Graduate School of Business at Stanford University conducted a study to see where

Southwest Airlines competitive advantage was in the Aviation industry in mid-’90s.

They found that there were several factors that contributed to Southwest Airlines
success in the industry. Factors such as great leadership, brought by Herb Kelleher
who has been named one of the best all-time CEOs by Forbes, or other factors such as
a great business model, that offered cheap airfare for short and long distance fares.
But what they found played the biggest role in Southwest success and competitive
advantage was its people and the “southwest spirit”. Southwest dedication to its
“People Department” showed to be almost too good to be true. The foundation for
Southwest’s business model is their customers and they consider their employees as
one of their customers because they believe that a happy employee can better respond
to customers and thus make customers happy.
Southwest employees are not the highest paid in the industry but what Southwest has
built is almost like a cult. A place that its employees are happy to be and happy to
perform what they are asked of. There is a family vibe in Southwest where a
individuals help other individuals without being asked to do so. For example, it’s not
uncommon to see a pilot help clean the airplane at southwest. Another amazing
achievement at Southwest is that everybody seems to know what the company goals
are and everybody is dedicated to move towards one goal-which is make the
customers happy.
This kind of team work, dedication and team spirit has also created a sense of
competition at Southwest that you see in sports and not in companies. Southwest
employees are driven to do better than their competition in satisfying their
customers. They will go out of their way (and are allowed to go out of their way) to
work with a customer to make them happy.
As I read through the first part of the case study (HR-1A) I felt everything made
sense. I didn’t even think that it was too good to be true but when I started the second
part I got a vibe that the second study was going to dispute the first part. But to my
relief, the second part further proved that Southwest competitive advantage is the
culture at Southwest airline.
To me, maintaining this level of commitment to employees in a company as large as
southwest is absolutely ridiculous. It is common sense that happy employees are
better motivated at work but I don’t think for a second that this is an easy task
especially in this big of scale. Also, in my opinion, Southwest’s business strategies
still play a very important role in their success. If employees don’t see that their
company is moving towards success, there is not much a Human Resources
department could do to motivate these employees.
In conclusion, the questions that come to my mind are: How do you maintain this
level of family-like environment as the company grows? How do you regain the
team spirit attitude in a company where team spirit has long died? Is Southwest
approach to success too laid back? Are the problems with today’s companies greed
and wall-street involvement and expectation that forces companies to focus on only
dollar amount and not long-haul success?
Why Is Southwest Airlines One of the Best Low Cost
Airlines?
Aug 21 2007
By Bimin Chan | Comments off

Even before September 11, 2001, the airline industry faced many problems, including
overcapacity, lower profits due to fierce competition, airport congestion, and antitrust
concerns. The terrorist attacks of September 11 had the worst economic impact on the
airline industry. Although some of the initial panic and fear of flying directly
following September 11 has dissipated, more rigorous security screening and
passengers’ perceptions of the risk of flying have altered the demand for and
experience of air travel, especially in the United States.

The events of September 11 resulted in a transitory, negative demand of more than

30% in addition to an ongoing negative demand of approximately 7%. Since
September 11, revenues have plummeted, and approximately 100,000 employees
have been laid off. National, Midway and Vanguard Airlines are out of business.
United, US Airways, ATA, and now Northwest and Delta are flying in bankruptcy.
However, low fare carriers Southwest, Jet Blue, Frontier, and Airtran have been
profitable in recent quarters, with Southwest being the best low-cost airline.1
Southwest has not laid anybody off and has not cut any flights since September 11. It
has managed its business in good times and survived in bad times. Prior to September
11, Southwest amassed a $2 billion cash cushion. Why did it attain growth and
maintain survival and even prosperity? The following are the reasons:

Great marketing strategy and long-term overall strategy

Competition requires companies to make choices as to what to do and what not to do
to attain growth and maintain survival. Southwest has a strategy — the creation of a
tailored set of best-fit activities. Southwest began as a low-cost, no frills airline 30
years ago.
 Credit: Matt Coleman
It has grown to be a national airline, but still has its basic cost structure. Southwest
has never served meals or reserved seats in advance. It still has what is basically a
linear route structure. It only flies one type of airplane and it wants to stay in high-
density markets. Its operation is highly efficient. The end result of this strategy is a
sustainable, competitive advantage and superior profitability.2

Employee loyalty
Southwest treats its employees right. The airline adopted the first profit-sharing plan
in the U.S. airline industry in 1973. Through this plan, its employees own at least 10
percent of the company stock. It has a highly motivated workforce. The employee
retention rate is 92.3%. It lost a huge amount of business after September 11, but each
of its 32,000 employees gave back some of their pay to help tide over the temporary
difficulty of the company. Its corporate culture really stands out.3
Southwest fully utilizes its resources and capabilities to make up its core
competencies. It focuses on short-haul, point-to-point routes, no-frills service and
less-crowded airports. It minimizes turnaround times and keeps its planes in the air
longer than its competitors. The design of these best-fit activities, the superior
management skills and the employees’ commitment are its core competencies. They
demonstrate three characteristics which are (1) it is valuable to the customers; (2) it is
applicable in a variety of markets; and (3) it is difficult for competitors to imitate.
That is why they result in a sustainable, competitive advantage.
Abstract:
With 35 consecutive years of profitability, the Dallas-based Southwest Airlines had
been the most successful low-fare, high frequency and point-to-point carrier in the
US. Southwest is known not only for its innovation in operations but also for its HR
practices which were nurtured by its long-standing CEO, Herbert D. Kelleher. He
developed a culture aimed at fun and employee satisfaction. He also devised
numerous employee-oriented organisational practices, training and motivational
programs. His fun loving way of treating employees and charismatic leadership
qualities made him a supreme hero among them even after he stepped down from the
CEO post in 2001 and became its chairman. But in May 2008, Kelleher announced
that he will step down from the post of chairman. Following the announcement, the
entire airline industry is skeptical about the sustainability of Kelleher’s innovative HR
practices at Southwest. The case discusses how a leader influences the HR practices
of a firm with his own leadership style. It also allows for discussion on whether it is
the right move for a company to follow HR practices which are highly influenced by
a leader.

Southwest Airlines Co. (NYSE: LUV) is an American airline based in Dallas, Texas.
Southwest is the largest airline in the United States, based on domestic passengers
carried, as of June 30, 2010.[4] Southwest operates more than 3,100 flights a day, as of
January, 2011, utilizing a fleet of 547 Boeing 737 aircraft. [5]
Southwest is known throughout the aviation industry as a "low-cost carrier" because
of its unique business model. The model includes flying one aircraft type, the Boeing
737, on high-density routes throughout the United States. Southwest's "low-cost"
business model is further defined by the airline not offering many services, which are
a standard offering on most traditional American carriers, such as a First Class cabin,
airport lounges, reserved seat assignments, and video/audio programing. By not
offering these services, Southwest claims that it can offer lower fares and produce a
higher return on invested capital than other airline companies. [6]
On September 27, 2010, Southwest Airlines announced it would acquire AirTran
Airways.[7]

Contents
[hide]
• 1 History
o 1.1 Foundation
o 1.2 Legal action by competitors
o 1.3 First revenue flights
o 1.4 Name change
o 1.5 Early corporate culture
o 1.6 Early losses and financial troubles
o 1.7 Wright Amendment
• 2 Operations
o 2.1 Employment
 2.1.1 Organized labor
o 2.2 Acquisitions
 2.2.1 Morris Air
 2.2.2 Muse Air
  2.2.3 ATA Airlines
 2.2.4 AirTran Airways
o 2.3 Failed acquisitions
 2.3.1 Frontier Airlines
o 2.4 Jet engine pressure-washing
o 2.5 Internet presence
o 2.6 Safety violations
o 2.7 Headquarters
o 2.8 Risk management
• 3 Corporate affairs and identity
o 3.1 Organizational culture
o 3.2 Advertising
 3.2.1 "Just Plane Smart"
o 3.3 Corporate reporting
o 3.4 The Southwest Effect
o 3.5 Lobbying
o 3.6 Awards and recognitions
• 4 Destinations
o 4.1 Current service
o 4.2 Top served cities
o 4.3 Newest Service
o 4.4 International service
 4.4.1 ATA Airlines codeshare
 4.4.2 WestJet codeshare
 4.4.3 Volaris codeshare
o 4.5 Codeshare agreements
• 5 Fleet
o 5.1 Current fleet
o 5.2 Retired fleet
 o 5.3 Livery
• 6 Services
o 6.1 Southwest experience
o 6.2 Wi-Fi
• 7 Rapid Rewards
• 8 Incidents and accidents
• 9 See also
• 10 References
• 11 External links

[edit] History
[edit] Foundation

A Southwest Airlines Boeing 737-300 at Portland International Airport.

Southwest Airlines traces its roots to the March 15, 1967 incorporation of Air
Southwest Co. by Rollin King and Herb Kelleher. [8][9]

[edit] Legal action by competitors

Some of the incumbent airlines of the time (Braniff, Aloha Airlines, United Airlines,
Trans-Texas, and Continental Airlines) initiated legal action, and thus began a three-
year legal battle to keep Air Southwest on the ground. Air Southwest eventually
prevailed in 1970 when the Texas Supreme Court upheld Air Southwest’s right to fly
in Texas.[10] The decision became final on December 7, 1970, when the U.S. Supreme
Court declined to review the case without comment.[11]
The story of Southwest’s legal fight was turned into a children’s book, Gumwrappers
and Goggles by Winifred Barnum in 1983. In the story, TJ Love, a small jet, is taken
to court by two larger jets to keep him from their hangar, and then to try and stop him
from flying at all. Taken to court, TJ Love’s right to fly is upheld after an
impassioned plea from The Lawyer. While no company names are mentioned in the
book, TJ Love’s colors are those of Southwest Airlines, and the two other jets are
colored in Braniff and Continental’s colors. The Lawyer is designed to resemble Herb
Kelleher. The book was adapted into a stage musical, Show Your Spirit, sponsored by
Southwest Airlines, and played only in towns serviced by the airline.[12]
[edit] First revenue flights
Operating from its Dallas, Texas headquarters, Air Southwest began customer service
on June 18, 1971, offering service to the Texas cities of Houston, Dallas and San
Antonio using three Boeing 737 aircraft.[13]

[edit] Name change

On March 29, 1971, Air Southwest Co. changed its name to Southwest Airlines Co..
[9]

[edit] Early corporate culture

Southwest Airlines founder Herb Kelleher studied California-based Pacific Southwest
Airlines extensively and used many of the airline’s ideas to form the corporate culture
at Southwest, and even on early flights used the same "Long Legs And Short Nights"
theme for stewardesses on board typical Southwest Airlines flights. The original
flight attendants that worked for Southwest Airlines were chosen by a committee of
individuals that included the same person who had selected hostess for Hugh Hefner’s
Playboy jet. The selection resulted in a group of female flight attendants that were
described as long-legged dancers, majorettes, and cheerleaders with "unique
personalities". Southwest Airlines and Herb Kelleher proceeded to dress these
individuals in hot pants and go-go boots.[14]

[edit] Early losses and financial troubles

N68SW (The Winning Spirit) parked at Dallas Love Airport in 2009. The aircraft was
used as a ground trainer for the airline's ground training department.[15]
The rest of 1971 and 1972 saw operating losses. One of the four aircraft was sold to
Frontier Airlines and the proceeds used to make payroll and cover other expenses.
Southwest continued to operate a schedule predicated on four aircraft but using only
three, and in so doing the "ten minute turn" was born, and was the standard ground
time for many years.[16]

[edit] Wright Amendment

Main article: Wright Amendment
A Southwest Airlines Boeing 737-700 landing at Lindbergh Field in San Diego.
Complete elimination of the Wright Amendment will allow non-stop service from
Dallas Love Field to all U.S. airports.
When airline deregulation came in 1978, Southwest began planning to offer interstate
service from Love Field. This caused a number of interest groups affiliated with
Dallas-Ft. Worth Airport, including the city of Fort Worth, to push the Wright
Amendment through Congress to restrict such flights.[17] Under the restrictions of the
amendment, Southwest, and all other airlines, were barred from operating, or even
ticketing passengers on flights from Love Field to destinations beyond the states
immediately surrounding Texas. In effect, to travel through Love Field, a passenger
and luggage would have to deplane and fly on a separate ticket, on a separate aircraft.
[citation needed]

The Wright Amendment’s restrictions did not apply to aircraft configured with 56 or
fewer seats. In 2000, Legend Airlines attempted to operate long distance business-
class flights using older DC-9s with 56 seats, but did not have the resources to survive
American’s legal and marketing attacks, and quickly ceased operations. Southwest
did not use the 56 seat loophole, even with its market strength at Love Field and the
availability of more modern regional jets such as the CRJ-700/900 and the Embraer
ERJ 145 family.[citation needed]
Southwest’s efforts to repeal or even alter the Wright Amendment were met with
opposition from American Airlines and Dallas Ft. Worth International Airport. Both
American Airlines and DFW contended that repeal of the Wright Amendment
restrictions would cripple DFW,[18] while Southwest contended that repeal of the
Wright Amendment would be beneficial to both Love Field and DFW.[citation needed]
Continental Airlines has a successful hub and spoke operation at Houston Bush
Intercontinental Airport despite unrestricted competition from Southwest at Houston
Hobby Airport.[citation needed]
In 1990 the airline registered its aircraft in Houston so it could pay aircraft taxes in
Houston, even though the actual corporate headquarters were in Dallas. Southwest
was not physically relocating any assets, but Texas state law allowed the airline to
choose either Dallas or Houston as the city of registry of its aircraft.[19]
In 1997, Southwest’s efforts began to pay off with the Shelby Amendment, which
added the states of Alabama, Mississippi and Kansas to the list of permissible
destination states. Southwest began offering non-stop service between Dallas Love
Field and Birmingham, Alabama, which it could not do prior to the enactment of the
Shelby Amendment.[citation needed]
In late 2004, Southwest began actively seeking the full repeal of the Wright
Amendment restrictions. In late 2005, Missouri was added to the list of permissible
destination states via a transportation appropriations bill. New service from Love
Field to St. Louis and Kansas City quickly started in December 2005.[citation needed]
At a June 15, 2006 joint press conference held by the city of Dallas, the city of Ft.
Worth, Dallas-Ft. Worth Airport, American Airlines, and Southwest Airlines, the said
parties announced a tentative agreement on how the Wright Amendment was to be
phased out. Both the U.S. Senate and House of Representatives passed Wright-related
legislation on September 29, 2006, and it was signed into law by President George W.
Bush on October 13, 2006. The new law became effective on October 16, 2006, when
the FAA Administrator notified Congress that any new aviation operations occurring
as a result of the new law could be accommodated without adverse effect to the
airspace.[citation needed]
Wikinews has related news: Southwest Airlines flight skids off runway at
Chicago's Midway
Southwest started selling tickets under the new law on October 19, 2006. Highlights
of the agreement are the immediate elimination of through-ticketing prohibitions, and
unrestricted flights to domestic destinations eight years after the legislation takes
effect. Because of the agreement, nationwide service became possible for Southwest;
the law also defined the maximum number of gates at Love Field. Southwest controls
all of the Love Field gates except for four gates controlled by American Airlines,
Continental Airlines, and Delta Air Lines. The future of the Legend Airlines terminal
for use by commercial airlines is in doubt because of the limit on number of gates.
[citation needed]

Southwest remains the dominant passenger airline at Love Field, maintains its
headquarters, hangars, training centers, and flight simulators adjacent thereto, and
reflects its ties to Love Field in its ticker symbol (LUV).

A Southwest Airlines Boeing 737 prepares for its next flight at Bob Hope Airport in
Burbank, California.
[edit] Operations
[edit] Employment
The President and CEO of Southwest is Gary C. Kelly. Gary replaced former CEO
Jim Parker on July 15, 2004 and assumed the title of "President" after replacing
Colleen Barrett on July 15, 2008.
Former CEO Jim Parker led Southwest since mid-2001, keeping alive Southwest's
unprecedented streak of profitability and guiding its growth as it became the largest
commercial carrier in the domestic United States. Jim Parker abruptly quit as CEO
and vice chairman for "personal reasons" though it's suspected that he stepped down
after failing to reach an agreement with the flight attendant union, TWU Local 556,
which made their labor strife (and displeasure with the Southwest CEO) public.
Southwest's CFO is Laura Wright. In July 2007, Herb Kelleher resigned his position
as Chairman. Colleen Barrett left her post on the Board of Directors and Corporate
Secretary in May 2008 and President in July 2008. Both are still active employees of
Southwest Airlines.
Southwest hired its first black pilot, Louis Freeman, in 1980. In 1992, he was named
the first black chief pilot of any major U.S. airline.[20]
[edit] Organized labor
Although Southwest is considered a "low fare" airline, it is heavily unionized when
compared to other airlines.[21] The Southwest Airline Pilots' Association, a union not
affiliated with the Air Line Pilots Association, International, represents the airline's
pilots.[22] The Aircraft Maintenance Technicians' are represented by the Aircraft
Mechanics Fraternal Association (AMFA).[23] Customer Service Agents and
Reservation Agents are represented by the International Association of Machinists
and Aerospace Workers Union (IAM). Flight Dispatchers, Flight Attendants, Ramp
agents and Operations agents are represented by the Transport Workers Union
(TWU).

[edit] Acquisitions
[edit] Morris Air
One airline influenced by Southwest was Morris Air, founded in 1984 by June Morris
and David Neeleman, based in Utah and operating in the northwestern U.S.
Southwest Airlines purchased Morris Air and absorbed the capital and routes into its
inventory and service. David Neeleman worked with Southwest for a short period.
When his non-compete agreement expired, Neeleman founded JetBlue Airways, a
competing airline that also incorporates (and in some ways, improves upon) many
principles and practices pioneered by Southwest, including building a positive, warm
employee culture and operating a simple fleet.[24]
[edit] Muse Air
Southwest Airlines has mostly pursued a strategy of internal growth, rather than by
acquisition of other airlines as commonly occurs. However, in addition to acquisition
of Morris Air Transport (see above), Southwest did acquire competitor Muse Air in
1985, which operated McDonnell Douglas MD-80s. Muse Air was renamed TranStar
Airlines. TranStar Airlines was then closed in August 1987.
[edit] ATA Airlines
Towards the end of November 2008, Southwest announced it was buying the
operating certificate and the remaining assets of ATA Airlines. This acquisition
transferred to Southwest Airlines ownership of New York LaGuardia slots formerly
controlled by ATA. The transaction did not include any aircraft, facilities or
employees of ATA.
[edit] AirTran Airways
 Wikinews has related news: Southwest Airlines to purchase AirTran Airways
for US$1.4 billion
On Monday, September 27, 2010, Southwest Airlines announced it will acquire
Orlando-based AirTran Holdings, Inc., the parent company of AirTran Airways for a
total cost to Southwest of US$1.4 billion. The acquisition will give Southwest a
significant presence in Atlanta, an AirTran hub and the largest U.S. city without
Southwest service prior to the merger, as well as access to or expanded service in
other destinations in the United States, Mexico and the Caribbean. Although
Southwest has previously operated only Boeing 737 series aircraft, Southwest plans
to integrate AirTran's fleet of Boeing 737-700 series and 717-200 aircraft. The
airlines plan to complete the acquisition within two years. Until the merger is
complete each carrier will continue to operate separately.[25][26][27]

[edit] Failed acquisitions

[edit] Frontier Airlines
On July 30, 2009, Southwest Airlines publicly announced a $113.6 million bid for
Frontier Airlines Holdings, the parent company of Frontier Airlines. Southwest's plan
was to initially operate Frontier as a stand-alone carrier, but eventually absorb the
airline. Frontier's aircraft would also be replaced with Boeing 737s that Southwest
had long operated as its aircraft type.[28]
On August 14, news reports announced that Southwest had lost its bid to Republic
Airways Holdings. Industry experts had expected Southwest to win, which would
have grown its presence in Denver and allowed it to explore international routes.
However, Southwest said a key reason its bid wasn't chosen was because it chose not
to remove a requirement calling for pilot unions at its company and Frontier to reach
an agreement.[29]

[edit] Jet engine pressure-washing

In 2008, Southwest contracted with Pratt and Whitney to supply the proprietary
Ecopower water pressure-washing system, which allows Southwest to clean grime
and contaminants off engine turbine blades while the aircraft is parked at the gate.
Frequent use of the Ecopower system is estimated to improve fuel efficiency by about
1.9%.[30][31]

[edit] Internet presence

On March 16, 1995, Southwest became one of the first airlines to have a website.
Originally called the "Southwest Airlines Home Gate", passengers could view
schedules, a route map, and company information at Iflyswa.com.[32] The company
later obtained the rights to its current home on the web, http://www.southwest.com,
from an unaffiliated business. Southwest consistently rejects syndicating its fares to
fare search sites such as expedia.com or orbitz.com.[33]
Southwest.com is the number one airline website for online revenue, according to
PhoCusWright. Nielsen/Netratings also reports that Southwest.com is the largest
airline site in terms of unique visitors.[34] In 2006, 70 percent of flight bookings and
73 percent of revenue was generated from bookings on southwest.com. As of June
2007, 69 percent of Southwest passengers checked in for their flights online or at a
kiosk.[34]
Southwest also maintains a website for their in flight magazine, named Spirit.

[edit] Safety violations

On March 6, 2008, Federal Aviation Administration (FAA) inspectors submitted
documents to the United States Congress, alleging that Southwest allowed 117 of its
aircraft to fly carrying passengers despite the fact that the planes were "not airworthy"
according to air safety investigators.[35] In some cases the planes were allowed to fly
for up to 30 months after the inspection deadlines had passed, rendering them unfit to
fly. Records indicate that thousands of passengers were flown on aircraft deemed
unsafe by federal standards. Southwest declined comment at the time, and US
Representative James Oberstar advised a hearing would be held.[35][36][dead link]
On March 12, 2008, Southwest Airlines voluntarily grounded 44 planes to check if
they needed further inspection. The FAA claimed that Southwest Airlines flew almost
60,000 flights without fuselage inspection. Southwest Airlines faced a $10.2 million
fine if they violated FAA regulations. There have also been rumors that the FAA
knew about Southwest Airlines violations but decided not to fine the airline because it
would disrupt the service of Southwest.[37]
On March 2, 2009, Southwest settled these claims, agreeing to pay the FAA fines of
$7.5 million for these safety and maintenance issues. The original fine of $10.2
million - a sum which would have been the largest fine in the agency’s history - was
lowered after a year of negotiations. The FAA gave Southwest two years in which to
pay the fine.[38]
On August 26, 2009 the FAA investigated Southwest for installing improper parts on
about 10% of its jets. The work was performed by an outside maintenance company.
The FAA stated that the parts do not present a safety danger, but the airline was given
until December 24, 2009 to replace the parts with those approved by the FAA.[39] The
FAA is still determining whether it will fine Southwest or its vendor.[40]

[edit] Headquarters

Southwest Airlines headquarters in Dallas

The Southwest Airlines headquarters are located on the grounds of Love Field in the
Love Field area of Dallas, Texas.[41][42]
Previously the airline was headquartered in the 1820 Regal Row building in Dallas,
by Love Field.[43] Southwest moved into its current headquarters in 1990. At that time
the headquarters had 256,000 square feet (23,800 m2) of space and approximately 650
employees.[44] The current headquarters facility was built at a cost of $15 million in
1990 dollars.[45] In early 1995 the building received an additional 60,000 square feet
(5,600 m2) of space. As of 1996 about 1,400 employees worked in the three story
building.[44]
In March 1996,[46] the airline announced that it would begin to build a 300,000 square
feet (28,000 m2) addition to the existing corporate headquarters at a cost of $30
million in 1996 dollars.[47] This occurred after, on Wednesday March 13, 1996, the
Dallas City Council unanimously voted to allow for the construction.[48] The airline
leased two additional tracts of land, a total of 10 acres (4.0 ha) of space, from the City
of Dallas to build a new pilot training facility, a headquarters expansion, and
additional parking spaces. A $9.8 million new pilot training facility was built on a
5 acres (2.0 ha) plot of land owned by the city of Dallas; it was scheduled to be
completed Spring 1997. With the new pilot training facility built, the old one would
be removed and the company would expand its headquarters building to the north.
120,000 square feet (11,000 m2) of building space, which had a price of $16 million
including fixtures, was built, making the headquarters have a total of 436,000 square
feet (40,500 m2). The airline also leased 4.8 acres (1.9 ha) from the city of Dallas to
build additional parking; 700 spaces were added to the existing 1,200. After the
facilities announced in 1996 were added, Southwest had a total leasehold of about
24 acres (9.7 ha) of land, including its headquarters, training facilities, and parking.
By the end of 1997 the expansion of the facilities at Love Field and several terminal
improvements were expected to cost Southwest $47 million.[44]

[edit] Risk management

Southwest Airlines has gained a reputation for "outside the box thinking" a proactive
risk management, including the use of fuel hedging to insulate against fuel price
fluctuation. Some analysts have argued against the style of profit-motivated energy
trading Southwest did between 1999 and the early 2000s. They suggested that rather
than hedging business risk (such as a hedge on weather to a farmer), Southwest was
simply speculating on energy prices, without a formal rationale for doing so.[49][dead link]
At present, Southwest has enjoyed much positive press (and a strong financial boost)
from its energy trading skills.[50][51][52] However, while most analysts agree that
volatility hedges can be beneficial,[49] speculative hedges are not widely supported as
a continuing strategy for profits.[53]
In the third quarter of 2008, Southwest recorded its first loss in 17 years due to its
fuel-hedging contracts being of lesser value because of the drop in oil prices.[54]

[edit] Corporate affairs and identity

[edit] Organizational culture
Southwest has created a positive workplace culture by promoting open
communication and strong team coordination [55]. In particular they have managed to
achieve a high level of coordination between employee groups resulting in greater
aircraft and employee productivity, fewer flight delays, and fewer customer
complaints [55]. This was achieved with the support of top-level management in
conjunction with a set of employee practices [55]. Southwest management coach and
nurture their front-line staff by providing feedback and support [55]. Southwest's HR
strategy (including recruitment & performance management) is geared towards the
development of a cohesive team focusing on team performance rather than individual
results [55]. Southwest is also a strong supporter of work/life balance, encouraging
employees to maintain strong community and family ties [55].

[edit] Advertising
The company has employed humor in its advertising. Slogans include "Just Plane
Smart", "The Somebody Else Up There Who Loves You" and "THE Low Fare
Airline". The airline's current slogan is "It's On.". A select history of print and video
ads are available on the company website.[56]

A Southwest Boeing 737-700 at Chicago Midway International Airport

[edit] "Just Plane Smart"
Shortly after Southwest started using the "Just Plane Smart" motto, Stevens Aviation,
who had been using "Plane Smart" for their motto, threatened a trademark lawsuit.[57]
Instead of a lawsuit, the CEOs for both companies staged an arm wrestling match.
Held at the now demolished Dallas Sportatorium (the famed wrestling facility) and
set for two out of three rounds, the loser of each round was to pay $5,000 to the
charity of their choice, with the winner gaining the use of the trademarked phrase. A
promotional video was created showing the CEOs "training" for the bout (with CEO
Herb Kelleher being helped up during a sit up where a cigarette and glass of whiskey
(Wild Turkey 101) was waiting) and distributed among the employees and as a video
press release along with the video of the match itself. Herb Kelleher lost the match
for Southwest, with Stevens Aviation winning the rights to the phrase. Kurt Herwald,
CEO of Stevens Aviation, immediately granted the use of "Just Plane Smart" to
Southwest Airlines. The net result was both companies having use of the trademark,
$15,000 going to charity and good publicity for both companies.[58]

[edit] Corporate reporting

Southwest Cares
Southwest's 2008 report that expounds on the company's commitment to the
environment and reports on the airline's corporate responsibility and citizenship
efforts pertaining to People, Planet, Communities, and Suppliers. Southwest Cares

[edit] The Southwest Effect

Southwest has been a major inspiration to other low-cost carriers, and its business
model has been repeated many times around the world. The competitive strategy
combines high level of employee and aircraft productivity with low unit costs by
reducing aircraft turn around time particularly at the gate [55]. Europe's EasyJet and
Ryanair are two of the best known airlines to follow Southwest's business strategy in
that continent (though EasyJet operates two different aircraft models today). Other
airlines with a business model based on Southwest's system include Canada's WestJet,
Malaysia's AirAsia (the first and biggest LCC in Asia), Sir Richard Branson's and
Australia's Virgin Blue (although Virgin Blue now operates two aircraft types),
Qantas's Jetstar (although Jetstar now operates two aircraft types), Philippines's Cebu
Pacific, Thailand's Nok Air, New Zealand's Freedom Air, Mexico's Volaris and
Turkey's Pegasus Airlines. Although Southwest has been a major inspiration to many
other airlines, including Ryanair, AirAsia and Jetstar, the management strategies, for
example, of Ryanair, AirAsia and Jetstar differ significantly from those of Southwest.
[59]

[edit] Lobbying
This section requires expansion with:
more than one sentence of information.
Southwest has fought against the development of a high-speed rail system in Texas.[60]
[61]

[edit] Awards and recognitions

This section needs additional citations for verification.
Please help improve this article by adding reliable references. Unsourced material may be
challenged and removed. (August 2010)
• The American Brand Excellence Awards recognize leading national brands
that best serve the needs of small- and medium-sized businesses. For 2007,
Southwest Airlines came out tops in the Travel segment, based on a City
Business Journals Network nationwide survey of 1,000 business decision-
makers who evaluated 251 brands.
• For the tenth year in a row, FORTUNE magazine recognized Southwest
Airlines in its annual survey of corporate reputations. Among all industries in
2005, FORTUNE has listed Southwest Airlines as number three among
America’s Top Ten most admired corporations.
• FORTUNE has ranked Southwest Airlines in the top five of the “Best
Companies to Work For” in America. Southwest ranked first in 1997 and
1998, second in 1999, and fourth in 2000. Southwest has chosen not to
participate since 2000.
• Southwest Airlines’ Rapid Rewards program was honored in InsideFlyer
magazine's 2006 annual Freddie Awards for Best Program of the Year, Best
Award Redemption, Best Award, Best Web Site, and Best Bonus Promotion
Honors.
• For 2007, the eighth year in a row, Business Ethics magazine lists Southwest
Airlines in its "100 Best Corporate Citizens", a list that ranks public
companies based on their corporate service to various stakeholder groups.[62]
Southwest is one of only 11 repeat winners that have made the list all eight
years.
 • In 2005 and again in 2008 The American Customer Satisfaction Index (ACSI)
recognized Southwest Airlines as leading the industry in customer satisfaction.
The ACSI, conducted by the University of Michigan, independently tracks
customer satisfaction levels by measuring the household consumption
experience.[63]
• Since 2000, HISPANIC magazine has listed Southwest Airlines as Corporate
100 for leadership in providing opportunities for Hispanics and for supporting
recruitment, scholarships, and minority vendor programs.
• The Express Delivery & Logistics Association honored Southwest Airlines as
the "2006 Airline of the Year."
• In 2005, American Small Business Travelers Alliance ranked Southwest
Airlines as the "Best Airline Among Small Business Travelers."
• Southwest president Colleen Barrett was chosen as 2007's Tony Jannus Award
winner,[64] becoming the first woman to be honored in the 44-year history of
the respected aviation award.
• Professional Women's magazine included Southwest Airlines in their 2006
ranking of the "Most Admired Companies Among Women."
• According to Institutional Investor magazine, Southwest Airlines ranked
number one in the Consumer category among all airlines as the "Most
Shareholder Friendly Company" based on the effectiveness of Southwest's
governance and investor relations as part of their overall efforts to maximize
share holder value.
• Southwest Airlines took top honors in the ninth Business Travel News Annual
Airlines Survey.
• In 2006, Southwest ranked in GIjobs.nets list of 50 military friendly
employers. At number 37, Southwest was the only major commercial airline
to make the list.
• In its January 2006 issue, Institutional Investor ranked Southwest CEO Gary
Kelly as one of America's top CEO's. He was ranked best CEO in the airline
sector.
• In April 2007, The Port of Portland presented Southwest Airlines with the
Environmental Excellence Award in recognition of an exemplary effort in the
category of Environmental Innovation.[65]

[edit] Destinations
By 1979, Southwest flew to all of the cities they currently serve in Texas, including
El Paso, Amarillo, Beaumont, Corpus Christi, Harlingen, Lubbock, and
Midland/Odessa. Interstate service began to New Orleans in 1979, and Albuquerque
in 1980. Oklahoma City and Tulsa were added shortly thereafter. In 1981 Southwest
co-launched the 737-300 with USAir. In 1982, the first expansion beyond the
Southcentral U.S. took Southwest to the West Coast, adding Phoenix, Las Vegas and
San Diego. In late 1984, the 737-300 was placed into service. Chicago Midway and
St. Louis service began in March 1985, spreading to Midwest markets.[66]
[edit] Current service
Main article: Southwest Airlines destinations

Ramp operations at William P. Hobby Airport in Houston, with a Southwest Boeing

737-500 parked at a gate
As of December 8, 2010, Southwest Airlines operates scheduled service to 69
destinations in 35 states, the newest of which being Northwest Florida Beaches
International Airport in Panama City, Florida which opened in May 2010.[67]
Southwest does not use the more traditional "hub and spoke" flight routing system of
most other major airlines, preferring instead the "Point to Point" system. Currently,
Southwest serves 69 cities in 35 states, with more than 3,300 flights a day. It has
notably large operations in certain airports. Airports with large Southwest operations
include Austin (AUS), Baltimore (BWI), Nashville (BNA), Chicago (MDW), Dallas
(DAL), Denver (DEN), Houston (HOU), Los Angeles (LAX), Oakland (OAK),
Orlando (MCO), Phoenix (PHX), San Diego (SAN), San Jose (SJC), Sacramento
(SMF), Salt Lake City (SLC), and Tampa (TPA). An average of 80 percent of
Southwest passengers are local passengers, meaning only 20 percent of all passengers
are connecting passengers. This is significantly higher than most airlines, where
passengers often connect in hub cities.[68] Las Vegas (LAS) has non-stop service to all
but ten of Southwest's destinations.[69]
As part of its effort to control costs, Southwest tries to use secondary airports which
generally have lower costs and may be more convenient to travelers than the major
airports to the same destinations. For example, Southwest flies to Chicago Midway
Airport (MDW) in Chicago instead of O'Hare International Airport (ORD), Fort
Lauderdale-Hollywood International Airport (FLL) and Palm Beach International
Airport (PBI) in South Florida instead of Miami International Airport (MIA), Dallas
Love Field Airport (DAL) in Dallas instead of Dallas-Fort Worth International
Airport (DFW), Long Island MacArthur Islip Airport (ISP) & New York-LaGuardia
(LGA) instead of New York-John F. Kennedy Airport (JFK) and Houston Hobby
Airport (HOU) in Houston instead of George Bush Intercontinental Airport (IAH).
Southwest’s tribute to Arizona Boeing 737-300 aircraft undergoes maintenance at
Portland International Airport.
Southwest makes exceptions to its practice of serving secondary airports by flying
into some larger airports in major cities, such as Las Vegas International Airport,
Phoenix Sky Harbor International Airport, Lambert St. Louis International Airport,
Orlando International Airport, Detroit Metropolitan Wayne County Airport,
Philadelphia International, Denver International Airport, Cleveland Hopkins
International Airport, Kansas City International Airport, Seattle-Tacoma
International, Raleigh-Durham International Airport, Bradley International Airport
(Hartford, CT) and Pittsburgh International. In the Baltimore-Washington market,
Southwest has limited flights into one major airport (Washington Dulles International
Airport) while maintaining their east-coast focus city at the region's other major
airport, Baltimore-Washington International Airport (BWI). In the Los Angeles
market Southwest flies to both the major city airport, Los Angeles International
(LAX), and to three of the four secondary airports, Burbank-Bob Hope Airport, Santa
Ana-John Wayne Airport, and LA/Ontario International Airport. With the restoration
of service out of San Francisco International Airport on August 26, 2007, Southwest
now serves all three airports in the San Francisco Bay Area; the other two being
Oakland International Airport and San Jose International Airport.
The airline also once served Stapleton International Airport in Denver but withdrew
in 1986 because of excessive ATC delays during poor weather exacerbated by
minimal separation between the runways. Southwest returned to Denver in 2006 with
service to the new Denver International Airport. Southwest is expanding Denver
service faster than any previous Southwest destination[70] at the cost of service to
Orlando, Kansas City and Baltimore.[71]

[edit] Top served cities

As of Nov 7, 2010[72]

A Southwest Airlines Boeing 737-300 landing at McCarran International Airport in

Las Vegas, Nevada.
Daily Number of Cities served Service
City
departures gates nonstop began
Las Vegas 212 19 54 1982
Chicago-Midway 208 29 52 1985
Phoenix 173 24 47 1982
Baltimore-
160 26 43 1993
Washington
Denver 141 17 42 2006
Houston-Hobby 127 17 30 1971
Dallas-Love 125 15 15 1971
Los Angeles 110 11 21 1982
Oakland 103 13 19 1989
Orlando 91 12 32 1996

[edit] Newest Service

During November 2008, Southwest applied to purchase 14 slots (for 7 roundtrips
daily) previously used by ATA Airlines at LaGuardia Airport.[73] The bid was
approved about a month later, and further progress was made during late March,
2009. In early April, it was announced that the airline will (strategically) have a
combined total of 16 daily arrivals and departures (5 and 3 each way with MDW and
BWI respectively), despite the receipt of only 14 slots.[74] On June 28, 2009
Southwest successfully started serving LaGuardia Airport and the airline is confident
about future growth at LGA, including expanded service to other locations.;[75][76]
On February 19, Southwest announced service to Boston's Logan airport, in the Fall
of 2009 .[77] Service began August 16, 2009, with five daily roundtrips to both BWI
and MDW .[78] Southwest says that it is complementing their service to Manchester,
NH and Providence, RI. As reported by the Boston Herald earlier this year, there is a
two-gate operation with an additional 2 gates as options at Logan .[79] Southwest is
hoping to curve toward business travelers that stay in downtown Boston and bring
lower ticket cost and fees to these travelers .[80]
In October 2009, the airline announced service to Northwest Florida Beaches
International Airport near Panama City, Florida, with service to Baltimore-
Washington, Orlando International, Houston-Hobby, and Nashville International.
Service began on May 24, 2010.[81]
On May 11, 2010, Southwest announced plans to begin serving both Greenville-
Spartanburg International (GSP) and Charleston International (CHS) airports in South
Carolina. The airline will start flights to and from South Carolina on March 13, 2011.
Both airports will have nonstop service to and from Baltimore-Washington, Chicago-
Midway, Houston-Hobby, and Nashville International, with GSP also having nonstop
service to and from Orlando International.[82]
On August 27, 2010, Southwest announced that it was to receive 36 slots at Newark
Liberty in a divestiture from Continental Airlines, due to a Justice Department ruling
as a result of the merger of Continental and UAL Corporation.[83] On October 28,
2010, Southwest announced it would begin serving Newark on March 27, 2011,
beginning with a "first wave" of six daily nonstops to Chicago-Midway and two daily
nonstops to Lambert-St. Louis International Airport. Additionally, on June 5, 2011,
Southwest will add ten more nonstops from Newark, with three each to Baltimore-
Washington and Denver, and two each to Houston-Hobby and Phoenix.[84]

[edit] International service

As of January 2011, Southwest does not offer direct service to destinations outside
the United States. Southwest has entered into code sharing agreements with other
airlines to allow Southwest customers to connect to international destinations. After
Southwest completes its acquisition of AirTran Airways in early 2011, Southwest will
offer direct service to a number of international destinations in Mexico and the
Caribbean currently served by AirTran.[citation needed]
Due to contractual agreements with it pilots' and flight attendants' unions, Southwest
is required to negotiate with those unions before entering into any code sharing
agreements with other airlines.[citation needed]
[edit] ATA Airlines codeshare
Prior to ATA Airline's shutdown, Southwest had set a goal to codeshare with ATA
and begin international codeshare services or ticket for international flights in 2009.
Destinations served by ATA would have included Canada, Mexico, Europe and the
Caribbean.[citation needed]
[edit] WestJet codeshare
On July 8, 2008, Southwest announced that it agreed to a comprehensive codeshare
agreement with Canada's second largest carrier, WestJet Airlines.[85][86][87] Southwest
terminated the WestJet codeshare agreement in early 2010.
[edit] Volaris codeshare
Southwest announced a plan to codeshare with Mexico's Volaris and flights are
expected to begin in 2010.[citation needed]

[edit] Codeshare agreements

Current
• Volaris
Southwest announced its second international codeshare agreement on November 10,
2008, with Mexican low-cost carrier Volaris. The agreement will allow Southwest to
sell tickets on Volaris flights beginning in 2010, including international flights from
the United States that the carrier started in early summer, 2009.[88] Volaris serves
Chicago Midway (MDW), Oakland (OAK), Los Angeles (LAX) and San José (SJC)
with service to Guadalajara. Volaris also operates between Los Angeles (LAX) and
Morelia (MLM), Toluca (TLC) and Zacatecas (ZCL).[89]
Past
• Icelandair
In 1997, Southwest and Icelandair entered into interline and marketing agreements
allowing for joint fares, coordinated schedules, and transfer of passenger luggage
between the two airlines at Baltimore. Icelandair operated flights between Baltimore
and Keflavik Airport in Iceland. Connecting service between several U.S. cities and
several European cities appeared in the Southwest timetable[90] The frequent flyer
programs were not included in the agreement. This arrangement lasted for several
years but is no longer in existence, and Icelandair service to BWI ended January
2007.[91]
• ATA Airlines
ATA Airlines, one of Southwest Airlines' main competitors in the Chicago market,
historically operated out of Midway Airport alongside Southwest. ATA declared
bankruptcy, and in 2004, Southwest injected capital into ATA that (among other
things) would have resulted in Southwest's 27.5% ownership stake in ATA upon their
exit from Chapter 11 bankruptcy proceedings.
In a departure from its traditional "go it alone" strategy, Southwest entered into its
first domestic codesharing arrangement with ATA, which enabled Southwest Airlines
to serve ATA markets in Hawaii, Washington, D.C., and New York City.
In late 2005, ATA secured $100 million in additional financing from the firm of
MatlinPatterson, and Southwest's original deal with ATA was modified such that
Southwest no longer retained the 27.5% stake (or any other financial interest) in
ATA. The codeshare arrangement expanded to include all of ATA's 17 destinations
and all of Southwest's 63 destinations. In 2006, Southwest's pilot union approved a
codeshare sideletter to their contract with limitations on the growth of this and other
codeshare agreements. While these restrictions today are minor, outsourcing remains
a growing concern in the union's current contract negotiations.
During 2006, Southwest Airlines began marketing ATA only flights. ATA's
dependence on the Southwest network continued to grow in 2006, and at the time of
ATA's demise in April 2008, the airline offered over 70 flights a week to Hawaii
from Southwest's focus cities in PHX, LAS, LAX, and OAK. Additional connecting
service was available to many other cities across the United States. Plans had been
announced for ATA to offer exclusive international service for Southwest by 2010,
but were scratched when ATA abruptly ended operations on April 3, 2008. There was
no plan to open the ATA/Southwest codeshare to ATA's sister carriers, North
American Airlines or World Airways, even though they are co-owned by the same
corporate entity created from ATA Holdings.
The ATA/Southwest codeshare was terminated when ATA filed for Chapter 11
bankruptcy on April 3, 2008. As of 4:00 A.M. EDT on April 3, ATA discontinued all
operations.[92][dead link] Towards the end of November 2008, Southwest announced it
was buying the operating certificate and the remaining assets of ATA Airlines thus
enabling Southwest Airlines access to New York LaGuardia slots formerly controlled
by ATA. According to Southwest Airlines "...it doesn't include any aircraft, facilities
or employees of ATA."[93]
• WestJet Airlines
On July 8, 2008, Southwest Airlines officially announced the intent to begin a
codeshare agreement with WestJet Airlines of Canada, giving the two airlines the
ability to sell seats on each other's flights.[94] Originally, the partnership was to be
finalized by late 2009, but has been postponed due to economic conditions.[95]
On April 16, 2010, Southwest and WestJet airlines amicably agreed to terminate the
implementation of a codeshare agreement between the two airlines.

[edit] Fleet
[edit] Current fleet
As of September 10, 2010 the Southwest Airlines fleet consists of the following 550
aircraft, all of which are variants of the Boeing 737:[96]
Southwest Airlines fleet
Orders/Options/
Aircraft Total Passengers Notes
Purchase Rights
Launch customer and largest
Boeing operator of the variant
175 0/0/0 137
737-300 Newer aircraft being retrofitted
with electronic flight decks
Boeing Launch customer and 4th largest
25 0/0/0 122
737-500 operator of this variant
All feature glass cockpit screens for
compatibility with analog cockpits
25 orders are to replace older
Boeing 737 Classics
Boeing
350 113/37/98 137 Launch customer and currently the
737-700
largest operator of the type
Unions approved conversion to
-800 or -900 series for gate
constrainted airports[97]
To Enter Service in March 2012
Boeing
0 20/0/0 175 Will be ETOPS configured upon
737-800
delivery[98]
Southwest is working with Row 44 to offer satellite-enabeled broadband access on all
its flights and has begun rolling out the In-Flight Wi-Fi service in the first quarter of
2010.

The interior of a Southwest Boeing 737-700 with the airline's leather seating
The airline operates more Boeing 737s in its fleet than any other airline in the world;
Southwest is often cited as an example of an airline streamlining operations by having
only one type of aircraft. However, Southwest operated leased 727-200 aircraft
during the late-1970s and again in the mid-1980s and subsidiary TranStar Airlines
operated DC-9s and MD-80s during the mid-1980s. Southwest has been a launch
customer for all three of the Boeing 737 variants it currently operates, and was the
first airline to put both the Model 500 and next-generation Model 700 into service.
Southwest has a mix of old and new aircraft with both its "classic" and "next
generation" 737 aircraft.[99]
As of August 2009, Southwest has an average fleet age of 14.0 years,[100] and each
plane flies an average of about 7 flights per day. The average aircraft trip length is
633 miles (1,019 km) with an average duration of one hour and 48 minutes. This
means the daily utilization of each plane is, on average, 12 hours and 36 minutes.[34]
Southwest's seats are the same as any other operator of 737s in the United States. The
seat pitch averages between 32 and 33 inches (840 mm), which is longer than the
average U.S. domestic airlines of 31 to 32 inches (810 mm). Low-fare carrier JetBlue
Airways also offers from 34 inches (860 mm) to 38 inches (970 mm).[101] However,
seats are approximately one inch narrower than Airbus A320 series operated by low-
cost carriers such as Frontier Airlines, JetBlue, Virgin America, USA 3000, and
several other competitors.
Southwest's Boeing 737-300 and -500 aircraft are not equipped with glass cockpit
technology, as the 737-300s, 737-400s, and 737-500s of some other airlines are
(earlier versions also had non-glass cockpits). Instead, the flight decks are fitted with
analog gauges, more akin to those of the earlier 737-100 and 737-200 variants. Note
the analog attitude indicator (ADI) and horizontal situation indicator (HSI) (the blue-
colored instrument and one below it) in this Southwest 737-3H4 and note the
electronic versions of the same instruments (EADI and EHSI) in this United Airlines
737-322. There are electronic displays throughout the cockpit of the 737-700 and
other "Next Generation" 737 variants, and Southwest has programmed their 737-7H4
models to emulate the appearance of the 737-300 and 737-500 for standardization
purposes. All three versions of the Boeing 737 that Southwest operates use (HUD)
Heads Up Display in the flight deck. This technology consists of a glass panel which
folds down on the Captain's side, and displays primary flight information as a
hologram.
Since production of the -300 and -500 variants has ended, recent Southwest orders
have been exclusively for the -700 model. Southwest began retiring some older -300
models, beginning in December 2007, reducing its -300 fleet from its original count
of 194. However, newer -300 models are being retrofitted with new electronic flight
decks and winglets. The former retrofits will make them compatible in operation with
the -700, and will support the airline's move to embrace the Required Navigation
Performance initiative; among other advances, these improvements will give the -300
a glass cockpit and allow navigation via the Global Positioning System. Southwest
expects substantial cost savings from this initiative.[102][103]
Southwest is the world's largest operator of the Boeing 737. Their current active fleet
consists of over 500 aircraft. In terms of total 737 production (all models in history),
deliveries of new aircraft from Boeing to Southwest accounts for approximately 9%
of total production[citation needed]. Southwest has one of the largest fleets in North
America. Southwest has the 1000th Boeing 737, 2000th Boeing 737 Next Generation
and the first of the 500 series.
On December 15, 2010, it was announced that Southwest was adding the 737-800 to
its fleet. CEO Gary Kelly said that Southwest will change an existing order with
Boeing Co. and get 20 new 737-800 jets beginning in March 2012.[104] Southwest
states that the 737-800 could possibly give them more scheduling flexibility to allow
additional capacity in high-demand, slot-restricted, or gate-restricted airports. Kelly
said during a speech in New York that Southwest might use the 737-800 first at busy
airports in the Northeast. But he said it could also be used to fly to Hawaii, Alaska,
Canada, Mexico and the Caribbean — destinations that Southwest doesn't serve now.
The addition of the 737-800 will require a larger in-flight crew. The 737-800 has 175
seats, 38 more than the largest planes in Southwest's current fleet. With the additional
seats, Southwest will be required to add one additional flight attendant.
It should be noted that after the acquisition of AirTran is finalized, Southwest will
inherit AirTran's fleet of Boeing 737-700s and 717-200s. Even though the adding of a
Boeing 717 to the Southwest fleet breaks the company policy of one type of plane in
the fleet, Southwest has expressed its intention to maintain both types of planes in the
immediate future.

[edit] Retired fleet

Southwest Airlines retired fleet
Year
Aircraft Replacement Notes
retired
Boeing 737- Boeing 737-
2005 Southwest's first aircraft type
200 700
Boeing 727- Boeing 737- Leased from other companies - Braniff
200 200 International.

[edit] Livery

Southwest Boeing 737-300 (N340SW) in the 1971-December 31, 2000 livery

Southwest Boeing 737-300 in the January 1, 2001-present livery

The original blended winglets of Southwest Airlines meet the new, blue variant at
Tucson International Airport.

Shamu livery
Southwest's original primary livery was beige and red, with orange on the tail end,
and pinstripes of white separating each section of color. The word Southwest
appeared in white on the beige portion of the tail. (Although, on the original three
737-200s, from June 1971, on the left side of the plane, the word Southwest was
placed along the upper rear portion of the fuselage, with the word Airlines painted on
the tail where Southwest is today N21SW. On the right side, the word Southwest was
in the same place as today, but also had the word Airlines painted on the upper rear
portion of the fuselage.N20SW.
Southwest introduced the Canyon Blue Fleet in 2001, its first primary livery change
in its 30-year history. Spirit One was the first plane painted in the color scheme. The
new livery replaces the primary beige color with canyon blue and changes the
Southwest text and pinstripes to gold. (The orange tail end continues to still be used;
there was one model with both liveries combined to celebrate the company's 35th
anniversary.) The pinstripe along the plane is drawn in a more curved pattern instead
of the straight horizontal line separating the colors in the original. The original livery
is gradually being phased out, but three aircraft remain in an updated version of the
original livery to commemorate Southwest's original three cities (N711HK, N714CB,
and N792SW). As of November 16, 2007, Southwest had nearly completed updating
the fleet.[34]
Southwest's livery designs exploit the aesthetic appeal of blended winglets as well.
The first planes to be fitted with the winglets remain in the plain colored winglet
(matching the stripes on the fuselage), but later aircraft to be fitted have winglets with
"SOUTHWEST.COM" written on them. All aircraft will eventually be repainted to
the ".com" winglets. Special livery aircraft with winglets, such as Shamu, have plain
white winglets.[34]
Some Southwest planes feature special themes, rather than the normal livery. These
theme planes have been given special names, usually ending in "One". Some of the
most well-known examples are:
• Shamu: The three aircraft are painted to look like an Orca, with
advertisements for SeaWorld. (N334SW), (N713SW), (N715SW)
o The first aircraft to be painted in the "Shamu" scheme was N334SW
(1988), a 737-300, and it was later followed by N507SW (Shamu II)
and N501SW (Shamu III), both 737-500s. Subsequent to the
retirement of Southwest's 737-200s, the 737-500s began to stay within
 a smaller geographic area formerly operated by the 737-200s, and as
such, Sea World was no longer getting the optimal national exposure
from these two aircraft. Two 737-700 aircraft, N713SW and N715SW,
were repainted as the new Shamu aircraft, and both N501SW and
N507SW were eventually repainted in Canyon Blue colors. All three
current Shamu aircraft are no longer referred to as Shamu I, II, or III.
The artwork on the nose of each aircraft simply states "Shamu". The
overhead bins on the -700 series aircraft display ads for Sea World,
except towards the front and back of the airplane, where the bins get
smaller and are no longer uniform.
• The Fred J. Jones: (1984) In honor of Fred J. Jones, one of Southwest's
original employees.[105] Signature on the nose. It later became Southwest's
only 737-200 to be painted in the Canyon Blue livery when it was applied in
2001. The aircraft was retired in 2005 and replaced in the same year with a
737-700 with the same signature on the cone. The replaced aircraft is also the
first 737 Next Generation that was manufactured without eyebrow windows
above the cockpit. (737-200 N96SW: Original,Canyon Blue) (737-700
N201LV).
• The Spirit of Kitty Hawk: (1984) Livery and title introduced the first three
Boeing 737-300 aircraft to the Southwest Airlines fleet. (N300SW) is the
oldest 737-300 in Southwest's fleet, followed by sister ships (N301SW) and
(N302SW).
• Lone Star One: (1990) The flag of the state of Texas applied across the
aircraft. (N352SW)
• Arizona One: (1994) The flag of the state of Arizona applied across the
aircraft. (N383SW)
• The June M. Morris: (1994) In honor of June Morris, Signature and Morris
Air logo on the nose. Logo removed for Canyon Blue repaint. (N607SW,
Original, Canyon Blue)
• California One: (1995) The flag of the state of California applied across the
aircraft. (N609SW)
• Silver One: (1996) 25th Anniversary aircraft. Originally polished bare metal,
it was later painted silver for easier maintenance. It was then re-painted with a
silver metallic paint. This aircraft also featured silver seats, which were
replaced to conform with the rest of the fleet for simplicity. Silver One also
featured silver heart shaped drink stirrers. Most recently Silver One was
repainted in the fleet standard Canyon Blue theme due to the silver paint
looking dingy and the company felt it didn't fit the companies cheerful, bright
personality. The Silver One nose logo remained but the interior was replaced
with the fleet standard blue and tan. (N629SW, Original, Silver Paint, Canyon
Blue)
• Triple Crown One: (1997) Livery dedicated to the employees of Southwest, in
recognition of Southwest receiving five Triple Crown airline industry awards
(best on-time record, best baggage handling, and fewest customer complaints).
The overhead bins in Triple Crown One one are inscribed with the names of
 all employees that worked for Southwest at the time, in honor of their part in
winning the award.(N647SW)
• Nolan Ryan Express: (1998) Commemorative sticker dedicated to famous
Texas pitcher Nolan Ryan who is MLB's all-time strikeout leader with 5,714
strikeouts. (N742SW)
• Nevada One: (1999) The flag of the state of Nevada applied across the
aircraft. (N727SW)
• New Mexico One: (2000) The flag of the state of New Mexico applied across
the aircraft. (N781WN)
• Spirit One: (2001) 30th Anniversary aircraft. (First Aircraft in New Canyon
Blue paint scheme) (N793SA)
• The Spirit of Hope: (2004) Dedicated to the Ronald McDonald House.
Overhead bins are covered in artwork from kids at a Ronald McDonald House
in Washington State. (N443WN), (The overhead bins)
• Maryland One: (2005) The flag of the state of Maryland applied across the
aircraft. (N214WN)
• Slam Dunk One: (2005) Basketball superimposed on side of aircraft and a
different NBA team logo on each overhead bin in the cabin, recognizing
Southwest's partnership with the National Basketball Association. On October
11, 2010 Southwest Airlines and the National Basketball Association
announced that their partership has ended and the aircraft will be repainted to
standard canyon blue livery. Source: Dallas Morning News Aviation Blog
(N224WN)
• Illinois One: (2008) The flag of the state of Illinois applied across the aircraft.
(N918WN)
• Southwest received both the 5,000th 737 produced (February 13, 2006)
(N230WN) and the 2,000th "Next Generation" 737 produced (July 27,
2006) (N248WN). The 2,000th "Next Generation" 737 is marked as such in its
livery, though the 5,000th 737 is not similarly marked on the outside. It does
have a placard stating that it is the 5000th 737 on the upper part of the inside
entry door frame.
• Southwest received their 500th 737 on June 28, 2007. This aircraft is marked
to honor this milestone. (N281WN)
• Tinker Bell One: (2008) Includes the logo of the Tinker Bell movie and a
sticker featuring the phrase "Powered by Pixie Dust". However on April 2,
2010 this aircraft was photographed in full canyon blue on a photo posted on
airliners.net, and on August 8, 2010 a photo of this aicraft was posted on
airliners.net with the "Free Bags Fly Here" sticker just above the cargo door to
promote Southwest's Bags Fly Free campaign. (N912WN, Tinker
Bell/Original, Canyon Blue, Free Bags Fly Here)
• Sports Illustrated: (2009) A large decal of Sports Illustrated Swimsuit Edition
Cover Model Bar Refaeli adorns the fuselage of N922WN . However on June
 16, 2009 this aircraft was photographed in full canyon blue on a photo posted
on airliners.net (N922WN, Sports Illustrated/Original, Canyon Blue) [106]
• Florida One: (2010) The flag of the state of Florida applied across the
aircraft. (N945WN) [107]
• Although not in a special livery, Southwest operates the very first 737-700
ever built. (N707SA).
All special planes prior to Spirit One originally wore the standard beige, red and
orange livery colors on the vertical stabilizer and rudder. Subsequent special editions
—Maryland One, Slam Dunk One, etc. so far—feature tails with the canyon blue
color scheme, and all earlier specials, with the exception of Triple Crown One, have
been repainted to match.

[edit] Services
[edit] Southwest experience
Prior to the 2000s, Southwest served smaller meals than the meals served by full
service airlines, with shorter flights receiving single small snacks and soft drinks, and
longer flights (with a duration of about 3 hours or more) meriting "Snack Packs" of
prepackaged goods. In the 2000s these meals in a bag typically exceed the food
served on full-service airlines like United Airlines or American Airlines.[citation needed]
Southwest also offers free in-flight beverages (excluding alcohol). Southwest has
complimentary peanuts or pretzels on all flights, and many flights have free Nabisco
snacks. There is no in-flight entertainment. Southwest is known for colorful boarding
announcements and crews that burst out in song. The singing is unusual, and is quite
popular among passengers, but has been noted by some travel critics as being
offensive and intrusive.[108]
Southwest maintained excellent customer satisfaction ratings; in 2006, according to
the Department of Transportation December year end operating statistics, Southwest
ranked number one (lowest number of complaints) of all U.S. airlines for customer
complaints, with 0.18 per 100,000 passengers enplaned. Southwest Airlines has
consistently received the fewest ratio of complaints per passengers boarded of all
major U.S. carriers that have been reporting statistics to the Department of
Transportation (DOT) since September 1987, which is when the DOT began tracking
Customer Satisfaction statistics and publishing its Air Travel Consumer Report.
In July 2010, it became widely public that Southwest had classified mechanical
difficulties as an act of God in their contract of carriage, a definition not shared with
major competitors such as Delta, American, Continental and United.[109] By doing so,
Southwest is under no obligation to provide passengers compensation for "any type of
special, incidental or consequential damages" and limits their recourse to receiving a
refund of the unused portion of their tickets. According to a Southwest spokesman,
the airline will still assist affected passengers "just as in the past."[109]

[edit] Wi-Fi
After an initial testing phase that began in February 2009, Southwest announced on
August 21, 2009 that it will begin rolling out in-flight wi-fi service throughout its
fleet in the first quarter of 2010. Southwest has contracted Row 44 to offer satellite-
enabled broadband access on its flights.[110]

[edit] Rapid Rewards

Southwest's frequent flier program is called Rapid Rewards. Customers receive one
credit for each one-way trip (even though the flight may have stopovers). A free
ticket, expiring after 11 months, is automatically issued when a member accumulates
16 credits in a 24-month period. In addition, one half credit is earned for using a
Southwest partner to book any car rental and/or hotel stay, regardless of whether a
Southwest flight is involved. Rapid Reward members can also earn one credit for
every $1,200 charged to a Rapid Rewards branded Visa credit card (with charges
from Southwest or its partners counting double). If members register their credit card
with Rapid Rewards Dining, they will receive 0.25 credits for every US$100 spent on
restaurant partners. In early 2009, Southwest announced their first retail partner,
TeleFlora Flower Club, from which members can earn 0.5 or 1.0 credits with each
flower order (depending on the total cost of the order). The Rapid Rewards program
has won numerous Freddie Awards over the years.
In the past, Double Rapid Rewards credits were awarded for trips booked online, but
this policy was modified at the end of 2003, at which time the bonus was reduced to
one half credit for each segment booked online (so a round trip booked online would
be eligible for three Rapid Rewards credits). The bonus for online booking was
discontinued completely in April 2005.
Prior to February 2006, reward travel was subject to blackout dates but not capacity
controls: one could use a reward to travel on any flight for which seats were
available, provided it was not on one of the five blackout dates. In February 2006,
these policies were reversed: the blackout dates were eliminated, but capacity controls
were instituted, limiting the quantity of seats available to those traveling on reward
credits.
In early 2006, Southwest expanded its codeshare agreement with ATA Airlines and
allowed redemption of award tickets on Hawaii flights at the rate of two awards per
round trip flight. On April 3, 2008, ATA airlines ceased all flights due to bankruptcy,
including the codeshare service to Hawaii.

[edit] Incidents and accidents

This section needs additional citations for verification.
Please help improve this article by adding reliable references. Unsourced material may be
challenged and removed. (July 2009)
Southwest Airlines Flight 1248 runway overrun at Chicago Midway International
Airport
Southwest Airlines has not had any passenger deaths on any of its planes in its
history, but has had eight incidents/accidents with one hull-loss and two deaths on the
ground.
• On March 5, 2000, Southwest Airlines Flight 1455 overran the runway upon
landing at Burbank-Glendale-Pasadena Airport, now called Bob Hope Airport,
Burbank, California, injuring 43. The incident resulted in the dismissal of the
pilots. The aircraft was damaged beyond repair. This incident is the only hull-
loss accident in the 38+ year history of the airline.
• On August 11, 2000, passenger Jonathan Burton broke through the cockpit
door aboard Southwest Airlines Flight 1763 while en route from Las Vegas to
Salt Lake City. In their own defense, the other passengers restrained Burton,
who later died of the resulting injuries.[111] A CSI episode, "Unfriendly Skies",
using similar incident elements in its plot, aired on December 8, 2000.
Wikinews has related news: Southwest Airlines flight skids off runway at
Chicago's Midway
• On August 19, 2004, Southwest Airlines Flight 411, taking off from Los
Angeles International Airport bound for Albuquerque, New Mexico, was on
the same runway that Asiana Airlines Flight 204, a Boeing 747, was using for
landing due to an air traffic control error. The Asiana pilot aborted the
landing, saving both planes.[112]
• On December 8, 2005, Southwest Airlines Flight 1248 (pictured above in its
end result) skidded off a runway upon landing at Chicago Midway
International Airport in heavy snow conditions. A six-year-old boy died in a
car struck by the plane after it skidded into a street. Passengers on board the
aircraft and on the ground reported several minor injuries. The aircraft
involved, N471WN, became N286WN after repairs.
• On May 12, 2009, one of the starboard rear tires of Southwest Flight 519 from
New Orleans deflated upon landing at Houston Hobby Airport. The metal rim
of the wheel made contact with the runway, and the resulting sparks ignited
the tire. It took about eight minutes to extinguish the fire.[113]
• On July 13, 2009, Southwest Flight 2294 from Nashville International Airport
to Baltimore-Washington International Airport was forced to divert to Yeager
Airport in Charleston, West Virginia, after a hole formed on the top of the
plane's fuselage near the tail, resulting in depressurization of the cabin and
deployment of the oxygen masks. The aircraft landed safely

Cost:
Southwest Airlines is the largest airline measured by number of passengers carried
each year within the United States. It is also known as a ‘discount airline’ compared
with its large rivals in the industry. Rollin King and Herb Kelleher founded
Southwest Airlines on June 18, 1971. Its first flights were from Love Field in Dallas
to Houston and San Antonio, short hops with no-frills service and a simple fare
structure. The airline began with one simple strategy: “If you get your passengers to
their destinations when they want to get there, on time, at the lowest possible fares,
and make darn sure they have a good time doing it, people will fly your airline.” This
approach has been the key to Southwest’s success. Currently, Southwest serves about
60 cities (in 31 states) with 71 million total passengers carried (in 2004) and with a
total operating revenue of $6.5 billion. Southwest is traded publicly under the symbol
“LUV” on NYSE.
Facts:
* The first major airline to fly a single type of aircraft (Boeing 737s)
* The first major airline to offer ticketless travel system wide including a frequent
flier program based on number of trips and not number of miles flown.
* The first airline to offer a profit-sharing program to its Employees (instituted in
1973).
* The first major airline to develop a Web site and offer online booking. In 2001,
about 40 percent ($2.1 billion) of its passenger revenue was generated through online
bookings at [http://www.southwest.com]. Southwest's cost per booking via the
Internet is about $1, compared to a cost per booking through travel agents of $6 to $8.
Key competitive advantages:
* Low Operational costs / High Operational Efficiency
* Award winning customer service
* Human Resource practices / Work culture
Operations Analysis – Competitive Dimensions:
Southwest clearly has a distinct advantage compared to other airlines in the industry
by executing an effective and efficient operations strategy that forms an important
pillar of its overall corporate strategy. Given below are some competitive dimensions
that will be studied in this paper.
1. Operational Costs and Efficiency
2. Customer Service
3. Employee/Labor Relations
4. Technology
1. Operational Costs and Efficiency
After all, the airline industry overall is in shambles. But, how does Southwest
Airlines stay profitable? Southwest Airlines has the lowest costs and strongest balance
sheet in its industry, according to its chairman Kelleher. The two biggest operating
costs for any airline are – labor costs (approx 40%) followed by fuel costs (approx
18%). Some other ways that Southwest is able to keep their operational costs low is -
flying point-to-point routes, choosing secondary (smaller) airports, carrying
consistent aircrafts, maintaining high aircraft utilization, encouraging e-ticketing etc.
Labor Costs
The labor costs for Southwest typically accounts for about 37% of its operating costs.
Perhaps the most critical element of the successful low-fare airline business model is
achieving significantly higher labor productivity. According to a recent HBS Case
Study, southwest airlines is the “most heavily unionized” US airline (about 81% of its
employees belong to an union) and its salary rates are considered to be at or above
average compared to the US airline industry. The low-fare carrier labor advantage is
in much more flexible work rules that allow cross-utilization of virtually all
employees (except where disallowed by licensing and safety standards). Such cross-
utilization and a long-standing culture of cooperation among labor groups translate
into lower unit labor costs. At Southwest in 4th quarter 2000, total labor expense per
available seat mile (ASM) was more than 25% below that of United and American,
and 58% less than US Airways.
Carriers like Southwest have a tremendous cost advantage over network airlines
simply because their workforce generates more output per employee. In a study in
2001, the productivity of Southwest employees was over 45% higher than at
American and United, despite the substantially longer flight lengths and larger
average aircraft size of these network carriers. Therefore by its relentless pursuit for
lowest labor costs, Southwest is able to positively impact its bottom line revenues.
Fuel Costs
Fuel costs is the second-largest expense for airlines after labor and accounts for about
18 percent of the carrier's operating costs. Airlines that want to prevent huge swings
in operating expenses and bottom line profitability choose to hedge fuel prices. If
airlines can control the cost of fuel, they can more accurately estimate budgets and
forecast earnings. With growing competition and air travel becoming a commodity
business, being competitive on price was key to any airline’s survival and success. It
became hard to pass higher fuel costs on to passengers by raising ticket prices due to
the highly competitive nature of the industry.
Southwest has been able to successfully implement its fuel hedging strategy to save
on fuel expenses in a big way and has the largest hedging position among other
carriers. In the second quarter of 2005, Southwest’s unit costs fell by 3.5% despite a
25% increase in jet fuel costs. During Fiscal year 2003, Southwest had much lower
fuel expense (0.012 per ASM) compared to the other airlines with the exception of
JetBlue as illustrated in exhibit 1 below. In 2005, 85 per cent of the airline’s fuel
needs has been hedged at $26 per barrel. World oil prices in August 2005 reached $68
per barrel. In the second quarter of 2005 alone, Southwest achieved fuel savings of
$196 million. The state of the industry also suggests that airlines that are hedged have
a competitive advantage over the non-hedging airlines. Southwest announced in 2003
that it would add performance-enhancing Blended Winglets to its current and future
fleet of Boeing 737-700’s. The visually distinctive Winglets will improve
performance by extending the airplane’s range, saving fuel, lowering engine
maintenance costs, and reducing takeoff noise.
Point-to-Point Service
Southwest operates its flight point-to-point service to maximize its operational
efficiency and stay cost-effective. Most of its flights are short hauls averaging about
590 miles. It uses the strategy to keep its flights in the air more often and therefore
achieve better capacity utilization.
Secondary Airports
Southwest flies to secondary/smaller airports in an effort to reduce travel delays and
therefore provide excellent service to its customers. It has led the industry in on-time
performance. Southwest has also been able to trim down its airport operations costs
relatively better than its rival airlines.
Consistent aircrafts
At the heart of Southwest's success is its single aircraft strategy: Its fleet consists
exclusively of Boeing 737 jets. Having common fleet significantly simplifies
scheduling, operations and flight maintenance. The training costs for pilots, ground
crew and mechanics are lower, because there's only a single aircraft to learn.
Purchasing, provisioning, and other operations are also vastly simplified, thereby
lowering costs. Consistent aircrafts also enables Southwest to utilize its pilot crew
more efficiently.
E-Ticketing
The idea of ticketless travel was a major advantage to Southwest because it could
lower its distribution costs. Southwest became electronic or ticketless back in the
mid-1990s, and today they are about 90-95% ticketless. Customers who use credit
cards are eligible for online transactions, and today Southwest.com bookings account
for about 65% of total revenue. The CEO Gary Kelly thinks that this idea would grow
further and that he wouldn't be surprised if e-ticketing accounted for 75% of
Southwest’s revenues by end of 2005. In the past, when there was a 10% travel
agency commission paid, it used to cost about $8 a booking. But currently, Southwest
is paying between 50 cents and $1 per booking for electronic transactions that
translate to huge cost savings.
2. Employee and Labor Relations
Southwest has been highly regarded for its innovative management style. It maintains
a relentless focus on high-performance relationships and its people-management
practices have been the key to its unparalleled success in the airline industry.
Mission Statement
To Our Employees
“We are committed to provide our Employees a stable work environment with equal
opportunity for learning and personal growth. Creativity and innovation are
encouraged for improving the effectiveness of Southwest Airlines. Above all,
Employees will be provided the same concern, respect, and caring attitude within the
organization that they are expected to share externally with every Southwest
Customer.”
The Southwest mission statement shows that the company has a strong commitment
to its employees. The company affords the same respect to its employees that is
provided to its customers. The Southwest mission statement is unique in that it
recognizes the importance of its employees within the broader business strategy,
which emphasizes superb customer service and operational efficiency. The employees
reciprocate the respect, loyalty and trust that Southwest demonstrates. Southwest
employees are known for their loyalty, dedication, attitude and innovation. The
employees are the distinguishing factor between Southwest and the rest of the airline
industry.
Hiring
Southwest hiring policy is unique not only within the airline industry, but also more
broadly, and revolves around finding people with the right attitude that will thrive in
the Southwest culture. Extensive procedures are employed to hire for positive attitude
and dedication. Those who do not posses those qualities are weeded out. Colleen
Barrett, a non-operational officer at Southwest, states that
“Hiring is critical, because you cannot institutionalize behavior. Instead, you must
identify those people who already practice the behaviors you are looking for. Then
you can allow Employees to be themselves and make decisions about Customer
service based on common sense and their natural inclinations.” 1
Recruiting and interviewing at Southwest is a two-step process. The first step is a
group interview, conducted by employees, where communication skills of potential
candidates are evaluated. The next steps in this process are one on one interview,
where the candidates' attitudes and orientation toward serving others are evaluated.
These hiring criteria apply to all job functions since all Employees at Southwest play
a customer service role. A critical part of Southwest operational strategy is that every
job at Southwest is a customer service position, whether it directly applies to the
customer or whether it is internal.
The table below shows that even though Southwest is the most heavily unionized
airline, at approximately 80%, that contract negotiations between the unions and
Southwest are much shorter in duration than of the other major carriers. This shows
the quality of relationship that Southwest has with its employees and with the unions
that represent them.
Culture
Southwest was created as a different kind of company and from its beginnings a
unique culture was nurtured. In 1990 Colleen Barrett formed the Southwest Culture
Committee. This is unique within the industry and among all large companies. The
committee also has a mission statement:
“This group's goal is to help create the Southwest spirit and culture where needed; to
enrich it and make it better where it already exists; and to liven it up in places where
it might be "floundering". In short, this group's goal is to do "whatever it takes" to
create, enhance, and enrich the special Southwest spirit and culture that has made this
such a wonderful Company/Family.”
It is this unique approach to company values that has created a culture that
differentiates itself from others. Southwest’s culture is the reason why it is successful.
3. Customer Service
The Mission of Southwest Airlines
The mission of Southwest Airlines is dedication to the highest quality of Customer
Service delivered with a sense of warmth, friendliness, individual pride, and
Company Spirit.
Approach
Herb Kelleher, founder of Southwest, has been quoted as saying that "We're in the
Customer service business; we just happen to provide airline transportation".2 Award
winning customer service is a distinguishing characteristic of Southwest and it is
referred to internally as “Positively Outrageous Service”. It means that from the top
to bottom everyone does whatever he or she can to satisfy the customer. This includes
Herb Kelleher, who has been known for helping out baggage handlers on
Thanksgiving. It is through emphasizing the customer and employee that Southwest is
able to differentiate itself from others in the airline industry. On a more technical
level, each employee or group within Southwest has his or her own customer. This
means that every employee ‘serves’ in one way or another despite not being directly
involved with the passenger. The mechanic’s customer is the pilot and the caterer’s is
the flight attendant.
Results
It can be said that the "Positively Outrageous Service" that is unique to Southwest “is
not the result of a department, or a program, or a mandate from management. It is not
secondary to the product; it is the product.” This approach creates the conditions
where Employees are more likely to treat customers in ways that distinguish the
company from others. There are numerous accounts of passengers who have received
exceptional treatment from Southwest employees.
The question that needs to be answered is how Southwest’s customer service is
different and why? Is it common for customers of other airlines to rave about their
special service? The answer is that it is not. While Southwest does not have a
monopoly on people who are kind and who are willing to go above and beyond to
satisfy a customer, such behavior is nurtured at Southwest to a much greater extent.
It can then be concluded that the customer service that is inherent to Southwest is a
part of its culture. This culture is supported through employee encouragement to do
the extra to satisfy the customer. This approach inspires people who would ordinarily
only on occasion go out of their way to help someone, to become consistent
performers that offer exceptional service all the time. Southwest employees are what
differentiate its customer service from the other airlines.
4. Technology
Southwest utilizes technology in many ways to fulfill its business objectives and
maintain its efficient operations. According to its CEO, technology equals
productivity. Launched in 1996, ticketless travel was first introduced by Southwest.
On May 1st 2000, Southwest Airlines introduces "SWABIZ," a portal that assists
company travel managers in booking and tracking trips made through its web site
[http://www.southwest.com]. There are many new technology initiatives being
undertaken currently and some are in the pipeline.
Bar codes in Boarding Passes
Southwest Airlines has invested $12 million during the past three years to standardize
corporate and terminal operations on about 10,000 Dell OptiPlex desktop and
Latitude notebook computers according to its company executives. Southwest wanted
to replace its well known, brightly colored plastic boarding passes with an electronic
system with bar-code paper boarding passes. So it installed about 350 touch screen
ticket readers powered by Dell OptiPlex desktops. The bar code gives Southwest
more information to automatically reconcile the number of boarding passes with the
number of passengers that actually board the plane.
Although the technology will help Southwest Airlines remain efficient by
consolidating passenger information for the company's 3,000 daily flights, there were
concerns it could lengthen the time to get travelers on board. However it was found
that scanning each bar code on the boarding passes didn't increase or shorten boarding
schedules, but it did take minutes from administrative processes, such as looking up
customer records. The new paper bar code system is giving Southwest ticket agents
the ability to match a customer record within having to scroll through and log into
multiple software screens. The process is much more automated. Once the bar code
on the boarding pass is scanned at the terminal gate it checks off the person from the
passenger list in real time.
The old process was manual that involved finding the information, scrolling through
several software screens from reservations to check-in to boarding. The bar code
hardware to scan the boarding passes has been deployed. The company is in the
process of replacing customer service back-office equipment at airports including at
its headquarters in Dallas.
Software Upgrades
Software applications, such as those used by clerks to check in passengers, are being
replaced. Southwest Airlines' internally written "Airport Application Suite" is
expected to rollout next year as the company transitions from green screens to
Window-based user interface. Similar to Wal-Mart Stores Inc., Southwest Airlines
believes in developing in-house the software that runs its operations. The company
uses very little off-the-shelf software. There are between 75 and 100 projects in the
works each year supported by approximately 900 IT employees.
RFID
Radio frequency identification technology, a favorable alternative to bar-coding for
luggage identification, is also on Southwest's radar. It plans to test RFID technology
sometime in 2006. Even though, Southwest is playing a little catch-up with other
airlines such as Air Tran, Alaska and Champion Airlines, in many cases they are able
leapfrog to more sophisticated applications easily having waited longer.
Challenges:
Southwest has emerged very successful, despite the most troubled times in the airline
market. However, it faces new challenges in the face of increasing competition from
other low fare airlines such as JetBlue, ATA airlines, America West.
Reserved Seating
Due to increasing security guidelines since September 2001, Southwest would need to
prepare for assigned (reserved) seating to track its in-flight passengers. This change
will involve large technology investments and may impact its gate operations
negatively since the current way of unassigned seating has helped in quick gate
turnarounds.
Passenger Demand
The keep-it-simple philosophy has served Southwest well. But as its own business
grows and grows more complex, with plans to purchase dozens of new aircraft and an
expected upsurge in passenger traffic to about 80 million boarding’s a year, the
simplicity strategy that has been reflected in the airline's IT philosophy is evolving.
The CIO Tom Nealon says that "It's time to adapt our business processes for
efficiency. As our airline scales for us to provide the same kind of high-touch
customer service, we have to automate a lot of things we've been able to do without
technology previously. The challenge is doing that without conceding the customer
touch." Southwest is also aggressively pursuing customer relationship management
(CRM) techniques and has applications to get insight into customer’s wants and
dislikes. According to an interview with its CEO Gary Keller, Southwest has its focus
on improving in two areas - customer’s airport experience and in-flight experience.
In-Flight Entertainment
In an overall effort to improve customer’s in-flight experience, in-flight entertainment
is something that Southwest is currently evaluating and which JetBlue has been very
successful at already because of its introduction in its long-haul flights. In
comparison, Southwest has 415 airplanes to consider and that represents an
investment decision at a whole new dimension. Additionally, Southwest has to
consider how things may fit into their environment. At this point, 60% of its service
is still very short haul. Southwest needs to be mindful of the fact that a certain
approach that has been successful for its competitor may not be necessarily work to
its advantage.
Summary:
Southwest has long been regarded as a benchmark in its industry for operational
excellence. Southwest Airlines is a fine example of a company that is committed to
its core competencies - efficient operations to drive its low cost structure, outstanding
delivery of customer service and innovative HR management practices. We hope this
paper provided a good insight into Southwest operations, as part of its overall
strategy, to achieve success and gain competitive advantage.