Now we move on to the following questions that will be answered in the 7 secrets of Success in Airlines:
3. How the South Airlines have been this successful? & 4. How do they generate more revenue?
The seven secrets of Success in Airlines
1. One plane fits all
All the other network carriers fly many different types of regional jets, turboprops, narrow-body and wide-body aircrafts. On the other hand, Southwest flies just one plane type, the Boeing 737 series.
First of all this saves millions of dollars that would have went towards maintenance costs—spare-parts inventories, mechanic training and other nuts-and-bolts airline issues. Next, It also gives the airline a unique flexibility to move throughout the assigned route without disruptions and reconfigurations.
2. Point-to-Point Flying
Network carriers rely on a
hub-and-spoke system, which painfully collects passengers from
"spoke" cities, flies them to a central "hub" airport, and
then redistributes them to other spokes.
On the other hand, South west flys non-stop mostly between two points. What
does this do? It minimizes the time that
planes sit on the ground at crowded hubs. Furthermore, it allows the aircraft
to be in the air for more time which is about an hour longer each day.
To add on, this helps to pay
dividends in on time for specific operations. According to FlightStats, In June 2012 South west Airlines scored a 78 percent on-time performance which was 8
percentage points higher than the industry average, and also higher than any of
its major competitors.
3. Simple
In-Flight Service
Although Business travellers have not always liked South west's simple
service, because of the airlines amazing strategy, that does not matter as much any more as other airlines in competition have also been cutting back.
There are no
assigned seats, no meals just beverages and snacks, and lots of space. Keeping
it simple allows South west to unload a flight, clean and restock the plane, and
also board another flight full of passengers in an outstanding time of 20
minutes. On the other hand, other airlines take around 90 minutes on a network
airline. Airline efficiency experts have also said that the time savings allow
each South west jet to fly an extra flight per day. Obviously we know that extra
flights mean extra revenue.
4. No Frills, No Fees
South west has always kept its customer proposition streamlined and transparent as other carriers have rushed to remove perks on fees and restrictions. Only one-way fares are sold by this airline. What does this do? This keeps costs down because complex fare structures are very expensive to manage. Further more, the prices are all-inclusive. South west does not have fuel surcharges. This means that doesn't charge for standby travel or ticket changes.
5. Strong Management
South west has
been known to be very disciplined throughout its history.
The airline has always avoided any sort of increased costs or anything that
complicates the basic travel plan. Management ranks are well compensated and productive.
Joe, the author said he calculated that the top executives of South west generated
10 times more revenue (per dollar) than the C-suite types at some of the
network carriers. This also shows how successful the airline is individually.
6. A Relatively
Happy Workforce
Network carriers have criticized for decades about the power of
their employee unions. Not South West of course. The airline says that 87
percent of its employees belong to a union. It is indeed very impressive to
know that the airline has never had a strike. South west staffers are known to
be the highest paid in the industry. At the same time, it has about 30 percent
fewer employees per aircraft as compared to the network competitors.
Furthermore, the airline has the lowest non-fuel C.A.S.M. (cost per available
seat mile) of any of the major carriers.
7. Aggressive
Fuel Hedging
Storming fuel prices now signify around 40 percent of an airline's
costs. Although, South west Airlines has obviously been ahead of the curve which
may not come as a surprise to you any more.
Since 1999, the airline has saved it an estimated $3.5 billion because
of its aggressive fuel-hedging program. It paid approximately a dollar less
than its network competitors.
In a world where
a barrel of oil costs $140, suggesting
that any airline is a guaranteed winner is beyond comprehension, but what can
be said is this: South west Airlines is “sitting on a pile of cash” has proven
to be very reliable and a service model which is extremely easily adaptable.
Its history
fully shows that South west has easily passed through and dodged every airline industry recession/problem, and then it
has even developed and grown swiftly, profited hugely and stood out from the
competition.
Overview
Basically, What does Southwest know that other airlines fail to realise ?
It keeps everything simple and consistent. That drives costs down, helps to maximize productive assets, and also helps to manage customer expectations.
