Luv and War at 30,000 Feet
Since the late eighties, every major airline in the country has gone bankrupt—except one. How on earth did scrappy, lovable, cut-rate Southwest hunt down its competition and emerge from all of the turbulence as the nation’s largest domestic carrier? And can its celebrated culture survive its success?
Illustration by Joe Zeff Design
Daniel says: Ditto the above comment. Southwest rocks! I think it has been very important to the growth and success of the Texas economy over the last 20 years, too. Fascinating article, but that issue doesn’t get much attention. (March 1st, 2012 at 1:25pm)
We are on a mission of love. There are no other words to describe it. After a meeting of Southwest Airlines’ Culture Committee, sixteen of us have deployed down a dim, windowless hallway in the company’s inner sanctum at Love Field, in Dallas. I am following a young woman named Jamie Lanham, who is wearing a metallic-pink cowboy hat, a pink tutu, and blue jeans. She is very excited. “Don’t you love this?” she asks. “People here eat this up.” She’s talking about celebration-crazed Southwest, which loves partying and commemorating events and putting on shows and dressing up in funny outfits. The idea that an airline would have a 129-person committee dedicated to such a thing might seem a little strange, but not when it’s Southwest, the same company whose flight attendants deliver safety instructions in rap and whose co-founder has shown up on flights dressed as the Easter Bunny.
Our mission is to sneak up on a department known as Crew Scheduling, then shower its workers with praise, adoration, and, yes, love, for no other reason than that they are doing one heck of a good job. Showing love and appreciation to fellow workers is a bedrock principle at Southwest. The committee’s job is to make sure no one forgets that. Team members carry trays of cupcakes, buckets of candy, and a hand-painted poster that reads “To the Best People Movers in the Business.” As if they needed more of these sorts of things, they also have a pile of “Kick Tail-a-Grams,” messages of thanks and encouragement addressed to individual workers. When we enter the work area, the team members disperse. They tape the poster to the wall. They distribute the Kick Tails. They hand out the goodies. As we return to the main conference room—where we will rejoin eight other groups that have been on similar missions—they whoop, fist-bump, and high-five one another.
If this strikes you as altogether too sophomoric, rah-rah, and naively cheerful for a heavily unionized, publicly traded, $15 billion corporation in a profit-obsessed, viciously Darwinian industry, I would make two observations. First, you will never be hired at Southwest Airlines, where your cynical, non-relentlessly-upbeat attitude would stick out like a tarantula on a wedding cake. Second, you are missing the point, which is that it is precisely this oddball, love-based, employee-first, party-down culture that has made Southwest Airlines one of the most formidable and feared competitors in the world, a company that has left in its wake dozens of wounded, dying, or dead legacy airlines—including, most recently, Fort Worth’s American Airlines, which was bleeding $100 million a month until it declared bankruptcy, in November. “We like to win,” says Ginger Hardage, the senior vice president of culture and communications, with a dazzling smile. “The way we beat our competitors is by delighting and surprising our customers. We win with outstanding customer service. We win by appreciating our fellow workers.” The company also wins by crushing its rivals and putting them out of business.
It is this mind-set that has carried Southwest through the worst decade in the history of air travel. The nightmare began with 9/11 and included two brutal economic downturns, the quintupling of oil prices, and the transformation of airport terminals into sensor-studded high-security zones. During those years, an astounding number of airlines went bankrupt, including United, Delta, Northwest, and US Airways. Carriers lost more than $50 billion, shed 160,000 jobs, slashed routes, and watched as their stocks plummeted to all-time lows or lost their value entirely. Even in an industry that has always been inherently risky, the first decade of the twenty-first century stood out as an unalloyed disaster.
But not for Southwest. The airline has emerged from the wreckage as the clear winner. The company made billions. It did not lay off a single employee or ground a single plane to save money. It bought new jets and added flights. It became the nation’s largest domestic airline, carrying a record 104 million passengers last year. Its $3 billion acquisition of AirTran in 2010 gave it access to Atlanta’s Hartsfield–Jackson, the busiest airport in the country, and ultimately its first international destinations, in Mexico and the Caribbean. Southwest’s “Bags Fly Free” campaign has been one of the most successful marketing strategies in recent history. The company has been an industry leader in customer satisfaction for nearly two decades, and this year it ranked number four on Fortune magazine’s list of the “World’s Most Admired Companies.”
Success, however, has come at a price. Southwest made a series of daring decisions in the past decade—in stark opposition to what its competitors were doing—that allowed the company to ride out the storm, but as a result, the airline is no longer the scrappy short-hop carrier that flew only into quirky airports like Love and Hobby, gave out flimsy pieces of plastic as boarding passes, and often charged half what other airlines did. And though it remains one of Texas’s most iconic companies, customers who are old enough to remember know that Southwest is very far from the days when attractive women wearing orange hot pants and white go-go boots served Bloody Marys on the 8 a.m. “Love Bird” from Dallas to Houston.
Yet in an era when the airline industry is barely more popular than Congress, and many passengers consider flying a form of slow torture, with its endless lines, delays, fees, and security hassles, the airline has managed to chart a new course that has left its competitors idling on the runway. The question is, How did Southwest do it?
It is easy to forget, in this age of iPhones and text messages and nonstop flights to Frankfurt and Tokyo, just how profoundly Southwest Airlines changed the way Texans lived and did business. The transformation began in 1971, when Southwest, a shoestring operation sketched out on the back of a cocktail napkin in San Antonio’s St. Anthony Club by founders Herb Kelleher and Rollin King, began flying three Boeing 737’s between Houston, Dallas, and San Antonio. The new airline had two noteworthy characteristics: its fares were dirt cheap, and, owing to its amazing efficiency in turning planes around at airport gates, it was able to keep those jets almost continuously in the air. Before Southwest, it usually made sense for a businessman to drive from San Antonio to Houston for an afternoon meeting. Not anymore. For $40 you could hop on a flight with incredibly friendly hostesses and wisecracking pilots and be in Houston for the meeting and lunch—and still be back in San Antonio by late afternoon to shoot a round of golf. Texans who were loyal to their cars flocked to the airport, and the better Southwest did, the more flights it added. Its flight service began to resemble a bus schedule. In this way, the airline shrank the state, linking its major cities in a way they had never been before, and prompted enormous numbers of people to choose flying over driving.
For its spectacular early success, the upstart airline was rewarded with a vicious fight for survival. Southwest was blackballed, boycotted, and even prevented from using airport fuel hydrants. It was sued in 1972 for refusing to help pay for the new DFW Airport, choosing instead to operate out of Love Field, which was closer to downtown and where planes could be turned around faster. Braniff once undercut Southwest by offering a $13 fare between Houston and Dallas, to which the company responded with an ad campaign saying “Nobody’s going to shoot Southwest out of the sky for a lousy $13.” Kelleher, a five-pack-a-day smoker with a fondness for 100-proof whiskey who also happened to be a brilliant tactician with killer instincts, pointed out that Braniff was trying to drive Southwest out of business, and as it turned out, Braniff and Texas International Airlines were both indicted in 1975 for scheming to do precisely that. In 1979 the competition once again moved against Southwest, using Congress as an ally. Lawmakers passed the so-called Wright Amendment, named for Fort Worth congressman Jim Wright, which severely restricted Southwest’s flights from its home base at Love Field.
But the airline soldiered on. A lawyer by training, Kelleher spent much of his time in litigation, often taking on teams of corporate attorneys. His company became a cause as much as an airline, and embattled employees got caught up in the new culture (the airline even chose “LUV” as its symbol on the New York Stock Exchange). His name appeared on bumper stickers that read “Fly Southwest. Herb Needs the Money,” and he once arm-wrestled a competitor for the right to use an advertising slogan (he lost). When rival America West claimed that passengers were embarrassed to fly on a discount airline that fed its customers peanuts, Kelleher kept up his flamboyant, madcap image by putting a paper bag over his head and appearing in a television ad as the “Unknown Flyer.”
Yet he understood the importance of smart business decisions as much as he understood the power of his public persona. Costs were kept at absurdly low levels, which allowed Southwest to offer fares that its rivals simply could not compete with. The company saved money by flying primarily one type of jet, by flying to smaller airports where traffic was low and planes could be turned around in as little as ten minutes, and by flying point to point instead of using the usual hub-and-spoke system. Its workforce was among the most productive in the country, from pilots and flight attendants to baggage handlers and cleaning crews. At Southwest, everyone did whatever it took to keep planes on time and in the air. It soon became Texas’s favorite little airline, as powerful a homegrown brand as Imperial Sugar or the Dallas Cowboys. By the late eighties, it was growing exponentially and had a virtual monopoly on air travel in the state.
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