Southwest: The Transition of an Airline

When Southwest Airlines was founded, it revolutionized air travel.  The airline would become one of the most successful airlines in history (when measured by profitability and safety), while inspiring imitators globally (like EasyJet in Europe).  Not only did it fly people safely and profitably – its corporate culture created some of the most loyal employees and customers you could find in any industry.

What was the secret sauce of Southwest?

  • Every minute that an airplane is sitting on the ground, it is losing the airline money.  So, Southwest planes would spend very little time on the ground.  If you have ever witnessed a Southwest gate – you will see how quickly passengers get on and off the plane
  • Having only one type of airplane (Boeing 737) greatly reduces complexity and cost – while ensuring that the spare part is always available.
  • If you create a fun, caring environment for employees – they will make a fun, caring environment for passengers.
  • What people really care about is getting to their destination safely and cheaply.  In other words: people will forgive a lot if the flight is cheap.  No seat assignments?  No food?  No problem – I just flew home for $60!

It was a special formula, and it worked well.  However, over time Southwest has grown into one of the largest carriers in the US.  It also acquired a very different airline (in culture and attitude), AirTran.  In fact, Southwest is starting to look different from that little airline that changed an industry.  If you watch their TV ads: gone is the sense of humor and commitment to low-costs.  If you look at the fares – they don’t seem so amazingly low.  And, if you look at their on-time performance – it is now one of the worst.

We all knew things were changing when the new advertising campaign was launched in March 2013.  Time Magazine reported that Southwest was experiencing an “identity crisis.”  Rather than making us laugh about bags flying free, we were told that Southwest is “America’s largest domestic airline.”  Who would have ever imagined the airline with a legacy of bad-boy CEOs and rapping flight attendants would brag about being the biggest.  Was Southwest becoming a flag carrier?  Rumors that bags won’t fly free much longer have been circulating – and management won’t rule it out.

Even more surprising, Southwest was reported by the Chicago Tribune to be the worst carrier for on-time performance.  This was the airline that was supposed to have mastered the art of the quick turn-around!  Why did this happen?  The article noted that as Southwest expanded into more congested airports in more populated cities, it struggled to keep the flights moving on time.

As a long-time admirer of Southwest, I hope it is able to retain its culture – a unique mix of friendly, fun, on-time, safe and low-cost.  But, based upon what we have seen recently – Southwest is acting more and more like American, Delta and United.  That means you need to start getting more creative in ensuring you keep your costs low.

Finally, about those bags.  Right now they fly for free.  But, if Southwest ultimately starts charging – then we can only hope that the credit card offers the same benefit as other airline credit cards – the first bag free.

People are still very loyal to Southwest, and the employees are still great to deal with.  It is just getting more expensive.  Which is why every penny counts – and using a card to accelerate those points has become so much more important.

About Jen Perkins

Likes: saving money, being debt free (aside from our house), zombies, travel, getting money, blogging and dogs. Dislikes: debt, being broke, bunnies, wasting money, not having enough money to travel the world and paying interest. Facebook  ♥  Twitter  ♥  Google+  ♥  RSS

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