEE EMPLOYEE PROFILE PROFILE Customer Focused Team Player Self Motivated Takes Initiative Open and Flexible to Change Sense of Humor Takes Pride in Work

Recruitment & Selection •Innovative Recruitment Ads – “You can have a job if you measure up”, “it helps to be outgoing”. •Recruitment processes focused more on attitude than on skills. •Team spirit was considered a must skill. •Panel included customers too. •Peer Hiring •People oriented applicants with extroversion and good sense of humour.

• The interview process is based on examining how people have handled various situations in their experience and how they would address current situations. • From these in depth interviews, the true character of the person emerges, and the selection team can determine the degree of fit with the organization. • Every hiring decision is a commitment to the person and a statement about the company’s culture.

Typical Ten Step Targeted Recruitment and Selection Process 1

Job Fair Orientation/Application/Testing

2

Screening Interviews

3 4

Assessment Center (COBRA & Team Decision Exercise)

5

Final Interviews Background/Reference Check

6

Pre-Employment Orientation

7

Job Preview/Offer

8

Med/Drug/Prework

9 10

Confirm Job Offer

Southwest Can Choose the Best • Southwest received 199,200 resumes and hired 3,350 new Employees in 2008. • Southwest has 1,328 married couples. In other words, 2,656 Southwest Employees have spouses who also work for the Company. • Progressive on diversity recruitment – Southwest Airlines was included in Hispanic Business Magazine’s Top 60 Diversity Elite for 2007. – Most admired companies among women – Fortune’s “Best Companies” list – Southwest Airlines ranked no.1 for being the Friendliest Airlines in 2008 Times.com survey.

Training • The purpose is not to train people to just do their jobs, but to “color outside the lines” and to use their initiative to fill the gaps in functions, departments, and operations to better serve the customer. • In the training process, the culture of involvement, action, and customer service is reinforced. • Leadership and various other training programs. Emphasis on management style based on coaching and encouraging. • Southwest uses an engaging  business game for business acumen training to their managers.

• Courses for new recruits and employees. • Financial literacy programs have been implemented to Southwest employees to ensure that all employees, at all levels, understand not only the company’s business and financial objectives but also how their individual jobs impact the bottom line.

Promotions • Supervisory positions are filled internally. • Training provided to employees for managerial positions over six month period. • At the end of six month period,procedure for 360 degree feedback and analysis by people department.

Compensation • The wages and salaries of the employees are covered by union contracts. • For most people this means that pay is related to seniority. This is important because Southwest values retention and long-term commitment to the organization. • Pay levels are either consistent with or slightly below the wages for various markets. • In fact, starting rates are low relative to the market, but they progress more rapidly than others to desired market levels. This keeps the salary costs in line with the low-cost provider philosophy of the company.

• Pilots and flight attendants are paid by the “trip”. • Southwest makes limited use of team or unit-based incentive programs. • There are limited variable pay programs, the most inclusive being corporate wide profit-sharing program. • This program was started in 1973 and encourages everyone to keep costs as low as possible. • The retirement plans offer a variety of investment options, including Southwest stock. The employees currently hold between 9% and 10% of the company.

• The CEO is compensated at below the median of the market for executives in companies of similar size. • Other senior managers are paid slightly higher relative to the market, but they retain a smaller portion of the company’s stock. • The philosophy is to underpay the executives for cash compensation but let them share in creating greater value for the shareholders by building a stronger, more competitive airline. • The stock options are not discounted, and executives have the same opportunities for stock purchases as other employees. The emphasis is on long-term growth and development of the corporation.

Awards and Recognition • There are a wide variety of both corporate and localunit based recognition programs. • Example: “Heroes of the Heart” is a way to recognize teams of individuals whose behind-the scenes work make a major impact on customer service. • They may be groups from maintenance, service, or support roles. They are selected through an extensive nomination and review process. • They are honoured by having the group’s name painted on an airplane for one year. • The award ceremony is one of the major events of the company, and many people share in the excitement of the presentation.

• There are numerous programs to recognize and reward individuals, teams, and entire departments for their contributions      

Together We Make It Great Ticket to the Future Walk a Mile Helping Hands Stuck on Service Go See Do Winning Spirit

• Some of the awards are as creative as the programs. These include:  Joe Cool Award  President’s Award  Top Wrench Award  Superstars  A Shining Star  Voice Award

Employee Relations & Productivity • Teamsters Union-Airline mechanics, stock clerks and aircraft cleaners. • Transport Worker Union-Flight attendants, baggage handlers, ground crews. • Southwest Airline Pilots Association- Sole bargaining unit for the more than 5,900 pilots of Southwest Airlines. • Harmonious relationship with the unions. • High labor productivity contributed to low labor costs.

Southwest Marketing

A people first culture. • Supported by Southwest's human resource practices. • Every aspect is dependant upon each other. • Each point of value addition -- in line with with the core business strategy

• Few of their main competitors are Continental Airlines and American Airlines. • Substitute products -– train (Amtrak) – bus (Greyhound) – customers are attracted to the low price)

Attack By Stratagem

• The skillful leader subdues the enemy’s troops without fighting -- Sun Tzu

• Product-cheap flights on the Golden Triangle • People-Organiztion culture • Place-Dallas Love field • Process-Operational Effifciency • Price- two tier on-peak, off-peak pricing • Physical Evidence-The planes and the environment • Promotion

• Customer Value(Product, Physical Evidence, People) • Cost to consumer(Price) • Convenience (Place,Process) • Communication (Promotion)

• Promotion – Leverages on • • • • • •

People Place Produce Price Process Physical Evidence

STRATEGIES

SOUTHWEST AIRLINES REACH

IFE matrix

Weight

Rating

Weighted Score

1. High capacity usage

0.08

4

0.32

2. Named the best low cost airline leader for the last three consecutive years

0.10

4

0.40

3. Diversity in upper management

0.04

3

0.12

4. Revenues increase by 8 percent to 5.94 billion in fiscal year 2003

0.05

3

0.15

5. Net income increased 83 percent to $402 million in fiscal year 2003

0.08

4

0.32

6. Dominates the short haul segment of airline industry

0.10

4

0.40

7. Fourth largest domestic airline

0.03

3

0.09

8. In 2008 Southwest posted a profit for the 36th consecutive year

0.10

4

0.40

1. No international flights

0.09

1

0.09

2. No segmented seating

0.03

2

0.06

3. Dependent on a single producer

0.05

2

0.10

4. Lack of exposure towards online booking agencies

0.05

2

0.10

5. Four out of five employees are members of the union

0.02

1

0.02

6. Carry a small amount of freight and cargo

0.02

2

0.04

7. Do not use chat communication such as e-mail

0.03

2

0.06

8. Do not offer morning flights

0.03

2

0.06

TOTAL

1.00

Key Internal Factors Strengths

Weaknesses

2.73

Key External Factors

EFE Matrix Weight

Rating

Weighted Score

1. National and international markets

0.03

2

0.06

2. Growth of older generation

0.05

2

0.10

3. Industrial research and development

0.02

3

0.06

4. Growth of Hispanic population

0.05

3

0.15

5. New technology opens the door for new products/services

0.04

3

0.12

6. Increased Internet advertising

0.06

3

0.18

7. Familiarity of Generation X with air travel and technology

0.07

3

0.21

8. Growth of business travel

0.06

3

0.18

1. Decline of leisure travel due to economy and terrorism

0.10

3

0.30

2. Competing online ticket reservation systems

0.11

3

0.15

3. New government regulations that make operations costlier

0.03

4

0.12

4. Demand for air travel has dropped sharply since September 11

0.10

2

0.32

5. Gas and oil price fluctuations

0.06

3

0.18

6. Terrorist attacks

0.15

3

0.45

7. Increased restrictions to limit noise (including restrictions on types of aircraft used and limits on a number of operations)

0.03

2

0.06

8. Increasing annual airline security costs.

0.04

2

0.08

TOTALS

1.00

Opportunities

Threats

3.04

Competitive Profile Matrix Southwest

Delta

Critical Success Weight Rating Weighted Rating Factors Score

Advertising Product Quality Price Competitivenes s Management Financial Position Customer Loyalty Global Expansion Market Share Reward Programs Security

Total

American Airlines

Weighted Score

Rating

Weighted Score

.15 .11

3 3

0.45 0.33

4 4

0.60 0.44

2 4

0.30 0.44

.14

4

0.56

2

0.28

2

0.28

.09

4

0.36

3

0.27

3

0.27

.14

4

0.56

2

0.28

1

0.14

.08

3

0.24

3

0.24

2

0.16

.06

1

0.06

4

0.24

3

0.18

.05 .05

2 2

0.10 0.10

3 4

0.15 0.20

3 2

0.15 0.10

.13

3

0.39

3

0.39

3

0.39

1.00

3.15

3.52

2.41

Competitive (CA)

Industry ( IS)

-1

5

-1

4

-2

4

-2

5

Financial (FS)

Environmental (ES)

4

-2

4

-1

5

-2

5

-4

SPACE Matrix

Strategic Position & Action Evaluation matrix

• Y axis • Financial strength +4.5 +1 worst to + 6 best Y axis: 5 + (-3) = 2 • Environmental stability -2.25 -1 best to –6 worst • X axis • Industry strength +4.5 1 worst to 6 best X axis: 3 + (-2) = 1 • Competitive advantage -1.5 -1 best to -6 worst

3, 2.25

IE Matrix • Segment Revenue IFE • Passenger $5.4 B 3.32 • Freight $1.1 M 3.80

EFE 3.34 3.20

High

Strong

Average

Weak

3.0 to 4.0

2.0 to 2.99

1.0 to 1.99

I

II

III

3.0 to 3.99

Grow and build

Freight

Southwest

3.04 Medium The EFE Total Weighted Score

2.0 to 2.99

Low

IV

V

VI

Hold and Maintain

Passenger

VII

VIII

IX

1.0 to 1.99

Harvest and Divest 2.73

Grow and Build Segment Passenger Freight

Revenue $5.4 B

EFE 3.34 $1.1 M

IFE 3.32 3.20

3.80

IFE scores

No meals

No seating

Focused passenger service

Frequent, reliable departures

Limited specialization of tasks

15-minute gate turnarounds

Flexible union contracts

Employee stock ownership

Low (base) pay for all employees

High aircraft utilization

No baggage transfer No connections

Short, direct routes between midsize Only cities & Boeing 737 secondary aircraft airports

Very low prices

Limited use of travel agents

SOME OF THE IMPORTANT FACTS…. • Southwest Airlines announced it will start allowing passengers to fly with dogs and cats in the cabin for $75 each way. • Southwest also took the opportunity to slap a new fee — $25 one-way, $50 round trip — for children age 5 to 11 flying without an adult. • Charges for a third checked bag or overweight luggage will jump from $25 to $50 each way. • Southwest has 1,328 married couples. In other words, 2,656 Southwest Employees have spouses who also work for the Company.

MAJOR ACQUISITIONS • Morris Air Southwest Airlines purchased Morris Air and absorbed the capital and routes into its inventory and service. • Muse Air Southwest acquired competitor Muse Air in 1985, which operated McDonnell Douglas MD-80s

• ATA Airlines Towards the end of November 2008, Southwest announced it was buying the operating certificate and the remaining assets of ATA Airlines.

Failed Acquisitions • On July 30, 2009, Southwest Airlines publicly announced a $113.6 million bid for Frontier Airlines Holdings, the parent company  of Frontier Airlines. • On August 14, news reports announced that Southwest had lost its bid to Republic Airways Holdings.

OIL HEDGING •  Between 1999 and 2008, Southwest saved approximately $3.5 billion through fuel hedging. • Fuel Hedging is a contractual tool used by airlines to stabilize jet fuel costs. • If the price of jet fuel falls and the airline hedged for a higher price, the airline will be forced to pay an abovemarket rate for jet fuel.

OIL HEDGING SWA fuel hedging for future:

Fuel consumption and cost (In billions)

(in millions) 2008

2007

2006

2005

2004

Southwest

11,023.00

9,861.00

9,086.00

7,584.00

6,530.00

Delta

22,697.00

19,154.00

17,532.00

16,480.00

15,235.00

American

23,766.00

22,935.00

22,563.00

20,712.00

18,645.00

 

 

 

 

 

2,104.00

2,352.00

2,573.00

2,226.00

1,760.00

-433

1,162.00

281

-504

476

1,383.00

3,018.00

2,961.00

2,718.00

2,525.00

 

 

 

 

 

449

791

934

725

404

Delta

-8,314.00

2,311.00

-6,148.00

-2,885.00

-3,330.00

American

-1,889.00

965

1,060.00

-89

-134

Southwest Delta American

Southwest

TOTAL REVEUE

Gross Profit

Operating Income

(in million) Southwest

178

645

499

484

215

Delta

-8,922.00

1,612.00

-6,203.00

-3,818.00

-5,198.00

American

-2,071.00

504

231

-857

-751

 

 

 

 

 

Southwest

0.242

0.852

0.628

0.613

0.275

Delta

-7.36

1.81

-11.006

-16.62

-31.58

American

-3.313

2.314

1.127

-5.194

-4.665

Net Income

EPS

Particulars

Ratio Analysis Southwest

Delta

Sector

S&P 500

Price to Sales

0.65

0.22

0.09

0.71

0.48

2

Dividend Yield

0.2

NA

NA

0

0.03

1.51

Quick Ratio

0.97

0.89

0.75

0.87

1.41

0.83

Current Ratio

1.03

0.92

0.82

0.94

1.75

0.98

Total Debt to Equity

69.96

1983

--

258.3

93.33

202.25

Interest Coverage Ratio

7.14

-15.9

-3.06

0.01

0.24

30.98

17.86

24.42

5.26

19.9

9.48

26.74

1.59

-5.21

-3.99

4.15

1.48

--

Gross Margin Operating Margin

American Industry

Ratio Analysis(cont…) Particulars

Southwest

Delta

Sector

S&P 500

Net Profit Margin

-0.69

-9.47

-7.2

2.25

0.7

6.21

Return on Assets

-0.45

-7.52

-5.56

1.94

0.29

3.62

Return on Investment

-0.61

-9.8

-8.29

2.38

0.32

4.94

Return on Equity

-1.17

-161.05

--

9.32

0.35

8.71

Net revenue/Employee

292197

331764

2,41,665

79,987

4,35,09,782

4,70,222

Net Income/Employee

-2028

-31432

-17,408

-7,850

28,83,776

30,316

Inventory Trrnover

34.27

61.9

28.16

25.54

2.94

5.32

0.64

0.79

0.77

0.45

0.26

0.45

Asset Turnover

American Industry

Operations Strategies

strategy • “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, & make sure they have a good time doing it, people will fly your airline.” • Operates only in the US market, unregulated expansion kept it from facing the severe financial difficulties all of the major airlines suffered following 9/11.

Competitive Dimensions • • • •

Operational Costs and Efficiency Customer Service Employee/Labor Relations Technology

Operating strategies. • Practiced ‘PRICE ELASTICITY ’. • Started services, if there is a potential for at least 8 flights a day. • Point -to-Point route system instead of Hub & Spoke system to minimize connections, delays, and total trip time. • Helped the staff handle a steady work load across the day, unlike Hub & Spoke. • Concentrated on operating nonstop flights between destinations.

How they achieved low operating costs ? • Operated only one type of aircraft BOEING 737.It minimized the size of spare parts inventories. • It helped to improve the proficiency and speed over maintenance, making scheduling of aircrafts easier. • Helped them to bargain with BOEING for the best price.

• Avoided congested airports-to achieve on time performance, avoid higher fees & reduce fuel costs. • Also helped passengers to minimize total travel time for passengers. • No first class & meals, helped reprovisioning simple & quick.

TICKETING SYSTEM • Customers had been encouraged to buy tickets directly through companies website. • It reduced the number of personnel needed to staff reservation center, paper work & back office processing. • They cut the commissions paid to travel agents also. • No baggage transfer services.

• Passengers were given just a card with ABCD, not reservation on seats. If they are particular about seats they have to push and catch. • It helped them to reduce the checking in time. • No separate cleaning crews .It was taken care by Flight attendants. • Used leather seats instead of clothes one, will result in lower operational costs long term.

• Utilization rates of the planes were very high. • The pilots average flying hours were 8.5 above the industry’s 7.5 hours. • Major Operational savings were on food, commissions, Operating & maintenance expenses, Rent and leasing fees.

• The company has also made great strides in consolidating its database system, resulting in greater efficiency and profitability for the airline. • Integration of Southwest's various software platforms to a universal Oracle program illustrates the company's ability to discover cost-savings opportunities and devise a means to achieve a goal. • Shattered the standard hierarchical framework used by many companies, allowing employees to go around supervisors for answers if necessary.

• SWABIZ, Southwest’s free online booking tool that allows business travelers to plan, purchase, and track business travel, increased sales 17% from 2007 to 2008. • The “Southwest Shortcut” feature on helps Customers find the lowest fare based on availability over an entire month online. • DING!, a downloadable desktop application, to notify Customers of exclusive hot offers. Southwest was the first airline to implement this type of tool. • Bar codes in Boarding Passes, Software Upgrades, RFID.

CHALLENGES • Reserved Seating- large technology investments and may impact its gate operations negatively. • Passenger Demand- challenge is doing scaling without losing the customer touch. • Pursuing CRM techniques and has applications to get insight into customer’s wants and dislikes.

• In-Flight Entertainment- has 415 airplanes to consider and that represents an investment decision at a whole new dimension.

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