Air Travel
Southwest Airlines Co. ("Southwest") is a major domestic airline that provides primarily shorthaul, high frequency, point-to-point, low-fare service. Southwest was incorporated in Texas and commenced Customer Service on June 18, 1971 with three Boeing 737 aircraft serving three Texas cities - Dallas, Houston, and San Antonio. Today Southwest operates over 300 Boeing 737 aircraft in 58 cities. Southwest has the lowest operating cost structure in the domestic airline industry and consistently offers the lowest and simplest fares. Southwest also has one of the best overall Customer Service records. LUV is their stock exchange symbol, selected to represent our home at Dallas Love Field, as well as the theme of their Employee and Customer relationships.
Objective and Scope
‘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.’ (SouthWest.com)
Southwest Airlines will fly any plane, as long it's a Boeing 737, and let passengers sit anywhere they like, as long as they get there first. Sticking with what works, Southwest has expanded its low-cost, no-frills, no-reserved-seats approach to air travel throughout the US to serve about 60 cities in 30 states. To curb maintenance and training costs, the airline uses only Boeing 737s; it operates about 360. Southwest offers ticketless travel to trim back-office costs and operates its own reservation system. The airline boasts a highly participative
corporate culture and only one strike during its 30-year history. It has also enjoyed 29 straight profitable years. Southwest is expanding service to the eastern US.
Location Strategy
Southwest currently serves 59 airports in 58 cities in 30 states. Based
in Dallas, Southwest currently operates more than 2,700 flights a day.
The objective of location strategy is to maximize the benefit of location to the firm. Companies make location decisions relatively infrequently, usually because demand has outgrown the current plants capacity or because of changes in labor productivity, exchange rates, costs, or local attitudes.
Location options include:
· Expanding an existing facility instead of moving
· Staying at current location while opening branches elsewhere
· Shutting down existing location and starting over at a new one.
There are 5 factors that effect location decisions. They are:
1. Market economics
2. Better international communications
3. More rapid travel operations
4. Ease of capital flow between branches
5. Cheaper labor
For example, Southwest airlines recently accounced future growth plans. On June 9, 2002, Southwest will initiate new nonstop service between Chicago Midway and San Diego with three daily nonstop flights. A seven-day advance purchase fare of $89 each way based on a round-trip purchase is available on this new nonstop service through June 9. On the same day, Southwest also will add two daily nonstop flights between Phoenix and Orange County, bringing to five the total of daily nonstop round-trip flights between the two cities. [next page]