Southwest Airlines – A model of efficiency

Southwest AirlinesOn my recent trip east, I had an experience on Southwest Airlines that reinforced the power of their business model. My flight from Columbus to Baltimore got delayed. It was scheduled to leave at 8:25PM. After boarding and shortly before the scheduled take-off, we were told that there was a mechanical issue and that we would have to switch planes.

After deplaning, the gate staff told us it would be an hour-and-a-half for them to fly another plane in. Then a few minutes later, they informed us that we were going to be switched to another plane that was already en route and that the delay would only be 45 minutes. A few minutes later, we were switched to another plane that had just finished unloading in Columbus. We were boarded immediately and were on our way.

The total delay due to a plane going out of service: 30 minutes. I don’t know of any other airline that could react so quickly to such a situation. It speaks volumes to Southwest’s operational efficiency. It is a true competitive advantage that, in this specific case, can be traced to one strategic business decision. They use the same plane throughout their fleet – the Boeing 737. Here’s how that one simple decision gives them a huge advantage over their competitors.

  1. Planes are interchangeable
    If a problem occurs with a plane, they can easily switch to another. No need to worry about differences in seating capacity. They don’t have to worry about where planes finish their day. In other words, operations can easily switch a plane out at anytime without affecting the entire system.
  2. Crew members are interchangeable
    Since the equipment is the same, pilots and flight attendants can fly on any plane in the fleet at anytime. An ill crew members can be quickly replaced since there isn’t any concern over whether a replacement is trained for that particular plane. Plus, training is simplified. New and on-going training programs only need to accommodate one plane model.
  3. Maintenance is simplified
    Maintenance staff always work on the same plane type. They also benefit from economies of scale since they only need to stock replacement parts for one type of plane.

In addition to their choice of plane, Southwest has made a number of other business decisions that further add to the efficiency of their operations such as:

  • Flight attendants double as the cleaning crew
    Have you ever noticed how the flight attendants aggressively clean the plane when it is on final approach? It’s because they are also the cleaning crew. The more help they get from the passengers while in the air, the less they have to clean when on the ground. It helps Southwest turn their planes fast so they spend as much time as possible in the air. The more time the planes are in the air, the more money they make.
  • No assigned seats
    Southwest uses open seating which means seats are filled on a first-come, first-serve basis. People are encouraged to check-in 24 hours in advance to save their place in line. Then they need to get to the airport early in order to take their place in line. The system creates an incentive for the traveler to be on-time.
  • No in-flight meals
    Even on their longer range flights, Southwest only offers snacks. They don’t offer complex meals for sales or offer hot meals. It makes it easier for them to turn planes at the gate since they don’t have to wait for the catering service to load the plane. Simply load up the boxes of snacks, and away you go.
  • One class of service
    Southwest has one class of service on their planes. Sure, you can buy priority boarding and free drinks, but once on the plane, everyone is treated equally.
  • No third party portals
    All reservations for Southwest are made through their reservation system. They don’t put their flights on Expedia, Orbitz, Hotwire, or any other third party sites. They don’t have to worry about discounting or pricing arbitrage. Southwest retains complete control over their pricing and capacity models so they can make more intelligent route decisions.
  • Providing service to secondary airports
    In recent years, Southwest has moved into more major airports, but their bread and butter is secondary airports. For example, even though they fly in and out of LAX, they have extensive flight schedules into LA’s smaller airports like Burbank, John Wayne, and Ontario. In Chicago they utilize Midway. In Dallas, there’s Love Field. To service Boston, they fly to Manchester and Providence. For New York City, they fly to Long Island, Newark and LaGuardia. In most cases, for a traveler, flying in and out of the secondary airports can be way more convenient. It’s typically much easier to get in and out of the airport. There’s less congestion. Services like parking tend to be much cheaper. Plus, it allows Southwest to control the majority of the gates and landing slots which gives it an advantage during peak travel or bad weather periods.
  • Simple fare structures
    Every fare on Southwest is priced as a one-way fare. They don’t differentiate between one-way and roundtrip, so there isn’t an incentive for people to try and game the system by booking back-to-back roundtrip tickets or other nonsense to exploit complex pricing rules. It helps them to more accurately calculate load factors and predict future flight capacity.

I could continue to go on and on, but by now you should get the point. All of Southwest’s decisions are based upon operational efficiency. It is reflected throughout their system in how they handle the booking process, the boarding process, the in-flight experience, crew availability, training and maintenance. It gives them a competitive edge, keeps their costs down, and allows them to offer superior service at a lower price than their competitors. It’s the reason incumbents get cleaned out when Southwest invades their markets. They can’t compete. Their hamstrung by their complex operational practices.

Some people hate the Southwest flight experience. They hate the open seating. They want full meal service on long flights. They want first class upgrades. Southwest isn’t for them. Southwest knows it, and they don’t care. Those customers aren’t their target market.

Southwest, is all about providing the best possible service at the lowest profitable price point. It’s a mission I respect and appreciate, and one that I hope they never deviate from.

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