Should Southwest consider parting with its single carrier policy—considered by many to be a cornerstone of its industry-defying long-term profitability?
In 2019 Southwest was the only US airline to remain profitable for nearly 50 years in a row, to never file for bankruptcy, and to never furlough or lay off employees. At the core of its profitability was a commitment, unlike other airline carriers, to keep only Boeing 737s in their fleet, thereby streamlining operational costs and training practices. This keep-it-simple corporate strategy was supported by a strong sense of community and shared values that fostered a cross-functional cohesion among Southwest employees—a culture that other low-cost carriers found difficult to replicate. However, The company’s keep-it-simple corporate strategy was tested in March 2019 when Southwest (along with other airlines ) was forced to ground 34 of its newest 737 MAX aircraft, after the Federal Aviation Administration cited safety concerns following the crash of two 737 MAX planes. As a result, Southwest considered parting with its long standing single carrier policy. In this case, students will be asked to consider what ripple effect a move away from a single-source vendor might have on the company’s highly efficient operations and organizational culture.
Case ID: 210407
Supplemental Materials: Teaching Note