Term Paper on "Ethics in Southwest Airlines"

Term Paper 18 pages (7676 words) Sources: 1+

[EXCERPT] . . . .

Ethics in Southwest Airlines

An Overview of the Business Ethics of Southwest airlines

How Southwest Airlines handle the various crises?

The ethical responsibility of southwest today and for the future

Ethics in South West Airlines

How can one single company enjoy so much success in its chosen field of operations? What is the business ethics of the company that has it one of the chosen best among hundreds of others and has it listed in a most coveted position as one of the best corporate companies of the world? The business ethics of the company must be analyzed in detail to gain answers to these questions and in this paper we have provided an overview of the business ethics of Southwest Airlines. The Southwest Airlines has successfully weathered many different crises through the years, and has remained as one of the top companies in the United States of America, today. Thus next we go over to discuss as to how Southwest Airlines is able to tide over its various crises in the backdrop that the airline industry today is facing losses, and more and more companies are declaring bankruptcy and are closing down. Finally, what is important to remember is that Southwest Airlines is today, one of the better managed airlines that exist, not only in just the United States of America but also probably in the entire world. This goes to say that with the right employees, and with the right attitude, and with the right values, the organization will is definitely succeeding and prospering in a time when others of a similar kind have downed their shutters and will continue to do so in future.

1. Introduction

Best 'Corporate Citizenship Awards' means that service of excellent quality is being rendered to a variety of stake holders, and if one particular company can get a listing among the top hundred Best Corporate, then that company can be taken as being one of the very best in terms of corporate citizenship, business ethics, and so on. The social ratings for these recommendations are made by KLD Research & Analytics of Boston, and the list ranks service made by the companies according to seven important stakeholder groups, which are community, stockholders, minorities and women, environment, employees, non-U.S. stockholders, and customers. The company South West Airlines has been placed among the first hundred of the '100 Best Corporate Citizens' list, and the company must indeed be proud to be included on the list for the fifth consecutive year from the time of the creation of the list. (Hundred Best Corporate Citizens for 2004)

It has been stated very often that in the troubled state of the airline industry, the Southwest Airlines, which stood at number 11 this year, 2005, is indeed a top rated performer, and has been consistent in its performance through the years since its inception. A Dallas, Texas-based firm, the Southwest Airlines has in fact recently announced its 32nd quarter of consecutive profitability, and while in the year 2004 it's net income was $313 million on revenues of $6.53 billion, it must be remembered that this was the year in which the basic costs for jet fuels showed a sharp increase of more than a 20%. The CEO of Southwest Airlines, Gary C. Kelly, had this to say, that the company could still afford to fly their airplanes at the low airfare demanded by their customers, only because of constant "ongoing efforts to improve productivity," and at the same time attempting to sustain profitability, as well as growing their route systems. The word 'productivity' for Southwest Airlines meant 'hard-working employees', and therefore, it comes as no big surprise that the Airlines managed to rank among the best in the category of employees. (100 Best Corporate Citizens for the year 2005)

Donna Conover, the executive Vice President of Customer services, states that ever since she joined the company, more than twenty eight years back, she had always felt that the employees of the company were the greatest assets for the firm, and perhaps it is because of the policy that the company follows, which is that of never ever dictating pay cuts to its employees, that it has managed to keep all its employees happy and satisfied, and working hard at all times. This was seen in the fact that employees by themselves, during the Gulf War of the 1990's, when fuel costs skyrocketed, voluntarily reduced their pay for some time in order to cope with the escalating costs of fuel. In a similar manner, after the debacle of September 11, Southwest Airlines employees volunteered to take cut costs on their wages, so that the company may be able to cope better with its reductions in flying schedules. This type of loyalty for the company has as yet been unrivalled. (100 Best Corporate Citizens for the year 2005)

II. An Overview of the Business Ethics of Southwest airlines

How can one single company enjoy so much success in its chosen field of operations? What is the business ethics of the company that has it one of the chosen best among hundreds of others and has it listed in a most coveted position as one of the best corporate companies of the world? The business ethics of the company must be analyzed in detail to gain answers to these questions. In the year 2001, the Southwest Airlines year end results showed twenty nine years of constant profitability. It is a fact that Southwest Airlines, which was incorporated in Texas, started its customer service in the year 1971, and that with a mere three Boeing 737 aircraft meant to serve three cities in Texas, which were Dallas, Houston, and San Antonio. Soon the company started to grow into the fourth largest airline in the United States of America, in terms of the domestic customers that it served to carry. (Southwest Airlines Corporation)

In the year 2002, the company could boast of a fleet of 366 Boeing 737 jets, and by this time, Southwest Airlines was being increasingly recognized as the only airline in the United States of America who was a major, short haul, as well as a low fare airline, and was a high frequency and a point to point carrier. The airline also had the lowest operating costs structure for any company of its kind, and it offered the simplest and the lowest fares ever. In addition, Southwest Airlines had the best record for overall customer service. The magazine, Fortune, has been consistently recognizing Southwest Airlines as being one of the top ten businesses to work for in the U.S.A., and has also repeatedly stated that it is one of the most admired companies in the entire world today. The Wall Street Journal has stated that in the year 2002, Southwest Airlines ranked as one of the bets and first airlines for customer satisfaction, and Business Ethics listed Southwest Airlines as one of its top 100 Best Corporate Citizen. (Southwest Airlines Corporation)

What gave the company so much of importance, and what was the approach that it used in order to meet with so much success? What must be noted here is that Southwest Airlines has never used the so called 'hub and spoke' approach that is generally used by other airlines of the same kind, like for example, United, American, and Delta, and in contrast, its approach was 'short haul', wherein the average flight time would be about fifty five minutes and not more, and the 'point to point approach', wherein its service would be from one point to the other, like for example, from Dallas to Houston, or from Los Angeles to Phoenix, and so on, and there would be no assigned seats for the journey. The crew of the airline would be paid as per trip, and the aircraft would use less congested airports, like for example, Washington's Baltimore instead of Dulles or Reagan, and Manchester NH, instead of Boston, Massachusetts. An interesting fact is that the pilots of Southwest Airlines were the only pilots who worked for an international airline who did not belong to a national union of any kind.

The advantage of this is that while a national union limits the number of hours that a pilot can fly, not belonging to any union allows the plots to choose the number of working hours by themselves, and since the pilots of Southwest Airlines are unionized independently, they can fly any number of hours they choose, and this will quite naturally be far more than pilots of any other airlines. Another interesting fact is that other workers at Southwest Airlines are nationally unionized, and this would mean that they would be able to jump up and help out whenever needed, regardless of the task at hand. One example of this phenomenon is that while in Southwest Airlines, the time that is generally taken for the plane to land and then get ready for takeoff takes on an average about twenty minutes, and requires about four… READ MORE

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