The way Southwest has streamlined i

The way Southwest has streamlined its operations for tight turnarounds means it must maintain a high capacity cushion to accommodate variability in its daily operations. Anything from weather delays to unexpected maintenance issues at the gate can slow down the flow of operations to a crawl. To handle these unplanned but anticipated challenges, Southwest builds into its schedules enough cushion to manage these delays yet not so much that employees and planes are idle. Additionally, the company encourages discussion to keep on top of what’s working and where improvements can be made. If a problem is noted at a downstream station, say bags were not properly loaded, this information quickly travels back up to the originating station for correction so that it does not happen again. Even with the tightly managed operations Southwest Airlines enjoys, company executives know that continued improvement is necessary if the company is to remain profitable into the future. Company executives know when they have achieved their goals when internal and external metrics are reached. For example, the Department of Transportation (DOT) tracks ontime departures, customer complaints, and mishandled baggage for all airlines. The company sets targets for achievement on these dimensions and lets employees know on a monthly basis how the company is doing against those metrics and the rest of the industry. Regular communication with all employees is delivered via meetings, posters, and newsletters. Rewards such as prizes and profit sharing are given for successful achievement.As for the future, Bob Jordan, Southwest’s executive vice president for strategy and planning, puts it this way: “We make money when our planes are in the air, not on the ground. If we can save one minute off every turn system-wide, that’s like putting five additional planes in the air. If a single plane generates annual revenue of $25 million, there’s $125 million in profit potential from those time savings.”QUESTIONS1. How can capacity and utilization be measured at an airline such as Southwest Airlines?2. Which factors can adversely impact turnaround times at Southwest Airlines?3. How does Southwest Airlines know they are achieving their goals?4. What are the important long-term issues relevant for managing capacity, revenue, and customer satisfaction for Southwest Airlines?