It is the best example in todays world how do airline industry survive in the toughest times.

1. Southwest Airline
A Airline in Trouble?
In Reference to Change Management
Employees First Second Customer…

2. Change Management
• Structured Approach to shifting/transitioning.
• Helping Employee to Accept and embrace change.

3. “It’s worth asking whether Southwest is finally facing the same issues and challenger
that legacy carriers have experienced for sometime. We believe there is a risk that as a
generational change occurs and the oldest Southwest employees retire (who
remember the early years of struggle), the company’s low-cost culture will change.”
-William Greene, an Analyst at Morgan Stanley, in 2004

4. Southwest Airline
ò The
se&ng
ò About
Southwest
• It’s
summer
of
July
2004
• Started
as
a
intra-­‐state
operator
in
Texas
• James
Parker
resigns
as
a
vice
chairman
of
• Budget
airline
philosophy,
survived
a
Southwest
Airline.
severe
price-­‐war
• Gary
Kelly-­‐
CFO
• OperaKng
out
of
Dallas’s
Love
Field
airport,
hence
the
Kcker
LUV
• 2004
profit
would
fall
below
by
54%
below
expectaKon.
•
7th
largest
in
the
country
by
April
1993
• Final
decision
would
have
to
preserve
the
• Expanded
to
become
a
naKonal
carrier,
Southwest
culture
and
spirit
and
the
serving
major
ciKes
growth.
• Short-­‐haul,
high-­‐frequency,
low-­‐cost
strategy

6. The Southwest Model
Use non- Controlled,
Treat Hire people
conventional Have Fun Involve Solid growth
employees as who form
models for Together employees for the
family the fit
low-cost airline
This model is used since the inception of
the company.

7. Success Story
ò Until 2003 airline has profits
for 31 years in a row.
ò Low cost by eliminating
unnecessary cost.
ò Culture – warm, informal,
distinct lack of hierarchy.
ò Benchmark to low cost
airline industry.

8. Trouble Brewing
Change at Southwest airline in early 2000s
ò Labor Problems
ò 2002 flight attendants union protest.
ò Better working condition.
ò Appraisals.
ò Stock options.
ò Tentative agreement.
ò Cost per seat mile increased.

9. Trouble Brewing
ò Customer Relations
ò Began to change.
ò Increased security post September 11 attack in USA.
ò Refusal to accept e-mail v/s call customer care.

10. Trouble Brewing
ò Rising Costs
ò Known to keep cost low by it’s
operations.
ò Fuel price in early 2000.
ò Cost reaching at par with full
service airline.
ò Position v/s competition.

11. Trouble Brewing
ò Looming Competition
ò Threat JetBlue & AirTran
ò JetBlue in 2002 grew 66%.
ò Service Quality.
ò Early 2000s gap between low
cost airline & full service.

12. The Change-Southwest
ò Transformation early 2000s
ò Kelleher – Charismatic personality.
ò Negotiation – Employees & Personal Letter.
ò Disassociation of Employee-Old V/s New
ò Earlier years V/s Later Years

13. 1996 also won the airline industry’s “Triple Crown” – the fewest delays, complaints and mishandled bags.
Clearly, Southwest is doing something right. Most attempts to copy Southwest have focused solely on operational issues:
• Flying just one aircraft type – to cut down on training and maintenance costs.
The Change-Southwest
• Using smaller, less congested airports – to avoid schedule disruptions caused by multiple aircraft demands.
• Eliminating meal service and seating assignments – to allow aircraft to be turned around more rapidly.
Despite following these same strategies, however, no other airline has yet been able to successfully clone Southwest’s succe
What’s missing is the “secret sauce” Southwest uses to make all these operational factors come together effectively and efficien
Lying at the heart of the Southwest success story are three elements:
1. 10 organizational practices which build relationships between managers and frontline employees and among employees.
2. An environment which emphasizes shared goals, shared knowledge and mutual respect.
The new millennium change:
3. Sound communication techniques which are frequent, timely and focused on solving problems.
10 Organizational Relationships
Environment å Outstanding business leadership Techniques
ç Invest in the front-line leaders
Shared é Hire and train for relationship excellence Frequent
Goals Communication
è Use conflicts to build relationships
ê Bridge the work-family divide
Timely
Shared
Knowledge
ë Create positions that span boundaries Communication
í Use broad performance metrics
ì Highly flexible job descriptions
Mutual Problem-Solving
Respect
î Partner with the unions Communication
ï Build the supplier relationships
Note especially the fact all ten of these organizational relationships are highly complementary. They only generate benefits when
ten are present and well implemented. They work in unison rather than in isolation. It is not until all ten are present that substan

14. Net Income-Comparison
2001 2002 2003 2004 2005 2007 2010
Net
Income(millions) 548 313 442 241 511 645 459
Net Income
700
600
500
400
300 Net Income
200
100
0
2001 2002 2003 2004 2005 2007 2010

15. Can Kelly Replace Kelleher At Southwest!
ò Analysts thought?
ò Personality- Kelly’s V/s Parker.
ò Under Gary’s Leadership 2010-
ò Continue to receive the distinct designation as the largest do- mestic
airline.1
ò Net income grew to $459 million, a 364 percent year-over-year
increase.
ò Gary’s message
“We credit our success to our Employees, who are our most valuable
asset and our competitive advantage”

16. Summary

17. Deep Vakharia
Pritesh Gianchandani
Ankita Luthre
Priya Bhojwani
Shivam Jadav
Anand Jadav