It is important for one company the corporate office access to all other branches. The Southwest Model Fig l. summery of Southwest Model (Abhishek Mehra) Operations In this table summery of report is shown in this diagram. According to Exhibit 1, Southwest Airline income was reported. As shown in Table, operating expenses percentage are: Operating expenses: Salaries, wages and benefits 33. 4 Fuel and oil 16. 2 Maintenance materials and repairs 8. 0 Agency commissions 7. 1 Aircraft rental 4. 3 Landing fees and other rentals 6. 8 Depreciation 6. 7 Other operating expenses 17. 4 This case must be complicated because table show 17. % of expense is related to “Other operating expenses “and this value is significant. If number of parameter is too many in a system they make a system complicated. But in this case, Salaries and wages is major expense. Salaries, wages and benefits: Review this three paragraph in article: Southwest Airline had 84% unionized labor force but its labor relations were excellent. All employees were entitled to profit sharing, which was the company’s only form of retirement program. Each year a percentage of the companys earnings before taxes was divided among employees based on heir wages.
A manager noted, “We pay our flight attendants at least as much, if not more, than the industry average. ” Flight attendants could work as many trips as they wanted, and could trade or give trips to other flight attendants. Thus, subject to being able to get another flight attendant to fly assigned trips, flight attendants could dictate their own hours and the number of days they worked. As a result, a manager noted that “some flight attendants fly no trips in some months. On the other hand, I’ve seen flight attendants work 150 flights in a month, too. It’s really up to them. This was not the case at any airlines where work rules limited flight flexibility. Ground crew, ticket agents, and telephone service representatives started at 56. 25 an hour, the average employee in these positions earning $20,000 per year. The first question come to mind is that, how they could control human resource because unionized labor without specific job description. It need expert leadership to manage them. On the other hand in high season vacations how they supply enough flight attendant for airplanes? Also, in some season they don’t need too many flight attendant. What about over time? Did they like to pay an overtime?
Fuel and oil: It is one of the important in system’s cost. It is integrated to other operation parameters. Airplanes flew non-stop origin to destination. On the other hand for a faster turn it is better use a small plane like 737. But it need fill up tank in each trip or maybe two or three. We must be sure it is available in all of airports. On the other hand they want more than one gate it means that maybe you need bigger tank for storage of fuel. It raise rental cost. Another parameter is politic, politic effect on oil price. For example, in 1980-1991 Persian gulf war was happened it had effected on oil price.
Maybe it is good dea buy a cheaper fuel? But forecasting of fuel price need a professional cost analyzing. Use a high performance airplanes maybe have a lot investment cost in first time, but in future operating cost will be decreased. As a result, Number of tank and supply of fuel is most important. Maintenance materials and repairs; Maintenance and repairs like a supplying Fuel have a same strategies. You must be sure which part is import and may be effect on hazard. Pieces must be provided in strategic airports. It dependent price of pieces and number of them must be spread in air flight zones. Landing fees and other rentals:
Percentage of this part maybe is not too much. But, we need mention to other parameters which effect on this. Geographic is affected parameter. Southwest Airlines airports mostly are in Midwest or in southwest. They connected like a Graph. The good point is they are far from Atlantic Ocean and storms. Maybe Mexican gulf cause a problem. Airport are outside of city rental maybe reduced but supplying parts and fuel will be increased. For faster “Turn” the plane need capacity or nest. If two gates is available two Nest is needed. Aircraft: It was good idea use a smaller airplane because maintenance will be simpler. e snack and drink is a brilliant way for cost controlling even cleaning of air plane will be easier. The important problem is capacity. For non-stop vacation small airplanes are good but in high season and crowded time make a trouble too. Another optimization related to location of airports and how many trips in week. It means that Airline route is important. Again important parameter is geographic it prefer new airport will be located near south west domain D. C. is not good choose because distance from other airports, maintenance, fuel cost and other parameters will be increased. We must investigate which arameter is important for us.
It is good we have a long route between Midwest and west coast, but maintenance, capacity, fuel cost will be increased. In short distance maybe it will not be applicable. Because revenue operation or passenger is not enough man maybe efficiency decrease again. Conclusion: As results shown, the Southwest Airline Planners found an optimum ways to increase benefit of company. That was a good strategies in that time, but it must be mention that this strategies suitable for that area. For example in other country maybe this strategies will not give same results because of geographic and politics of that domain.