Synopsis of the Situation: From June 18, 1971 when it started operation from the Love Field in Dallas Texas, Southwest Airlines stands out as a company willing to do things differently and wanting to be the best Airline in America, and last year it was rated America’s best airline, both in the quality of its flights and the being the most profitable. With such admirable past and what seemed like a future cast in success, one would not expect Southwest to be confronted with problems which could potentially derail it from its destination as the premier carrier in the US Airline industries.
The twin problem of bleak economic outlook and looming labor union negotiation makes the future a challenge that must be negotiated carefully. This case study examines these issues and tries to proffer solutions to them. Key Issues: Southwest faces a challenging future despite several years of success as America’s only profitable Airline. The very basis of those successes is about to be tested with a looming negotiations with its ‘best-paid’ Pilot union and the coming end of fuel hedging contract. There is also the problem of the record rate of unemployment and the general economic outlook that is gloomy to say the least.
These indeed are challenging times that the organization is faced with. But behind these challenges are opportunities that it can exploit to remain indeed a profitable Airline. Define the Problem & the Opportunity. Many of the problems faced by Southwest Airlines are indeed out of its control. The global economic situation and the attending employment crisis are some of those. With the Wall Street Journal reports of “investors fretting over a sluggish economy and early evidence of decelerating revenue growth ahead of the busy holiday weekend” while recently analyzing the Airline industry as a whole.
But within the reach or immediate control of Southwest is its looming negotiation with its Pilots Union. While the relationship between the Pilot Union and the Management might be said to be good at this time, will the fact that the Pilots of Southwest are considered as the best paid in the industry create a hostile negotiation period or will the Managing Director, Gary Kelly, be able to rally his team, a la, the entire company, to rise up to the challenges facing the company? One thing within the company environment is the fine spirit in the Organization based on previous year’s performance when Southwest outperformed other Airlines.
That Spirit is even called the ‘Southwest Way – Warrior Spirit’. The openness of the management style creates trust, mutual respect and above all a shared vision with other members of the company or other team members. There lies the strength of this organization and its opportunity. By continuing to engage its workforce as stakeholders, they will continue to work for the organization with a sense of ownership and not that of an employee. While there may be several problems and a multitude of symptoms, attempt to identify one problem, the resolution of which would alleviate most of the symptoms found in the case.
The problem can frequently be defined around one of the key factors of marketing, target market, environment, or marketing mix elements (product, price, promotion, or distribution). Alternative Solutions. The company then was the only Airline declaring profit while the rest were struggling to stay afloat. To overcome these turbulent times, Southwest Airlines must continue to entrench those Company policies that foster open and truthful communication. Southwest has established a participatory leadership that involves its people, develops individual performance, resolves conflicts quickly and have a well coordinated group effort.
Southwest Airlines thus became an industry leader by building a corporate culture that emphasized communication. This has worked well for it as a Team, but it would also be important that the Company continues to hedge its fuel contracts, so that it can deal with the uncertainties in the environment. Such hedging as has been done in the past, will guarantee that the company continues profitable even in the nearest future. As the negotiation with the Pilot Union loons, the CEO, Gary Kelly, need put himself forward as a transformational leader that is able to motivate others to transcend their personal interest for the good of the group.
While adequate attention is paid to the needs of the Pilot, such needs must come within the overall company objective. Selected Solution to the Problem: There is a need for effective communication at this stage of the organizations. Effective communication will allow all stake holders to continue to be alive to the company’s objective. It will enable the organization carry everyone along and bring in a greater sense of belonging even more than currently exist.
If all the Managers and Supervisors in the company follow the same corporate culture of the organization, the company will be so place as to overcome any obstacles in its operating environment. However, communication must be allowed to get to its intended user, who might be dependent on it in the decision making process. Therefore, all in the organization might need to become familiar with how to communicate effectively. Implementation/Recommendations: It therefore will be appropriate to recommend to the company the need for it to continue to embrace a culture of openness with all its unions, as well as non union employees.
The leadership of the organization will benefit the company. In accessing the leadership quality of Gary, one thing that is brought out is his understanding of the subtle social fabric of the organization and his ‘‘everyman’’ quality. These will serve the company well in the future. References Bateman,T. S. , Snell,S. A. , Scott, A. , Kerin, Roger, A. , . (2009) M : Marketing. Boston, MA: McGraw-Hill Southwest Airlines – About swa. n. d. Retrieved, July 14, 2010 from http://www. southwest. com/about_swa/