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Short-Term Challenges: Operating Procedures

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Short-Term Challenges: Operating Procedures;In response to the 9/11 crisis, other airlines had increased estimated-schedule flight times to reflect;increased passenger- and baggage-processing times. With disappointing load factors, many flights as a;result regularly arrived 20 minutes or more before their scheduled times. Southwests management, on;the other hand, had not changed its schedules in the hope that this would continue to benefit aircraft;utilization. In spite of this, average turnaround times in recent months had risen from 24 to 27 minutes, a;matter of real concern to management, and Southwests reported on-time performance had slipped below;that of its rivals (as shown in Exhibit 9). Southwests management had discussed several possible;responses at various meetings in late October 2002. Among these, one possibility was that of just sitting;tight, essentially concentrating on doing the best possible job with the resources at hand in a pricecompetitive environment and despite sluggish demand for the service. The price of this alternative would;be depressed profits and possibly declining morale. A second response would be simply to reschedule the;airline, building more liberal flight and turnaround times into the schedule. However, too often schedules;became self-fulfilling prophecies. If this proved to be true, results could be quite costly with serious profit;implications. Third, efforts could be made to redesign passenger- and baggage-handling processes once;again. Southwests practice of boarding passengers in groups just minutes before flight time, then holding;the door of the aircraft open for late arrivals, was somewhat at odds with the government directive to;single out passengers for a thorough search of luggage at the gate. Southwest gate agents were;instructed to encourage passengers so identified to assemble at the gate for searching as early as;possible in the relatively rapid boarding process. Even so, passengers were often still being searched;after everyone else had boarded. Those singled out often ended up getting inferior seats even if they;arrived at the gate early in order to get a good choice. One solution to this problem, that of adding extra;government security guards at Southwests gates (probably at the airlines expense), would substantially;increase boarding costs. Fourth, passenger boarding policies could be altered. Other airlines were;requiring passengers to be on hand at the gate with greater lead times before boarding in order to;accommodate new security procedures. This would further restrict Southwests passengers, a direct;contradiction of its past policies and its advertising strategy of freedom to move about the country.;Finally, open seating could be abandoned, insuring that passengers would get a seat they had chosen;when they booked the seat. This would require retraining regular passengers, some of whom actually;preferred open seating. Further, it would likely add delays, especially to full flights on which the probability;of assigning the same seat to two people would be greater. Whatever was done would have to be;implemented with customers, employees, and the governments needs in mind. Conover, in charge of;customers (both travelers and employees), commented on the success of Southwests responses to;changing requirements to date: Now, both government and our employees think were invincible. Thats;great, but its almost a disservice. It has been tough trying to maintain customer service levels and;relationships in a whole new environment. We sometimes wonder if were in control of our destiny any;longer.;Long-Term Challenges: Growth Strategies;Immediately after 9/11, Southwest deferred 19 aircraft deliveries, borrowed a billion dollars, and;developed a contingency operating schedule. Initially, little thought was given to strategic growth plans.;The primary focus, instead, was on stabilizing operations, even though decisions were made to go ahead;immediately with a previously planned opening of the Norfolk station and begin accepting in early 2002;deliveries of new aircraft. But by late 2002 questions regarding appropriate long-term growth strategies;began to surface once again. Over the years, the average flight length at Southwest had gradually;increased from an average of 228 miles in the first year of operations, 1971, to about 450 miles in 1998.;On Thanksgiving Day, 1998, Southwest experimented with its first nonstop transcontinental flight;between Baltimore and Oakland, necessitating a flight time of about five hours. The plane was filled with;passengers who had paid $99 for the flight, almost half of the passengers had never flown Southwest;before. The only problem experienced by the crew was the lack of space to store the trash that;accumulated during the flight. Many observers, who attributed much of Southwests success to the focus;of its operating strategy up to that time, feared that the test might mark the first crack in the strategy.;Passenger reactions to the flight were positive. Those who typically flew multiple segments to get to a;distant destination were enthusiastic about getting there two hours sooner. They provided permission to;the airlines management to introduce other long-haul flights. By late 2002, Southwest was operating 213;flights per day over 1,200 miles in length. Some crew members preferred to work longer flights, enough to;be able to staff new flights, others, according to Pete McGlade, vice president schedule planning;signed on with Southwest because they like more landings and takeoffs per day of work. Because;longer flights experienced high-load factors, utilized the existing infrastructure, and did not require;additional catering or on-board staffing (with only snack service, the usual three cabin attendants could;serve a full planeload of 137 passengers), they generated healthy profits per passenger and operating;economics at least comparable to those of shorter flights. This comparison held true only if long-haul;flights were operated from cities served by a substantial number of other;Southwest flights. By mid-2002, the average aircraft stage (flight) length had grown to 550 miles.;Southwests experience with longer flights raised the question of the degree to which the airline should;rely on them in its future growth plans. There were a number of opportunities to connect existing stations;three or more flying hours apart on the Southwest system. The alternative would be to continue to add;new cities to the airlines 59-station network from among more than 100 cities that were requesting;Southwest service.Questions were raised from time to time about limits to Southwests growth and, when;growth was resumed, whether the airline could resume its 14% growth per year between 1980 and 2000.;However, one Wall Street analyst, examining Southwests route structure and the density of existing;service, concluded that it could double its size without opening one new station.

 

Paper#18587 | Written in 18-Jul-2015

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