This is a great comment, and thanks for bringing up fuel hedging. I hesitated to include it in the post because it wasn’t purely operational, but it definitely gave Southwest a cost advantage for a long time. Low oil prices in 2015 have been great for airlines in general but not great for (some of) their hedging strategies. The economist has a great summary here: http://www.economist.com/blogs/gulliver/2015/01/fuel-hedging-and-airlines
That’s great to hear! I like their process too. Hopefully they can continue executing it well.
I think they would get a lot of push back if they charged for checked baggage, but my hunch is that the cost of bags is just baked into the ticket price now. Southwest’s fares are not as competitive as they were 10 years ago. This Bloomberg article describes it pretty well, and includes some average prices: http://www.bloomberg.com/bw/articles/2014-09-11/southwest-airlines-no-longer-the-low-cost-leader However, this was written in 2013, and oil prices have come down a lot since then.
Will– this is spot on. I took the California Zephyr from Emeryville to Chicago over the summer, and the scheduling is terrible. We arrived 10 hours late to Salt Lake City, and the Amtrak employees thought this was normal. I learned that Amtrak often sells its passenger rail right of way to trains that are shipping cargo in order to boost revenue. Cargo rail is much more profitable than passenger rail for long haul routes in the U.S.
Interestingly, the new Hyperloop system is taking a cargo-first approach as well: http://www.techinsider.io/hyperloop-technologies-lawyer-says-system-will-be-for-cargo-first-2015-11
Jennifer, this is a great analysis. I thought your description of point-to-point vs. hub-and-spoke strategies was particularly interesting because so many US airlines are focused on hub and spoke models, even for short-haul flights. Megabus is a great alternative to airline low cost carriers for price conscious consumers, and I wonder if their routes will eventually start to affect airline prices between competitive city pairs.
Natasha, this is amazing. I hadn’t thought very much about operations in the retail space (aside from Dore-Dore, obviously), and Zara is clearly using a well-designed operating model to support their business goals. Having their factories within a 10-mile radius of “the Cube” is an unusual move–most clothing is designed and manufactured in separate facilities, and Zara’s geographic proximity is clearly creating huge advantages for them.
Alex– this is super interesting! I’m a happy spotify customer and had no idea they had such an unusual approach to operations. It reminded me of the Valve case we did in LEAD class, and I think these types of self-managed teams can work very well in software companies composed mostly of engineers.
OneMedical is such a great concept, and I’ve had very good experiences with them overall. I hope more doctor’s offices take up their approach, but wonder how challenging it will be to maintain their current level of service as they expand to more cities. The alignment between the operating and business models makes a big difference to all their patients.