Southwest Case 1
1. Should Southwest save a few low-numbered boarding cards for its more frequent fliers?
What is the key motivation for your opinion? What are the trade-offs that Southwest must
consider in making this decision?
Southwest should not save a few low-numbered boarding cards for its more frequent
fliers. I make this decision because the fliers who purchase a “Business select” fair
automatically get the a low-numbered board cards and the customers who decide to
purchase a boarding upgrade also get the low boarding number. If a customer wants a
low-boarding number, then Southwest knows they will pay for it one way or another. The
premise is the same with Southwest’s competitor airlines, if a customer wants a specific
seat, they will pay for it.
Some tradeoffs which the airline must consider are listed below, however when making
the decision to not withhold boarding passes for frequent fliers they specifically need to
consider their first come, first serve policy vs assigned seats.
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- Fixed, low cost - Higher prices with variety
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- 20-minute plane turnarounds - Delay turnarounds
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Longer air time hours - Long delays
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- Focus on internet sales - High use of travel agents
- Quality snacks for sale - Meals
- First come, first service seats by - Assign seats in advance
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zone - Focus on connects with other
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- Schedule for connections to other airlines
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airlines - Baggage transfers to other airlines
- No baggage transferred to other - Variety of aircraft
airlines
- All 737 aircraft
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2. Should Southwest allow its more frequent fliers who have missed their flights to take the
next available flight with an empty seat or should these customers have to wait for the
next available flight with an empty seat within their fare class? What drives your
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decision?
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The customer should have to wait for an empty seat within their fare class or, given the
information in Exhibit 1, the flier should have the option to pay for the upgraded ticket.
Within the case, Bast’s company had purchased a restricted fare and was subject to the
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fare rules laid out by Southwest. If her company had purchased an unrestricted fare, she
would have been able to get the next available flight instead of waiting.
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Southwest Case 2
3. What are Southwest’s sources of competitive advantage?
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4. How may you determine the economic importance of frequent fliers?
The economic importance of frequent fliers may be determined two ways, from the side
of the company and from the side of the individual.
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1. How much is the flier bringing in as revenue for the company?
2. How is the company valuing each point that the frequent flier earns?
3. How much has the overall frequent flier program increased revenue for the company?
4. When do points expire? Are there black-out dates for consumers?
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5. How much has business increased for the airports that people are flying out of using
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those points?
5. In what instances do you advocate firms offering tiered or differentiated service to their
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customers? What guidelines do you propose firms follow in making such decisions?
In cases where consumers may spend a lot of money thought out the year and to keep
their business continuous. In the case of airlines, people spend thousands of dollars on
flights throughout the year. Those who want to earn points for doing what they normally
would do can get rewarded for their continued consumption of the brand or firm.
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Southwest Case 3
The guidelines I would propose would be to make it worthwhile for the customer. Many
airlines are decreasing the point value for frequent flier programs. A significant change in
the program may drive people away because it would take them longer to accrue points
and would make them feel less valued as a customer.
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Southwest Case 4
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Southwest Case 5
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