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Case Title:

Southwest Airlines: The Changing Cost Structure and Corporate Culture

Publication Year : 2005

Authors: Srinath Manda, G Srikanth

Industry: Transportation

Region:USA

Case Code: CCA0012

Teaching Note: Available

Structured Assignment: Available

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Abstract:
Southwest Airlines, the largest domestic passenger airline with the highest market capitalisation in the US airline industry, has been the only airline in American history to have recorded profits for 32 consecutive years since its inception in 1971. Southwest relied on a unique business model of 'low cost – no frills – high customer service' and leveraged its human resources effectively to achieve extraordinary success. Southwest had been in the top ten list of FORTUNE's Most Admired Companies every year since 1998. Southwest had sustained the success and its position even when the whole airline industry plunged into losses after the 9/11 terrorist attacks and also withstood the competition from a horde of airlines, which tried to replicate its strategies and business model. But since 2002, Southwest also had been caught up with the general troubles associated with the other airlines – higher cost structure, changing consumer attitude, infrastructure bottlenecks, and changing corporate culture.

Pedagogical Objectives:

  • To understand (1) the evolution of Southwest as successful airline in America (2) The business model of Southwest Airlines (3) the strategic and competitive advantages of Southwest Airlines (4) the leadership of Herb Kelleher (5) and the employee empowerment of Southwest Airlines in achieving success in the highly competitive Airlines industry
  • To discuss the changing cost structure and corporate culture of Southwest Airlines

Keywords : Southwest Airlines; Leading low cost airline; FORTUNE’s most admired companies; ‘Triple Restructuring / Turnaround Strategies Case Study; Crown’ award; Herb Kelleher; Strategic advantages; Business model; Hub-and-spoke system; Point-to-point airline network; Corporate culture; The Southwest Airlines way; Competitive advantage; Lowest cost structure; LUV airline; Changing employee attitude

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