It looks like Southwest Airlines may have fallen into a growth trap: "Among all other influences, the desire to grow has perhaps the most perverse effect on strategy" - M.E. Porter
Southwest competes on cost, and this cost position hinges in large part on the rapid turnaround of aircraft. Rapid turnaround lowers Southwest's equipment and labor costs; its aircraft, pilots, and flight attendants are "doing work" for longer periods of time each day (rather than sitting idle on the ground).
A variety of activities contribute to Southwest's ability to rapidly turnaround aircraft, but some of the key activities include:
- Southwest's culture, where everyone pitches in to turnaround aircraft
- Using a single type of aircraft (737s), enabling simplified service and maintenance
- The point to point route structure, avoiding the issue of synching the schedules of hub and spoke aircraft
- Operating at less congested airports to avoid traffic delays
From my vantage point, it seems the AirTran acquisition threatens each of these activities:
- Integrating AirTran's distinct culture with Southwest's
- Expanding beyond 737s to operate 717s
- Divergence from the point to point structure to a hub and spoke
- Entry into congested airports, such as Hartsfield-Jackson (ATL), which was ranked #20 in 2010 for on-time departure performance by the Bureau of Transportation Statistics
In short, this acquisition is problematic from a strategic standpoint and appears to threaten the basis of Southwest's cost advantage.
Another cost saving measure that Southwest appears to use is to access the "worst" terminals via the "worst" gates. What I mean by that is their flights consistently service older terminals, gates that are further away from the security checkpoint or are otherwise less desirable. I presume that this means they save considerably on their airport access fees. I personally don't mind walking a bit further to the gate, so this kind of cost savings doesn't bother me a bit. I do wonder what the distribution of AirTran's gates looks like, though.
At least at ATL, Airtran has pretty much all of C terminal. Mind you there are 30ish i think gates split 15 on each side so it's not THAT far to walk from train to one end of the terminal.
The choice of terminal is irrelevant because it just means a shorter or longer train ride from ticketing/baggage claim. Unless you're connecting with other airlines, you usually don't have much to worry about.
Who says that they're going to a hub-and-spoke model? That would hardly make sense. They've acquired a bunch of gates at ATL, which is great for Southwest. That doesn't mean that they're going to "hub" there in the traditional sense.
I believe AirTran uses a hub and spoke model. It would be very difficult to unwind this from an operational standpoint. ATL is a key airport, but it's quite congested and thus may delay Southwest's turnaround of aircraft.
Southwest competes on cost, and this cost position hinges in large part on the rapid turnaround of aircraft. Rapid turnaround lowers Southwest's equipment and labor costs; its aircraft, pilots, and flight attendants are "doing work" for longer periods of time each day (rather than sitting idle on the ground).
A variety of activities contribute to Southwest's ability to rapidly turnaround aircraft, but some of the key activities include:
- Southwest's culture, where everyone pitches in to turnaround aircraft
- Using a single type of aircraft (737s), enabling simplified service and maintenance
- The point to point route structure, avoiding the issue of synching the schedules of hub and spoke aircraft
- Operating at less congested airports to avoid traffic delays
From my vantage point, it seems the AirTran acquisition threatens each of these activities:
- Integrating AirTran's distinct culture with Southwest's
- Expanding beyond 737s to operate 717s
- Divergence from the point to point structure to a hub and spoke
- Entry into congested airports, such as Hartsfield-Jackson (ATL), which was ranked #20 in 2010 for on-time departure performance by the Bureau of Transportation Statistics
In short, this acquisition is problematic from a strategic standpoint and appears to threaten the basis of Southwest's cost advantage.