Southwest Airlines is one of the prominent and highly reputed names in the field of aviation transport that is provided to Americans. In 2009 the airline was labeled as the busiest airline maintaining the third largest fleet of passengers of aircraft among all other commercial airlines of the world. Apart from being the busiest airline it also holds the credit of being the most profitable at the same time.
Southwest Airlines and Economic Recession
In the mid of 2007 with the sparking of the economic downturn all business experienced a tremendous plummeting of prices and profits. Stock markets nosedived, share prices bottomed, company began to slash their expenses and commenced employee axing at various levels as a result of which a severe financial meltdown gained substantial impetus. Two sectors that were particularly affected by the depression that invaded the economic arena were automobile and airline sector.
On one hand where automobile moguls like Chrysler, Ford and General Motors started to release distress signals, on the other hand airlines like Southwest, British Airways and Lithuania reached at the doors of the federal government to announce and release bailout and stimulus packages for their sanctuary. The gravity of the crunch faced by airlines can be vindicated from the fact that during summer seasons when airline booking use to be at its summit, this time it slumped substantially.
It was the time when everyone thought that airlines would surge there fare rates, but all of them plunged into a war like state of decreasing their fare rates and offering greater benefits to their users in these conditions.
In such crucial circumstances airlines like Southwest took a tougher decision in reorganizing the structure of their policies and offer greater facilities and benefits to the people who use their airline for travelling. It was during the time when recession was reaching unprecedented zenith when Southwest announced of offering greater discounts for summer vacation trips and tours to its travelers.
The incentives launched by the airline company was publicized and advertised through various and effective methodologies. For example, many strategies devised by the company accentuated on employee referral programs. Schemes like attracted friends and family members in programs through which they could win a computer system, free flight coupons and gift hampers by simply making a drawing attracted a whole new flock of customers at the airline to compensate for the losses that the recession was about to create.
Another department of any organization that plays a pivotal role during such times is the public relations. In order to establish a positive and optimistic image about the company, the public relation department made use of all ingenious methods out of which one method which boosted public support and respect for the company among its users was its step of providing 1 million to Ford Explorers for their perfect attendance program. According to Libby Sartain, the Vice President of the Peoples Department of Southwest, all methods and strategies that can attract a customer will be applied and exercised by the organization (Renk, 2004).
Despite of all the excellent services and commercial performance of the company over a long period of time, Southwest Airlines has still refrained from experimenting larger or out of country tours and trips for its people. There are a couple of reasons that contribute to such marginalization from mainstream aviation activities.
Firstly, it is the typical business model that the company has always exercised and implemented upon. The model being practiced upon involves short trips, great service providing staff and most importantly cheap rates and efficient works. Furthermore there is only a single category of aircraft that has been used by the airline since its inception which is Boeing 737, it may be refereed as a lack of experimentation in the company but the company did not want to add further complexities to regular users of the airline.
The business model has been so successful that it now commonly referred to as the Southwest Effect. It is because of this business model that when fares slash by a certain percentage, the number of airline users increases manifold. Due to the cheap rates offered by the airline many people prefer it over other means of transport. The iconic commercial model used by Southwest has served as a source of inspiration to competing airlines like Air Asia, West Jet and Virgin Airlines.
Southwest Airlines and Economic Recession
In the mid of 2007 with the sparking of the economic downturn all business experienced a tremendous plummeting of prices and profits. Stock markets nosedived, share prices bottomed, company began to slash their expenses and commenced employee axing at various levels as a result of which a severe financial meltdown gained substantial impetus. Two sectors that were particularly affected by the depression that invaded the economic arena were automobile and airline sector.
On one hand where automobile moguls like Chrysler, Ford and General Motors started to release distress signals, on the other hand airlines like Southwest, British Airways and Lithuania reached at the doors of the federal government to announce and release bailout and stimulus packages for their sanctuary. The gravity of the crunch faced by airlines can be vindicated from the fact that during summer seasons when airline booking use to be at its summit, this time it slumped substantially.
It was the time when everyone thought that airlines would surge there fare rates, but all of them plunged into a war like state of decreasing their fare rates and offering greater benefits to their users in these conditions.
In such crucial circumstances airlines like Southwest took a tougher decision in reorganizing the structure of their policies and offer greater facilities and benefits to the people who use their airline for travelling. It was during the time when recession was reaching unprecedented zenith when Southwest announced of offering greater discounts for summer vacation trips and tours to its travelers.
The incentives launched by the airline company was publicized and advertised through various and effective methodologies. For example, many strategies devised by the company accentuated on employee referral programs. Schemes like attracted friends and family members in programs through which they could win a computer system, free flight coupons and gift hampers by simply making a drawing attracted a whole new flock of customers at the airline to compensate for the losses that the recession was about to create.
Another department of any organization that plays a pivotal role during such times is the public relations. In order to establish a positive and optimistic image about the company, the public relation department made use of all ingenious methods out of which one method which boosted public support and respect for the company among its users was its step of providing 1 million to Ford Explorers for their perfect attendance program. According to Libby Sartain, the Vice President of the Peoples Department of Southwest, all methods and strategies that can attract a customer will be applied and exercised by the organization (Renk, 2004).
Despite of all the excellent services and commercial performance of the company over a long period of time, Southwest Airlines has still refrained from experimenting larger or out of country tours and trips for its people. There are a couple of reasons that contribute to such marginalization from mainstream aviation activities.
Firstly, it is the typical business model that the company has always exercised and implemented upon. The model being practiced upon involves short trips, great service providing staff and most importantly cheap rates and efficient works. Furthermore there is only a single category of aircraft that has been used by the airline since its inception which is Boeing 737, it may be refereed as a lack of experimentation in the company but the company did not want to add further complexities to regular users of the airline.
The business model has been so successful that it now commonly referred to as the Southwest Effect. It is because of this business model that when fares slash by a certain percentage, the number of airline users increases manifold. Due to the cheap rates offered by the airline many people prefer it over other means of transport. The iconic commercial model used by Southwest has served as a source of inspiration to competing airlines like Air Asia, West Jet and Virgin Airlines.
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