Southwest Airlines Term Project

Southwest Airlines Term Project

Services Marketing

Dr. J. Chris Lin

Fall, 2008

Group 10

Yi-Ping

Dani

Judy

Joy

Ann

Peter

Frank

Ted

"We tell our Employees we are in the Customer Service business—we just happen to provide airline transportation. It is a privilege to serve your air travel needs." – Southwest Mission Statement.

Question 1:

A. Targeting the niche market

Southwest Airlines' secret to its success is very straightforward. Southwest clearly defines its existing purposes, which is to provide the lowest fares for business and leisure travelers traveling between states. Instead of competing with large-scale airlines to fly international routes, Southwest focuses on "point-to-point" interstate short trips, and more on maximizing the profitability than focusing on market share. This strong vision outweighs the allurement of international flight market, keeping Southwest airline concentrated on its own niche to gain profit.

B. Cost-consciousness

Since low fares have become its selling point, decreasing the cost becomes very important. Southwest Airlines tries to save money by simplifying its operating process. Utilizing strategies such as having "One type of aircraft", "cash-register receipts as tickets", "no computer reservation system" and "no meal service" are some examples of its low cost strategies.

C. Speed and Efficiency

Southwest knows that airplanes generate revenue only when they are in the air. Accompanied with the "point-to-point" strategy, Southwest chooses to operate by the most efficient way of adopting the concept of "high average velocity" instead of conventional "hub-and- spoke" system.

D. High Service Quality

Furthermore, Southwest understands that its "low fares" strategy cannot be achieved at the sacrifice of good service. Southwest defines the essence of its business as service, stating, "We are not an airline with great customer service. We are a great customer service organization that happens to be in the airline business." According to the five dimensions in SERVQUAL, Southwest has great performance in the dimensions of reliability, responsiveness, assurance,