Hrm Recuitments in Star Hotels

The challenges Southwest is facing in the future are as follows :

1. The New generation of Low Fare - Low Cost Carriers :
The low fare market become progressively crowded by 2004 with many new players emerging in the same industry providing low fares for the passengers. The Southwest Airlines soon faced difficulty in generation of profits as their target audience got divided with the emulation in of these newer players. The market share of these low fare-low cost carriers was on an increasing level and it was forecasted to reach 50% in 2010. One of the main player who was successful to give a tough fight to the Southwest Airlines was JetBlue launched by David Neeleman. Like Southwest, it also provided transportation from different points in a large metropolitan area and highly travelled markets that were underserved. Jetblue was providing all the prominent facilities which include luxurious leather seating, free Live TV etc that can attract people to choose them. In Feb 2004, United also launched a new low cost, low fare carrier called Ted. Ted offered value added inflight services which was the USP for them. For eg., they provided pre-assigned seats, music videos, episodes of NBC along with trendy margaritas and Atkins Bar. In April 2003, Delta came up with its own discount Spin off called Song targeting urban women. Song consisted of flight attendants decked out in designer Kate Spade Uniforms and it offered in flight Cappucinos with Biscotti and an inflight exercise band & ball. Other successful startups that emulated the Southwest model included AirTran Airways, Midwest Express, Frontier Airlines, American Trans Air (ATA) and in Europe Easyjet.

2. Labor Issues :
Southwest Employees were becoming tired of being in the bottom half of the industry with regard to pay, especially as they worked for one of the nation’s most profitable airlines. Moreover, As the workforce grew to more than 35000 employees the quality of communication between management and labor deteriorated. Tensions started to emerge between management and Southwest Unions. It was being said that the harmonious relationship between the employees and the Southwest may be disturbed by the happenings. The terms of a recent deal with the flight attendants, pilots and the mechanics made the reason for an increased expense on their compensation. This was affecting the fact cascading that Southwest will be able to keep its cost below the competitors. There was an increment in the labor cost from 33% to 41% of total operating cost in 2003. Moreover, again it had an increase of 6% in the early 2004. These enhancements of labor cost were due to the contract negotiations of Unions over the management from the last few years. On July 2004, flight attendants ratified a new contract which consisted of 31% increment in their pay over six years settling a two-year labor dispute.

3. Management Turnover:

The sudden turnover of the CEO of Southwest Airline, James Parker was also a challenge for the airlines. On July 16, 2004 he announced his retirement.  While Parker was doing his work extremely good from the time of his joining as the CEO of the company, it was now very troublesome for the company and for the employees to work with a new boss. Parker was credited with guiding Southwest through turbulent period after September 11, 2001. Under his leadership, Southwest was the only airline company to post a profit in every quarter following the Sep 11 terrorist attacks. It was now skeptical for the entire company to see whether the new CEO Gary Kelly (former CFO) would be able to maintain the profitability of Southwest along with the same reputation.

The Southwest Airlines should meet those challenges by the following ways:

1. Intense competition from other players can be tackled with rethinking the business model of Southwest. As Kelleher stated, “we have to change our tactics frequently as competitors emerge, and as facts and circumstances change” adapting the required change can help the company tackling this issue. Consequently, the no-frills airline implemented asthetic and technological improvements.

2. In 2001, Southwest started to renew the interiors and exteriors of its fleet. The airline also refurbished the all leather seats in the canyon blue and saddle tan for increased comfort. It also renovated its Airport facilities at BWI, Chicago Midway, and Houston Hobby. Major expansion at Fort Lauderdale, Las Vegas, Oakland were also underway.

3. In June 2003, Southwest announced that its current and future fleet of Boeing 737-700s would be outfitted with blended winglets which would give a distinctive, advanced look and feel for the fleet and would improve aircraft performance.

4. Also, Southwest implemented several technological initiatives to streamline its operations through automation. For eg. The airline began using computer generated luggage tags at all its facilities which could electronically capture luggage checked by customers. These also helped customers to automatically check in their luggage and obtain boarding passes by rapid check in Kiosks. The company also planned to offer customers the ability to check in and obtain boarding passes online through website.

5. The Labor issues can be combated by providing the desired incentives to the workers at times where it is important, and no further negotiation can be carried out. Other than that, motivation and encouragement of the labors must be done to ensure the work culture that has to be maintained in the company to remain on the top.

4) What should their business and operations strategy be for the future?

Looking at the future growth for SWA we should look at its strengths and opportunities.

Strengths- Low Cost, service innovations, expertise in technology, innovative marketing mix, financial position, safety, security, and customer services.

Opportunities- Growth opportunities for smaller urban airports, Vertical integration, long term sustainable industry growth.

To maintain its business model sustainable SWA’s should be looking at after its Weaknesses and threats:

Weaknesses- multi-country coverage, no baggage transfer, lack of infra airlines and alliances

Threats- Cost of fuel, terrorist attacks, economic downturn, communication and ecommerce.

The following alternatives can be used –

a) Introduction of structural and continuous learning programs that can be used to retain the current employees.