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OM in the News: How Southwest’s Operations Strategy Gives Low-Cost Competitive Advantage

June 18, 2012

In an airline industry that is notoriously brutal, writes Slate.com (June 6, 2012), Southwest Airlines just recorded its 39th consecutive year of profitability. How does Southwest do it? It’s all about keeping operations simple. Simpler operations mean fewer things that can go awry and botch up the whole process, as we show in Figure 2.8.

First, while other airline fleets can employ 10 or more types of aircraft, Southwest uses just one, the Boeing 737. The airline’s VP explains: “We only need to train our mechanics on one type of airplane. We only need extra parts inventory for that one type of airplane. If we have to swap a plane out at the last minute for maintenance, the fleet is totally interchangeable.”

Second, Southwest  doesn’t assign seat numbers. Which means that if a plane is swapped out, and a new one’s brought in with a slightly different seat configuration, there’s no need to adjust the entire seating arrangement and issue new boarding passes.

Third, while most other airlines charge to check bags these days, Southwest has resisted the trend. Its “bags fly free” policy  has operations benefits: “When you charge people to check bags they try to carry more on, sometimes more than can fit in the overhead bins,” says the VP. “That results in more bags being checked at the gate, right before departure. And that wastes time.”

Finally, other carriers use a hub-and-spoke system. But hubs  lead to backups as planes queue up awaiting turnaround—cleaning, refueling.  Southwest’s flights are generally point-to-point. The plane lands, goes through turnaround, and often heads right back where it came from. With less interdependence, the network can survive a problem at a single airport. Southwest can turn around planes in about 25 minutes.  A simpler network also means less luggage getting lost in the shuffle.

Discussion questions:

1.Compare Southwest’s operations strategy to that of other airlines.

2. How will adding international flights impact Southwest’s strategy?

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