Author’s Note: This question was posed on Formspring. Feel free to ask any questions to me at http://www.formspring.me/matteargle
I think it pretty-much goes without saying that I can’t think of a far better way to relax than digging my bare feet into some warm sand, listening to the waves crash against the shore. Could be the reason I like being here in southern California so much. I like to travel and I enjoy visiting new cities, becoming immersed in the local colour, but to vacation–to get away from the grind–always takes me to the beach.
Westbound and down, eighteen wheels a-rollin’; we’re gonna do what they say can’t be done. We got a long way to go, and a short time to get there. I’m westbound just watchin’ Bandit run!
For those of you who have not been following on YouTube (shame on you, go there now and click “Subscribe”), I’ve been assembling my video documentary for The Great American Road Trip piecemeal for your enjoyment. In the meantime, I’ve also been working on a web design project that will bring in a little extra scratch and it’s all back to branding and selling myself in this lousy economy. Carry on, good citizens!
Dude! How awesome would that be, a Route 66 mug? Maybe they could put your picture on it since you’re doing the whole ‘epic road trip’ thing! I could sell it to people and say, ‘Yeah, I know that guy. I served him his coffee.’
Barista at Starbucks in Amarillo, TX
After a quick break in Oklahoma City to cool off and have lunch (the temperature was at least 100 and the sun was relentless out over the plains which may or may not have contributed to the sudden madness at the end of the last part), I was back on the road. Western Oklahoma was an orchard of windmill generators lining the crests of any slight knolls that ran the length of I-40. I never knew the sheer size of these things until I saw them up close, and they are massive. As another Deep South/California transplant would say, “Wouldja LO’OK at THA-YAT?!? That’s uhMAYzin’!”
I wonder. You know, I just bet we shoulda turned left at Albuquerque! And then maybe a right turn at La Jolla. Hmm, er–well, we can’t be too far off….
Bugs Bunny, “Ali Baba Bunny”
After a short rant about getting lost in Albuquerque (I should have turned left…), I set out on what should have been the final leg of my journey: across the high deserts of New Mexico, Arizona, and California to Los Angeles, but Mother Nature had other plans.
For the first time, it’s something actually very frightening for Halloween…I don’t think we’ve done anything this scary before.
Steve Roach, Imagineer
Who doesn’t love a good roller coaster? Who especially doesn’t love a good roller coaster in the dark with multimedia effects? For the second year now, Disneyland (along with the rest of the Disney Parks family) has added a spooky overlay for their HalloweenTime celebration during the month of October. Now, there’s only a couple more days until All Hallow’s Eve, but for those of you who may not have a chance to visit their nearest Disney theme park, I’ll give you a little taste of the action.
One of four ghastly projections on the exterior of Space Mountain.
Space Mountain Ghost Galaxy is probably best experienced at night when the projections on the Space Mountain dome can be seen. Monstrous roaring, gnashing, and clawing periodically emanates from the Mountain, as if there is something big inside trying to get out. Disney does a fantastic job of communicating the feel of the ride from the moment you walk past the entrance. Normally, the Mountain is quiet, unassuming, but for HalloweenTime, you know as soon as you enter Tomorrowland that something is wrong.
The story, from what I can infer from the themeing is that SpacePort 77 (as the entrance to Space Mountain is known) has been experiencing some odd readings from one of its planetary probes: eerie clouds in space followed by extreme interference and a loss of signal (riders can watch the playback on the large screen in the spaceport section of the pre-show queue). As crew of SM77 (your mission designation), it is the riders’ task to investigate the phenomenon and report back to your commander.
The ride, from the beginning, gives the feeling that something isn’t quite right. At launch, instead of the normal, epic choral fanfare, the music is subdued and in minor key. There’s a lot of humming and tension building as you ride through the darkened tunnels on the lift section. Eerie, pulsating green lights provide little comfort in lieu of the normal red and blue lighting. At last, you begin the “hyperspace” section of the lift and see the familiar swirling galaxy in the distance followed by…
HOLY SHIT, WHAT’S THAT?!?!
Meet the Nebula Ghost, a paranormal entity that has invaded your galaxy and the source of all the interference back at SpacePort 77. It’s big, it’s powerful, it’s scary, and it wants to eat you. The SM77 rocket you and your fellow astronauts are flying has no weapons systems (it was designed for relatively short-range, peaceful exploration and scouting), so your best option here is to run.
And run you do. Fast. Down the familiar dips, twists, and turns that make up the Space Mountain track, but this time with a galaxy-eating, world-destroying, soul-sucking Nebula Ghost at your every turn!
If you happen to make it back to SpacePort 77 in one piece, you will be rewarded with the option of purchasing a souvenir photo of your adventure. I would highly recommend it, as it’s only available for 1/12th of the year and it’s a really cool image mask. The best seats are in rows 3 and 4, as most of the action centers there. Sit in row 4 if you decide to go for the photo–you’re not as likely to be blocked by someone’s wayward arms or hands.
I’ve been through the desert on a horse with no name. It felt good to be out of the rain.
At long last, the concluding chapter of my video documentary of the Great American Road Trip is completed. I wanted to make note of the toll extreme boredom that nearly 3 days of driving was beginning to exact upon me–especially in western Arizona. It’s been a long time coming, and I do hope you enjoy it! Please comment, like, and subscribe!
Author’s Note: This was originally written and published as an academic paper early in 2010, before Southwest’s decision to purchase AirTran was announced. The material exists as it was originally written with only images added for the purposes of this blog.
Hailed as a scrappy, start-up, small-market airline, Southwest Airlines has taken an unconventional attitude toward the air travel industry and turned itself into the most profitable company in the business. Throughout its history, Southwest has had to fight tooth-and-nail, quite literally, for its very existence. It’s this warrior attitude that has developed into a tongue-in-cheek approach to marketing and a vehement sense of doing right by the customer; which has, in turn, developed into a business strategy that has kept the company growing for over thirty years.
Since its inception, Southwest’s mission has been a “dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” The company focuses on this mission through an extremely selective hiring process that ensures all employees fit within the corporate culture believing that truly fun-loving and spirited employees bring superior customer service through their inherent attitudes that are allowed to shine without the confining regulations and propriety that so many other airlines practice. Southwest employees routinely go the extra mile to help a customer because—by and large—they genuinely care about making people happy. Just as most other wildly successful companies, Southwest’s philosophy agrees that happy employees translates into happy customers and happy stockholders.
Plain and Simple
In 2004, when Gene Kelly took over as CEO from Herb Kelleher, he formally instituted the four factors and five strategic objectives that had become and, as he said, would continue to be the guiding principles of Southwest Airlines’ continued success. Hiring great people and “treat ’em like family” is the first factor which is illustrated through the airline’s extremely selective interview process and extremely generous wage and benefits schedule. Southwest employees have, on average, made more than their rival counterparts without taking massive pay cuts during hard economic times through a conservative financial plan as well as stock options that have grown as considerably as the company has over the years. Second, Southwest cares for customers “warmly and personally, like they’re guests in our home” because it only hires employees who genuinely care for people. Third, Southwest pledges to keep fares lower than anyone else through safety, efficiency, and operational excellence. The company’s 25-minute turnaround goal can only be achieved through efficiency and teamwork where ground and flight crews all work together to have a plane ready to board within the specified time limit. When faced with glaring safety violations tarnishing the company’s near-perfect safety record, Southwest acts with integrity by alerting and working with federal inspectors to make sure aircraft are repaired and maintenance is brought current—despite the possibility of fines and other potential penalties (lost revenue, for example), which is far outweighed by the potential company-ending disaster that could occur otherwise. Finally, staying prepared for hard times has helped the company weather the economic recessions and skyrocketing fuel costs. Southwest maintains strong liquidity and aggressive fuel hedging which keeps them afloat while other, larger airlines are haemorrhaging money, raising fares, declaring bankruptcy, and merging out of existence. Southwest’s five strategic objectives build and restate the four factors while adding the goal of offering customers a convenient flight schedule to places that they actually want to go. This has allowed Southwest to realise its goal of bringing the American public the “Freedom to Fly” almost anywhere, at any time, and for a low price.
By utilising aggressive cost-cutting measures, such as their trademark no-frills flight service, point-to-point route structure, single-model fleet, and fuel hedging, Southwest Airlines currently enjoys one of the lowest operating costs per passenger seat mile—13.85 cents in first quarter of 2008, a feat that can not be duplicated by other airlines (the closest, America West, reports 15.58 cents per passenger seat mile). In addition, Southwest maintains large cash reserves ($16.77 billion in 2007) as compared to the industry average. The airline’s volume strategy of selling full planeloads for lower fares than selling fewer seats for higher prices has led to historically high revenues for the company as well, as less money is wasted flying full rather than empty seats. Not only boarding more passengers per flight, but also quicker turnarounds leads to more available seat miles, which, after filling those seats, leads, again, to larger revenues. These elements have put Southwest in a position of being, financially, the strongest airline in the United States as of the fourth quarter 2008.
Due to the nature of how it conducts business, Southwest Airlines enjoys many competitive strengths. The airline has enjoyed unprecedented growth since 1971 driven by a simple fare structure, low costs, and impeccable customer service. The company also maintains a fleet of one aircraft type, which saves on parts inventories and maintenance training costs as well as provides them with incentives such as volume discounts and flexible financing options. Strong, simple loyalty programs help to build lasting relationships with repeat customers. Southwest’s desirable corporate culture also makes it able to be highly selective during its interview process for new hires, making sure the company hires only the best of the best applicants.
One major weakness in Southwest’s product is its lack of seating options. Passengers must arrive early to be more selective about their seating arrangements, which may aggravate some passengers and turn them off to the experience. Because it only flies smaller Boeing 737 aircraft, cargo space is limited, and increased revenues from less price-elastic cargo transport must be foregone in favour of highly price-elastic passenger miles. Also, being reliant on one producer for aircraft creates some level of dependency on Boeing that may prove a strategic weakness if aircraft prices change. Southwest also does not offer any international flights, even to popular tourist destinations in Canada, Mexico, and the Caribbean—missing out on the very lucrative vacationing market segment.
Southwest has always been a leader in incorporating advanced technologies into their business model. The airline was among the first to utilise electronic ticketing as well as adding winglets to improve efficiency in their aircraft fleet. By continuing to seek advanced technologies, Southwest has the opportunity to gain significant competitive edges against its competitors during the adoptive phase of the new technologies (which can last upwards of ten years, in some cases). Southwest can also consider expanding into markets not already served by the airline, especially smaller markets in the southeast and central United States with little or no competition.
Several threats face Southwest Airlines, as well as their competitors. Chief among these is the price of jet fuel and other petroleum derivatives that are essential in aircraft maintenance. Currently, a slowing domestic economy has reduced the amount of leisure travelers while commute alternatives such as teleconferencing have reduced the need for business travel. Increasing federal regulatory action also threatens Southwest, especially in light of recent safety violations that caused a significant portion of the fleet to be grounded for inspections and repairs. Not only FAA regulatory action, but also ever-increasing demands for security protocols from the TSA threaten air travel by making it inconvenient for many people, either through outrageous screening processes or increased costs of passenger screening, which is then passed back onto the customer.
The bargaining power of the buyer in this market is quite high, as there are several options in each market on which a potential customer can choose to fly, and the services offered are relatively standard at this point. Typically, he who offers the lowest price is going to attract the most customers, which is where Southwest typically displays some advantage. In addition, the threat of substitutes is high as well for the same reasons—undifferentiated services and proliferation of competitors. Southwest has also set themselves in a situation where their suppliers have a high level of power as well. While maintaining a fleet of only one aircraft type significantly reduces the cost of warehousing parts and training mechanics as well as simplifying maintenance logistics, it puts all bargaining power in the hands of the manufacturer, Boeing. Any decision to increase prices of aircraft or parts can force Southwest to succumb to those extra costs under threat of grounding the entire fleet. Fuel suppliers also keep a choke-hold on the industry as a whole as they control the means of production (in this case, the distribution of fuel—without which, there can be no flights). However, Southwest has been able to mitigate the effect of fuel costs by their aggressive hedging strategy. Competitive rivalry is also quite high in the airline industry. There are many competitors and, such is the case in periods of slow economic activity, each one plays a price game to entice customers away from the others in order to keep their operations at sustainable levels.
One piece of good news for Southwest, considering Porter’s Five Forces model, is that the threat of new entrants is low. There is a lot of cost and capital investment associated with starting an airline, and, especially in periods of slow economic growth, the risk often far outweighs the reward. Established brand names—often legacy airlines—tend to survive the troughs better than small start-ups, especially when customers are not patronising as they do during peak economic times. Loyalty programs become paramount, discouraging changeover and promoting the strong brand names that already exist in the marketplace.
Southwest Airlines seems to be doing almost everything right, but, even still, there are two notable strategies that the company can implement for continued growth across all market segments. Currently, Southwest offers no partnerships with other air carriers for international or tertiary domestic markets. Southwest can “extend the LUV” to these smaller domestic markets by partnering with regional airlines that provide shuttle service to the larger markets. In addition, Southwest can partner with larger international carriers to enhance their global reach from entry ports such as LaGuardia (for European travel) and LAX (for destinations to and from Asia and Oceania). Such partnerships may seem counter-intuitive to Southwest’s self-reliant culture, but as the global community becomes smaller, airline partnerships will become inherently more important.
The other major consideration, and presently the most important, for Southwest’s continued expansion is the acquisition of rival airlines. This may be the most important step in enhancing Southwest’s domestic presence because it opens up previously-untapped markets to Southwest’s lower-cost, simplified structure. Utilising the company’s large war chest, motions to purchase AirTran or JetBlue can easily be made during the economic slowdown. Both of these airlines are of particular strategic interest because—by and large—they operate in markets that are not currently serviced by Southwest, including major presences in tourist destinations in the Caribbean and business travel destinations in Canada. Also of singular interest is the fact that both competitors operate a fleet of Boeing 737’s, which will—unlike Delta’s acquisition of Northwest’s “hodgepodge” fleet—ease transition costs by not forcing Southwest to retrain mechanics or attempt to unload unused aircraft inventory on an already saturated market as well as by keeping maintenance costs relative to the size of the fleet, thereby not negatively affecting overall costs per available seat mile.