A. UNIQUE OPERATION SYSTEM
Unlike its industrial rivals who used the “hub and spoke” system, Southwest Airlines established its own point-to-point system instead. Even though economic theories tell Southwest’s system should be unworkable – the shorter the flight is, the higher the setup cost per seat mile, thanks to the well-known quick and efficient turnaround process, Southwest succeeded in creating a miracle. The point-to-point system not only enables Southwest to lower its costs and make frequent flights, but also to capture a niche market and compete with other transportation like trains and buses. This is because Southwest is able to provide passengers with short-hauling flights which can be substitutes to trains and buses. Consequently, it earns a considerable profit from the expanded market size.
B. LOW COSTS
Southwest is operating at a lower cost when comparing with its competitors. It minimizes its cost in four main ways.
The quick turnaround process: Southwest focuses on turning aircraft around quickly at the gate to minimize an airplane’s time on the ground. They do so by the relational coordination of their operation agents, which would be further discussed in Q2.
The use of a single aircraft type: Southwest uses only Boeing 737 and standardizes the cockpit configuration. These minimize additional training requirements for pilots and routinize ramp operations, which helps to save training costs and speed turnarounds at the gate.
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The use of less-congested airports: Southwest uses such airports to avoid disrupting flight operations in those busy and high-traffic airports.
Cheap oil price: Southwest constantly monitors fuel prices at different airports and load fuels from places with attractive price.
Other practices like offering beverages and snacks instead of in-flight meals, transferring no baggage to other airlines, and open and single class seating can also help lower the operating costs.
C. A PRODUCTIVE AND LOYAL WORKFORCE
Southwest places great emphasis on hiring team players willing to go beyond their primary responsibilities. They invest substantial amounts of time selecting employees for attitude, teamwork, and service orientation, resulting in a strong corporate culture of valuing excellent customer service. Meanwhile, Southwest also strives to build a loyal workforce. It treats its employees as family members and creates an enjoyable working environment. Employees’ opinions and suggestions are listened to and respected.
The plane turnaround process at Baltimore is quick and efficient due to (1) Process simplification and (2) Relational coordination powered by its operation agents.
The process is said to be simplified relative to other airline companies because Southwest Airlines provides no-frill services – no in-flight meals and no transfer of baggage to other airlines. These lead to time reduction in the restock of provisions, cleaning of cabin area and handling of baggage. Moreover, Southwest also adopts the open seating system to encourage early gate arrival. The two practices thus speed up the turnaround process.
In addition, Southwest has increased its staffing of operations agents to a higher level than the industrial average, allowing the operations agent to play a greater role than only managing the flow of information across functional boundaries. Each individual flight is assigned to a dedicated on-site operations agent, who engages in face-to-face contact with each functional team. In so doing, the operations agents are actually engaged in relationship building, developing relationships of shared goals, shared knowledge, and mutual respect among fellow employees to facilitate the coordination of work. This relational coordination results in greater staffing productivity.
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In the following we would examine the major activities took place during the turnaround process: (Some duration assumptions are made in the table)
As noted in the text, the whole process took 20 minutes for flight 110 but it already took 17 minutes to deplane and board passengers, which is considered as the major bottleneck. Yet, the Baltimore Airport would find it difficult to further speed up the process since it is not considered as good customer service to hurry passengers, especially for the Southwest culture.
However, what worth noticing is the overall service level. According to the case, the scheduled turnaround times had lengthened over the past eight years and misplacement of baggage could happen during a quick turnaround. These implicitly reflect that the low staffing level in Baltimore could not catch up with its current service expansion and limited its capability to shorten turnaround time. Therefore, we would attribute the major bottleneck to the size and average tenure of its workforce.
The reasons for Baltimore’s deteriorating operational performance are as follow:
The gates in Baltimore were reaching capacity limits and its bag sorting area had already reached its full capacity. While the former implies longer boarding time, the latter leads to longer bag handling time, with both slowing down the whole turnaround process.
Efficient turnaround process relies heavily on its employees. The tight labour market, however, forced Baltimore to have a serious labour shortage at least in short term and lead to many mandatory over-times. As a result, it led to declining productivity and slowed down the turnaround process. Moreover, the experience of employees is also crucial. With high labour turnover rate and frequent hiring, Baltimore was having a comparably inexperienced workforce. This would affect the operational performance.
UNCONTROLLABLE PASSENGER CONNECTIONS
Southwest’s connecting flights were unevenly distributed and Baltimore was one of the stations that had the greatest amount of connecting flights. The numerous connecting flights made operations become more complicated and satisfying all customers become even more difficult. As a result, flights were frequently held up for connecting passengers.
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Two issues should deserve much attention. They include:
UNSATISFACTORY CUSTOMER SERVICES
Mishandled bags and passenger complaints in Baltimore were higher than the system-wide average and its number of passenger complaints was even the highest among all stations. Limited facilities and frequent flight holdings brought inconvenience and dissatisfaction to passengers. All these were definitely undesirable especially for Southwest which built its success on passenger’s trust. These problems should be tackled as soon as possible so as to re-gain passenger’s confidence and loyalty.
PROLONGED WORKING HOURS
Labour is always the most valuable asset. The lower the productivity is, the longer time the whole turnaround process takes. Prolonged working hours adversely affected the morale of employees. It ended up not only worsening operational performance but also causing discontent among workers. If the problem remained unsolved, the operational performance would further deteriorate.
On seeing the service deterioration at Baltimore, Matt Hafner is actually making a trade-off decision between its service expansion and service quality.
There are two alternatives:
As Baltimore is served as a mega-station in the East Coast, rapid expansion of flights is desired to capture strong demands. Matt should exert its bargaining power to urge for facility expansion of the Baltimore Airport to cater for future expansion needs and relieve the pressures for gates and bag sorting areas. Moreover, he should shorten the hiring process or lower the hiring requirements to recruit more staff to support the addition of flights.
Since the staffing level at Baltimore does not support its expected service level, Matt should slow its expansion pace down so as to maintain a high service quality and hence, protect Southwest Airlines from damaging its own reputation.
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However, it is advised that the first option could pose these substantial risks:
Since it requires persistent over-time on its staff, the staff morale would definitely be affected, leading to a high staff turnover rate and also deteriorated service.
Southwest has long been surviving without laying off any of its staff. Nevertheless, given the shorten hiring process, they may fail to screen out all undesired candidates. As a result, service quality would suffer.
The rapid expansion also poses itself to high uncertainty. For example, the 911 incident, which happened just three months afterwards, could obviously tumble the flight demands. Therefore, any large-scale investment could adversely affect quarter earnings.
Therefore, it is recommended that Matt should choose the second option – striving for a stable but progressive growth. By saying so, he could suggest lengthening the connecting time for the reservation system so that it relieves the staff pressure to rush for a quick turnaround and at the same time reduces the frequency of holding flights. In return, a higher service quality could be guaranteed. Meanwhile, it is also high time to promote its services through marketing efforts and public relations to re-build public confidence towards the Southwest Airlines.