A of Southwest Airline - Case Study Example

Airport Hubs Congestion: A Case Study of Southwest Airline Introduction Almost all the airports hubs in this country have been affected by congestion. This has affected almost all the airlines operating in those hubs. Southwest airline being one of the major airline companies in this country has been greatly affected by this problem. Currently, southwest airline is contemplating either to start having less number of daily flights or to initiate a project of expanding the runways of these hubs on behalf of the Federal Aviation Administration. Having less number of daily flights will certainly drop the revenues generated by this company and might make the company to incur losses. However, the process of expanding the runway is an expensive project that requires massive funding. Causes Southwest Airline has been one of the companies with highest growth rate for the last more than forty years since it was found (Bundgaard, Bejjani & Helmer, 2006). This has been due to its ability to sustain growth and maintain profitability despite the challenges of the aviation industry and has resulted mainly due to increase in the demand of its low price structures and high quality services. According to Keller (2010), it is always the objective of this company to meet the customer demand. Since the customer demand has been increasing, Southwest airline has been forced to increase its number of flights and to even acquire other Airline companies. One recent acquisition is acquiring of Air Tran Holding, which it used to expand its operation (Keller, 2011). According to Drake (1998), Southwest Airline has been experiencing growth on annual bases since it was found. The airline started with three aircraft operating in three planes only. Since then, the airline has grown to the capacity of operating more than 400 planes throughout the United States. This growth has been because of the increase in demand that has resulted to Southwest airline increasing number of flights in each of the airport hubs. This has led to presence of more aircrafts and more schedule flights in all the airport hubs selected by Southwest Airline. Another cause of this congestion is increase in competition in the aviation industry and emergence of new companies. In the recent years, there has been emergence of other low cost companies in the airport hubs selected by Southwest Airline. These companies have introduced more planes in these hubs; they also schedule several flights on daily bases. This introduction of more planes, and more number of flights undertaken in an airport hub has resulted to congestions in those airport hubs. For the past ten years, airport hub capacity has been either fixed or expanding at a very low rate. This has made these hubs not to be able to accommodate the increasing number of planes operating in those hubs and the increasing number of flights scheduled by different companies on those hubs. Currently, the number of flights scheduled on the airport hubs selected by Southwest Airline Company exceeds the capacity of those hubs thus resulting to congestion. Effects Congestions in these airports have sometimes resulted to delays in the departure or landing of planes in these airport hubs. In most cases, this makes the passenger to spend more time than they anticipated during the flight thus incurring inconveniences. According to the information I got from one of the most frequent customers of the Southwest airline, Mrs. Jones, the delays have been resulting from congestion hence causing customers a lot of inconveniences and losses. However, the blame always goes to the Federal Aviation administration. Another effect of congestion in airport hubs is increase in probability of occurrence of air transport accidents. Due to congestion, the aircrafts are sometimes forced to land while others are taking off on runways that are close to one another. Moreover, the planes are no longer having so much time to prepare to land or to take-off which might cause them to run-off their runways especially when landing. These can result to deadly accidents in those airport hubs and thus it should be controlled as soon as possible. Another effect that congestion of the airport hubs has had is that it has forced the Federal Aviation Administration to come up with an idea of improving efficiency in air transport. The strategy call the NextGen is expected to be in full operation by the beginning of the year 2025 (FAA, 2012). In this strategy, FAA plans to introduce new and more efficient aviation equipment that will improve air traffic control and thus help in easing congestion on airport hubs (FAA, 2012). Southwest Airline, being the key player in the aviation sector has been fully supports this initiative through providing useful data that can assist in the implementation process. Moreover, this problem has made Southwest airline to have an increase operational costs. This has been due to usage of more fuels and additional working hours of employees. Although, the company has been able to cushion itself from this problem using its operational strategy, the management feels that the revenues could have been higher if the problem was not there (Kelly, 2011). Possible Solutions One of the possible solutions to this problem is the improvement in the level of technology used to control air traffic in these airport hubs. The proposed NextGen project if fully implemented will introduce new and more efficient equipment to help in controlling air traffic. These and other possible technologies like introduction of aircrafts with higher speed and larger carrying capacity can play a very big role in solving this problem of congestion in airport hubs. Another possible solution is expanding the capacity of the airport hubs in the most affected areas like Dallas airport hub. Since Southwest Airline has its headquarters in this city. It schedules many flights on daily bases that result to a very big congestion. Hence, this airport hub should be expanded to have a higher capacity that can be able to accommodate the increasing number of flights. It is not only this airport hub thus experiences the problem of congestion and hence other airport hubs experiencing the problem should be expanded to accommodate more flights. Conclusion This problem of congestion is actually affecting the revenues and operation of Southwest Airline Company. It has several causes like increase in demand and low rate of expansion of airport capacity. Another factor that might have caused this problem is the increase in competition in the aviation sector. This problem has had several negative impacts to Southwest Airline some of them being increase in delays and increase in operational costs. However, it has caused the Federal Aviation Administration to initiate an initiative that is aimed in improving the overall aviation sector called NextGen. In this research, we bring out two possible solutions to this problem that are improvement in the level of technology and expanding of airport hubs. However, this is just a case study and thus an actual research should be undertaken on this issue to determine whether there might be other better solutions to this problem. References Bundgaard, T., Bejjani, J., & Helmer, E. (2006). Strategic Report for Southwest Airline. Retrieved from: http://economics-files.pomona.edu/jlikens/SeniorSeminars/pandora/reports/southwest.pdf. On 6 June 2012. Drake, W. (1998). A Financial Analysis of Southwest Airlines Company. Retrieved from: http://teknirvana.com/documents/Southwest.pdf. On 6 June 2012. FAA. (2012). What’s New in NextGen. Retrieved from: http://www.faa.gov/nextgen/new/. On 06 June 2012. Keller, G. (2010). Southwest Airline Company 2009 One Report. Retrieved from: http://216.139.227.101/interactive/luv2009/luv2009ar.pdf?print_pages=true. On 6 June 2012. Keller, G. (2011). 2010 Southwest Airlines One Report. Retrieved from: http://www.southwestonereport.com/_pdfs/SouthwestOneReport2011.pdf. On June 2012. Read More