Southwest self-sufficiency
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Posted Date: 24/09/2008
Issue: Airline Handling International November 2008
Publication: Airline Handling International
Often hailed as the blueprint for the low-cost model, Southwest Airlines has set the standard for many of its imitators that have come to the market since its inception. Pursuing commonality of fleet, budget pricing and high load factors, Southwest Airlines has delivered a very clear lesson in how to operate a low-cost operation.
But outsourcing is commonly considered key to the low-cost concept – and this, at least in terms of ground handling, is where Southwest Airlines diverges from its kind. In fact Southwest Airlines currently does not outsource handling at any of its departure and destination airports; the whole operation is in-house and firmly under the airline’s control. Teresa Laraba, Vice President Ground Operations, has worked at the airline for 24 years, and she says it has always been thus during her tenure.
About 80% of all Southwest Airlines’ customers obtain their boarding passes online. “Over the last few years we have been working to streamline our ticket counter processes. We do have self-service kiosks in all of our locations; the number of touch points we have depends upon the size of the airport. We recently ran a test in Oakland, California, for Express Bagdrop where the process at the kiosk is a little more expedited and all you need to do is check your bag. We have a goal of a 15 minute wait. We do not want you in line at our ticket counter longer than 15 minutes if we can avoid it.”
Laraba points out that unless Southwest Airlines has the opportunity to work with an airport authority to redesign a terminal, the airline is locked into working with a linear belt that runs behind the ticket counter with check-in agents in front of that ticket counter processing the customers. “We are just kicking off a project about our desired lobby of the future so that, maybe, we will not be tied to that bag belt in the future. Currently, our real estate is very linear so our self-service and other processes that we are looking at are still tied to that linear flow but we are excited about stepping away from that and working to design a more free flowing lobby.”
Southwest has already started to redesign the gate/lounge areas of the airports at which it operates as well as the process for boarding customers. “Now, as far as the lobby is concerned, we are rewriting our ticketing applications – this will be called ‘Customer Service to a New Level’ (or CS2) and this is about to roll out in addition to our test for express bagdrop. We’re also working on a product called ‘Ramp Suite’. We call the ramp the area where the employees touch the baggage and then load it on the airplane. This will allow us to scan bags upon acceptance so that we can track better where they go once they leave what we call our ‘T-point area’ or ‘our baggage make-up area’.”
Is the baggage process always the bottleneck? “Yes,” she responds. “You have to see the customer’s identification and the baggage has to come into contact with airline personnel so that it can be checked in and screened by the TSA. You can’t avoid those processes so you are very tied to them.”
It should be noted that Southwest Airlines does not have a home base. In fact there are 10-12 airports from which over 100 Southwest Airlines flights a day depart. “We call them Mega Cities,” comments Laraba, “and these are where we see the majority of our departures. We are a very point-to-point carrier so there is no hub. All of our airports flow the same way and have the same processes; the difference is just the volume of passengers.”
Many hands
It takes many hands to manage a ground handling operation like that in evidence at Southwest but the airline insists that the whole operation is staffed and managed internally. “We do not outsource except for some of our Skycap operations,” Laraba insists. Even on the ramp, everything is handled by Southwest staff – in every location.
“We have about 34,000 employees and we are in 64 locations. We have our own ground handling in every location,” she summarises. “We have an entire department called ‘Ground Support Equipment’ that purchases all of the airline’s ground equipment. We may not purchase all of our deicing equipment as sometimes the airport is in charge of deicing rather than the airline. Where we are in charge of deicing, we own our own equipment.”
There is a rolling investment programme at Southwest Airlines for GSE acquisition. All budgeting takes place annually and is based on growth. The formula for GSE acquisition is straightforward given that the airline only operates 737s. “The opportunity to negotiate effective pricing is much easier if we are just looking at a limited type of equipment,” she comments.
Southwest Airlines is a very heavily unionised company – 80% are fully signed up members – and outsourcing is currently not part of the handling picture. “We feel that we get a better product this way. It allows us to have more control over the Customer Service that we offer and helps us maintain a better on-time performance because our staff has pride in our product..”
Laraba concedes that, on paper, in some cases the arguments for outsourcing are compelling; but at this time it is difficult to determine what that cost saving will look like if you have a drop in Customer Service or if you have a drop in productivity. “This is not a risk we have been willing to take,” she states categorically. “We have been able to manage our costs outside of outsourcing.”
When it comes to handling passengers with reduced mobility, Laraba comments: “Obviously we are compliant with everything we should be. Again, this goes back to our employees. We work very hard to ensure that the customers are boarded in the best way for them. This is always something we spend a lot of time on. We are installing a wheelchair lift in most of our locations to help our ramp employees to move those chairs from the ramp into the jetway and then back down again.”
And cargo too
Southwest Airlines carries a remarkable quantity of cargo for a point-to-point passenger airline. “In most of our locations we have a cargo check-in counter which is usually aside from the main airport with all the other airfreight companies. We accept freight there but we obviously have cut off times so that we can meet our turntimes,” explains Laraba. “Because we do not operate a hub and spoke system, we’re able to get this cargo on the flights more directly and most of it is just one stop.”
Southwest Airlines is also working on an application for cargo that will allow more visibility as to what freight is being carried in the belly. “This will allow a little more dynamic opportunity for pricing and for availability with our cargo customers,” states Laraba.
When asked whether Southwest Airlines offers third party cargo or passenger handling services to other airlines, Laraba is emphatic in her response: “We’re more concerned about looking out for our own operation. We work well with other carriers whenever needed in terms of reciprocal situations – irregular ops – but we are more concerned about our own systems and we do not have systems that interline with other companies.”
Right-sizing
Never mind aircraft operations; ground operations at Southwest Airlines are a huge business. So what about pulling this operation together and putting in place a reporting system to ensure that this large ground services operation is productive and right-sized. “At every one of our stations we have a score board. It allows the staff – every day – to see their performance and their metrics from the prior day. We measure our costs – or our hours paid per trip – our over time and the time that customers wait in the airport, to ensure that we are operating as efficiently as we can,” she says. “We expect our people to work hard when they are at work. We do not allow for a lot of ground time – 20-25 minutes is the norm to turn an aircraft – and our personnel are scheduled very tightly.”
Southwest Airlines has had in place an initiative called “Redefining Excellence” over the last three years to ensure strategic management goals are met. “This initiative was geared to looking at how to maintain efficiency, how leaders in the field achieve visibility of the daily cost. We have been able to save a lot of money and gain efficiencies over time. This has been the catalyst for many of our improvement projects.”
But it is not all work and no play at this airline. “When you expect this much of your people, we make sure that we give them an environment that is enjoyable to work in,” Laraba confirms.
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