Rapid Rewards at Southwest Airlines Case Study Sample Essay
Southwest Airlines prided themselves on their committedness to client service and equality by offering a streamlined concern theoretical account with an accent on simpleness and efficiency that has remained the same for the most portion since the airlines’ origin in 1967. At the clip of the instance survey. Southwest had been profitable for the past 28 old ages. an achievement many air hoses are incapable of touting due to the volatility of the air hose industry. One of the alone policies that Southwest employs is their ‘single-class service.
’ where seats are non assigned. and those who check in first board the plane foremost and have their choice of available seating. In order to better and keep client keeping. Southwest built up trade name trueness by systematically offering the lowest flight rates and constructing relationships between repetition clients and staff. This worked for the most portion. nevertheless in recent old ages the air hose industry had become more competitory. with more air hoses taking low-priced schemes in an effort to pull a wider array of clients.
peculiarly those of the price-conscious assortment.
With this alteration. Southwest all of a sudden had an addition of rivals who were bear downing similar monetary values but offering tiered seating options and comfortss that Southwest’s classless scheme lacked. While insouciant clients had no job with go oning to utilize Southwest’s simple and inexpensive services. frequent flyers began to experience as though their consistent backing was underappreciated when compared to other airlines’ frequent flyer privileges. Southwest’s chief quandary was in finding the stairss that should be taken in order to keep their classless scheme that had been a basic of the trade name and its nucleus values since its beginnings. while besides maintaining their frequent flyers satisfied and guaranting their continued backing ( client keeping ) . Southwest’s wagess plan was alone in that the company determined one’s frequent flyer position non by how many stat mis flown. but by the figure of trips taken. doing it a more desirable option for those who flew frequently. and non needfully far distances. In add-on. if one flew over 50 round-trips or 100 single-way trips one could have a Rapid Rewards Companion Pass. which allowed members to denominate one individual to go with the Rewards Member free for one twelvemonth.
However. beyond the generous aforesaid offerings. Southwest refused to give anyone pre-boarding privileges or siting regardless of discriminatory position. In recent old ages. this had become a bone of contention among frequent flyers. who felt as though their continued backing deserves some sort of pre-boarding or discriminatory seating privileges. Southwest’s current scheme involved clients being willing to give the comfortss and privileges offered by the more premium and expensive air hoses in order to have a cheaper menu. quicker gate turn-around. fewer cancellations. and a higher safety record. If Southwest were to alter their classless policies and values and offer frequent flyers low-numbered embarkation cards. it would assist maintain their current frequent flyer clients in add-on to potentially pulling new 1s who were ab initio turned off by their deficiency of pre-boarding discriminatory intervention. However. it would make a cognitive disagreement between the firms’ nucleus values and their patterns. Southwest offered two types of menus ; an unrestricted. by and large available option which was to the full refundable and allowed for alterations to go programs. and a ‘restricted’ menu which was offered at a profoundly discounted rate. nevertheless you could non have a full refund or utilize a ‘restricted’ ticket to board a flight with lone ‘full-fare’ seats left on the plane.
A common ailment Southwest received from frequent flyers was their deficiency of flexibleness when it came to flight alterations in respects to restricted tickets. In an attempt to keep their ‘classless’ system. even Rapid Wagess Members were capable to paying excess to do up the difference in ‘restricted’ and ‘unrestricted’ menus when altering flights. or waiting for the following available place within their ‘restricted’ fare-class. which may ensue in holding base on balls up multiple flights that merely had ‘unrestricted. ’ full-fare seats staying. If Southwest were to alter their policy sing restricted tickets bought by frequent flyers and let them to take the following flight that offered an empty place regardless of the menu limitations. it would take the full intent of the unrestricted/restricted menu duality. which is to bear down a discounted rate for those who are willing to take a less incentivized option. This would besides so compromise the classless values that define the Southwest trade name as a whole. and perchance estranging clients loyal to the trade name.
The economic importance of frequent flyers is the construct of repetition clients being cheaper and easier to keep in comparing to the acquisition of new clients. Keeping a steady flow of frequent flyers consequences in keeping a steady flow of gross. one which is acquired at a much cheaper cost than gross acquired from new clients. Southwest would hold to find if the sum of money lost due to frequent flyers exchanging to rivals because of dissatisfaction environing their unrestricted/restricted monetary value construction outweighs the sum of money generated from said clients who end up paying to upgrade to an unrestricted place. If found that the former outweighs the latter. they would besides hold to so make up one’s mind if the sum of money lost is deserving compromising the unity of their nucleus values.
An alternate option for Southwest would be to offer clients an option for their Rewards Plan: they could take the ‘free ticket’ option which is the original Rapid Rewards plan. or they could alternatively take a 2nd option. which gave frequent flyers the ability to utilize ‘restricted’ tickets with any flight with empty seats irrespective of menu category when they’ve missed their original flight one time the flyer has reached 8 round-trip flights or 16 single-trip flights. nevertheless in exchange they would hold to give their free ticket. This would offer a pick that could potentially fulfill the concern flyers who are more likely to lose their scheduled flights while still offering their original Rapid Rewards plan.