Why Does Southwest Survive?

[thrillme]

Here's just a question:

I'm not selling SW by any means but there's just not a lot of news about them having problems.

In light of all the current Airlines that are going bankrupt, merging, canceling flights, charging for second luggage and some even FIRST luggage...

What is the "magic" that Southwest seems to have to stay out of a lot of this mess. It's often like they're in their own world. I know their rates are going up a bit because of the fuel issue but...

They had an article today about how to FIX the airline industry...Why are the other airlines so broken?

[Strmchsr]

It's way too much to put here. I would suggest you read "The Southwest Airline Way" if you're truly interested as it explores the corporate culture that makes SWA so much more successful than other airlines. Also "Good to Great" is a fantastic book about why, in a given industry, some rise to the top while others falter.

Basically, it boils down to great leadership, exceptional vision, and strategic implementation of that vision. No corporation is perfect, SWA and Disney included, but there are definite reasons why they are more successful than others.

[Jeff G]

It's way too much to put here. I would suggest you read "The Southwest Airline Way" if you're truly interested as it explores the corporate culture that makes SWA so much more successful than other airlines. Also "Good to Great" is a fantastic book about why, in a given industry, some rise to the top while others falter.

Basically, it boils down to great leadership, exceptional vision, and strategic implementation of that vision. No corporation is perfect, SWA and Disney included, but there are definite reasons why they are more successful than others.

Very well put.

SW is an amazing company with great vision and leadership. One thing they have done better than most is hedging gas prices. Basically they purchased gas futures when fuel prices were low, this has allowed them to keep profits up even with soaring fuel costs. There is a lot more they do but that is one recent example.

[AZ Disney]

I'm the wife of a SWA Captain and I can tell you from the inside that they love their employees and their customers. They run their business entirely different as mentioned by previous posters. Another big factor is how they purchase fuel. They're saving Million to Billons on their fuel hedging program.

I love SWA!!!

Recent Article:
The airline industry is in full retreat against overpowering fuel prices — slashing flights, raising fares and slapping consumers with new fees for everything from checked bags to a packet of peanuts.

All the airlines, that is, except Southwest Airlines. The Dallas-based low-fare carrier still allows passengers to check luggage, munch on snacks and sit where they like without doling out extra cash. And while it has raised fares this year, the airline continues to set the lowest prices in the industry on most routes.

It’s all part of a very different strategy for dealing with the run-up in fuel prices. Rather than sharply raising fares across the board, Southwest is trying to attract more higher-paying business travelers. Instead of hitting customers with multiple new charges, the airline is trying to draw more travelers by marketing itself as the “no-fee airline.” And while others are shrinking, Southwest is continuing to grow and take advantage of opportunities on routes vacated by competitors.

“Southwest is perfectly positioned competitively with the network airlines in full retreat,” said Michael Derchin, an airline analyst with FTN Midwest Securities, in a recent report on the airline.

The carrier has “a unique ability to generate strong revenue growth in a weak economic setting, while maintaining the lowest cost structure in the industry, despite a high fuel-cost environment,” he said.

The strategy’s architect, Gary Kelly, recently solidified his position at Southwest by assuming the position of chairman as well as chief executive officer. In July, he will become the company’s president as well.

He takes those titles from two of the industry’s titans — Herb Kelleher, Southwest’s legendary co-founder and chairman, and Colleen Barret, who rose to the president’s job by helping to build the airline’s employee- and customer-centric corporate culture.

“It’s obviously a very challenging time for the industry,” Kelly said. “We’ve got a lot of work ahead of us.”

The airline’s biggest advantage right now is its hedging program, which allows it to purchase much of its jet fuel at lower prices. While Southwest still feels the sting of the spike in prices, it is far more muted than at competitors such as American and United.

Analyst Kevin Crissey of UBS predicts that Southwest will be the only large airline to turn a profit this year, largely because of its fuel hedges.

That partial shield has allowed Southwest the breathing room to plan a long-term strategy rather than making desperate moves to stem the bleeding. Indeed, some of Kelly’s plans to bring in more money, such as in-flight Internet service and partnering with another airline to offer international flights, won’t be rolled out until next year at the earliest.

And there are no guarantees that the carrier’s course will mean a smoother flight.

“We’re in a transformational phase,” he said. “We have great enthusiasm that [our plans] are going to work, but there’s still a risk.”

No frills, no fees
Airlines have begun ratcheting up charges as they struggle to bring in dollars to offset crushing fuel prices.

American recently announced plans to begin charging $15 each way to check the first piece of baggage, and other airlines are considering similar changes. American also increased fees for a host of services, including flying with pets, having overweight luggage and unaccompanied minors.

U.S. Airways said Thursday that it will no longer provide free snacks in coach. Northwest has begun to charge passengers extra to sit in the exit row, while AirTran Airways charges to reserve a seat in advance.

But Kelly is skeptical that so-called unbundling of charges is the answer.

“Customers hate all that stuff,” he said. The airline has a 37-year history of providing low-price service, he said, “and we’re going to live up to that and deliver what our customers have come to expect.”

Instead, Southwest has been using its refusal to levy extra charges as a marketing weapon. A commercial features a flight attendant from an unnamed rival reading a long list of fees and says customers with questions can press the attendant call button “for a minimum fee of $1.”

“We want to differentiate and celebrate those differences,” Kelly said.

Focus on business
That doesn’t mean Southwest doesn’t want to increase its revenues, and not all fees are off the table. The airline will charge for in-flight Internet service, for example, which is being tested this summer on four airplanes.

But Kelly said he is more interested in drawing passengers, typically business travelers, who tend to pay more for fares because they’re purchased at the last minute. Earlier this year, the airline unveiled its new “Business Select” fare, which is generally about 10 percent higher than its average prices.

The business fare includes priority boarding and a free alcoholic drink, and it is fully refundable.

About 5 percent of travelers are buying the new fare, Kelly said, and it generated about $15 million in additional revenue during the first quarter. He expects that number to rise as Southwest increases its marketing to business fliers.

Southwest is also upgrading its frequent-flier plan, typically a major draw for business travelers.

“When you go into a new market against an entrenched carrier, it can be challenging to get those business travelers who are wedded to that frequent-flier plan,” he said. “It can be tough to get them to jump to the good guys.”

Kelly said he was developing “some interesting techniques” to improve Southwest’s “Rapid Rewards” plan, but he wouldn’t disclose specifics. He added, “We’ll have a lot to talk about on that by next year.”

The airline is also planning on drawing more passengers by offering flights to international destinations as early as next year. Southwest won’t fly directly to foreign cities but will partner with another airline to provide the international segment of a trip. The two airlines would split the revenue from each shared passenger.

Kelly sees Southwest offering fares to Mexico, Canada, the Caribbean and Hawaii with one or more partners.

Continued growth
For Southwest, perhaps the most significant diversion from the industry is its decision to keep growing despite the difficult environment.

The airline is adding 13 planes to its fleet this year and is tweaking its schedule to take advantage of pullbacks at other airlines.

For example, the airline recently said it would launch six new daily flights from Denver, including two new destinations from that city — San Francisco and Omaha.

“It’s a tough decision in this environment to continue to grow,” Kelly said. “So there’s a limit to how much we’re willing to do.” Still, he said, his planners are watching other airlines cut back and are looking for opportunities.

“We have to have the airport facilities, planes and flight crews, so we can’t always react quickly,” he said. “But we’re making some educated guesses.”

He said the Denver expansion was “a no-brainer,” given growth in the market and United Airlines’ loss of market share.

He added that growth can be successful only if costs stay in check and revenue expands as well.

“Otherwise, it makes no sense to grow the fleet,” he said.

Kelleher, the Southwest co-founder who handed the reins to Kelly on May 21, said he’s confident that Kelly is the right man to steer Southwest on its new course.

“He has done one heck of a job, and I can’t imagine anyone who would be better,” he said. “I feel like Southwest is in very good hands.”

[AZ Disney]

I'm the wife of a SWA Captain and I can tell you from the inside that they love their employees and their customers. They run their business entirely different as mentioned by previous posters. Another big factor is how they purchase fuel. They're saving a ton of money on their fuel hedging program.

DALLAS (AP) — Southwest Airlines said Thursday its first-quarter profit rose by half on record revenues, but income would have fallen by 4 cents per share if not for gains from hedging future fuel costs.
The low-cost carrier said it earned $93 million, or 12 cents per share, compared to $61 million, or 7 cents per share, a year earlier.

[thrillme]

Well AZ Disney...

From me and my DS...please give your husband a big HUG from us. My son has LOVED Southwest since he was 6.

I just kinda wonder why other airlines don't study SW strategies a bit more.

I do hope for ALL the airlines that they find a way around this fuel thing soon. It's so much better to fly than to make that long drive.

[vicster]

Absolutely Southwest is the best!!!

[dephenn]

We also like SW. I do have 2 wishes though.

1. It would be great if on round trip flights your boarding pass # would be the same for both flights. That way you would only have to check in once and not have to worry about forgetting to check in while in the parks or at the beach or in a business meeting.

2. It would be great if you could use Disney's ME for the flight home, so you could skip check baggage.

But as some one already mentioned, it's not a perfect world, nor should it revolve around me, though that would be really cool if it did.

[chrisb26]

We always fly Southwest and really like it. Haven't ever had any big problems.

I have a cousin who flies for them although we haven't ever flown with him lol

As far as why the airline is so successful I'm not really sure but I can say every flight we go on with them seems to be full. Also while all these other airlines cut back and increase the charge for bags they don't seem to be doing that which probably helps them since people will choose them. I mean when I flew with them last month they didn't start charging for extra bags until you checked your 3rd bag and you have airlines charging for the very 1st bag why would I want to fly with them when I can go to SW and get a cheaper air fare and not pay for my bag to be checked.

[pogo]

I agree with everything said here. :thumbsup:

SW is a great airline. One thing I've noticed that I think helps them is their routing. They route themselves where they can be profitable and avoid routes where they would lose money.

The same things can be said about Jet Blue and Air Tran. They know their niche and they fill it.

All three are exceptional if you ask me. :D

[Ian]

We agree ... we're converts from USAir to Southwest (converted the minute Southwest started flying out of Philly!) and we'll never go back.

It's all about a great corporate culture that rewards success, truly cares about the customer, and does it all while maintaining a solid sense of humor about it.

[Here we go again...]

We love Southwest too.

You know the saying, Give and Ye Shall Receive.
Did you know that Southwest donates flights to the Kidd's Kids campaign every year? That means that all of the sick kids that Kidd Kraddack takes to Disney World (along with every member of their families) fly free on Southwest every single year.

When you give something like that, you will stay in business.

[Jared]

You guys are all lucky. No Southwest here in New York. JetBlue is the closest we have.

:(

[mickey&missy]

What a great thread! I've been wondering the same thing. I knew that southwest was "different" then other airlines but I didn't realize it was that deep.

We are big fans of southwest! They are the only airline that flies direct from our smaller sized, more local airport to MCO. They keep us from having to go to JFK or Laguardia! Can't bet that! We've also had a very good experience flying with them, barring the flight attendant who got snotty with me when I told her my son threw up in his seat and the 2 next to him on our descent on our way home in 06. I told her I tried to clean it up the best I could with what I had. I can't really blame her for not wanting to face someones throw up! But, other then that we've had such great experiences! From a employee at the gate going out of his way to help me and answer my question about the new boarding procedure, to the flight attendant who told me if I needed help getting the car seat in the seat to come get her, to completely smooth boarding and deplaneing, to (knock on wood) no delays! and great prices!!

I only wish Southwest was a DME airline, oh well!

[ChipDale2708]

We love Southwest as well and have flown them exclusively for at least 5 years now. Even when we had a major baggage snafu, they more than made up for it. :cloud9:We booked Delta for this October only because I found an amazing rate back in January and didn't want to play the waiting game w/ Southwest to book. Delta has already changed our return flight twice. As of right now we're losing 1/2 a day in the World. :thedolls:

[luvdiznee]

While I have preferred JetBlue, mainly because they are a 1/2 hour closer to our home, I did like the NONSTOP when we flew SW to Vegas. :marg:

[luvdiznee]

Delta has already changed our return flight twice. As of right now we're losing 1/2 a day in the World. :thedolls:

Somethings never change. :shake:

[2Epcot]

Southwest has been my primary domestic airline for the last 15 years. My first few trips to WDW were on Delta, but I don't usually consider any other airlines now when I fly. Southwest does a great job and has wonderful service


You guys are all lucky. No Southwest here in New York. JetBlue is the closest we have.

:(

I've flown Jet Blue on two seperate trips to Washington D.C. in the last 5 years. I enjoy Jet Blue and think they do a great job as well. It's nice to have the TVs on Jet Blue, but not enough to stop using Southwest.

[Love of Disney]

I have never flown Southwest before....our first time will be on July 12th. I am really looking forward to it because I have always hear good things! After reading these posts, I am feeling good about my airline choice!
:cool:

[Ed]

You guys are all lucky. No Southwest here in New York. JetBlue is the closest we have.

:(

Jared, Southwest has had service to and from Islip (Long Island) for many years.

With all the turmoil in the entire airline industry, this is the time for Southwest to shine. Don't be surprised if they end up setting the standard that the others will follow if they have any hope of surviving.

[pixie897]

You guys are making me soooooooooo happy right now!!!!:D I am a Southwest Airlines employee in Chicago and I can honestly say that this company loves their employees!!! I worked for ATA airlines before SWA and they were horrible to us.

We survive for many reasons and the main reason is the way the company treats us. Another major reason we are still around is the fact that our management is a group of geniuses for hedging fuel years ago for right now....So while other airlines are paying an arm and a leg for their fuel we are paying the price from a few years ago.

Thank you guys for the support of the airline!! Keep flying!!!
You are now free to move about the country!!:mickey:

[Fangorn]

I'm another long time fan of Southwest. I was actually going to school in Ft. Worth when Southwest was starting operations. They were different then (something about pink hot pants stands out in my memory) and they're still different than the rest of the industry.

In my opinion there are a number of reasons they have succeeded despite the rest of the industry and even the US Congress trying to put them out of business:

Business Model - management was never afraid to think creatively and look to the future.
Valuing both their employees and their customers as people, not just debits and credits on the ledger
Doing the basics exceptionally well. I.E. getting from point A to point B safely and on time.
Not taking themselves so seriously that they can't have a bit of fun.


I travel a lot, and Southwest is my first, second and third choice. As noted in the earlier article, they have stepped up their efforts to attract business travelers and the changes are really welcome. I had to fly on one of those other airlines last month (Southwest doesn't fly to South Dakota) and it was the most miserable trip I've been on for a long time. The employees were surly, the flights were not on time and the schedule was awful. I was so thankful to get back on SW for the final leg home!

And by the way, in case anyone cares, this Wednesday, June 18th is Southwest's 37th birthday. I'll actually be on a SW flight from Baltimore to Orlando that morning, and my wife will be going to Orlando from the Great Northwest that morning as well and meeting me there. I wonder if they'll have cake on the flight? Wouldn't surprise me at all.

Steve

[BronxTigger]

Jared, Southwest has had service to and from Islip (Long Island) for many years.


If either Jared or I flew out of Islip, we would spend more time getting to the airport than we would spend in the air getting to WDW!

As it is, it takes me around 2 hours to get to JFK for a 2.5 hour flight to Orlando!

[mickey&missy]

If either Jared or I flew out of Islip, we would spend more time getting to the airport than we would spend in the air getting to WDW!

As it is, it takes me around 2 hours to get to JFK for a 2.5 hour flight to Orlando!

It shouldn't take you that long! But I do agree that you or Jared, especially Jared, driving past JFK or LaGuardia to Islip would be a bit silly. Especially, with todays gas prices!

We love the direct flight from Islip to MCO! Especially the 7:05 flight. We're out so quickly and easily!

[gojoe]

I'm sure you all have noticed but no sooner to the passengers deplane then we board. They make money in the sky not on the ground. Let's here it for the ground crews hard work. :thumbsup:

[BronxTigger]

It shouldn't take you that long! But I do agree that you or Jared, especially Jared, driving past JFK or LaGuardia to Islip would be a bit silly. Especially, with todays gas prices!

We love the direct flight from Islip to MCO! Especially the 7:05 flight. We're out so quickly and easily!

I don't own a car and I live in the central Bronx.

To get to JFK it takes over 2 hours by mass transit, but it's far cheaper than a cab, which costs over $50.

To get to LGA it takes about an hour by mass transit, although one time it did take 2 hours because the bus got stuck in a horrific traffic jam in Manhattan. (It shouldn't take an hour to go from Lenox to the Triboro!)

I keep thinking I should try flying out of White Plains (also about an hour on mass transit), but I always forget. They don't have Southwest either, but so far I've been happy with JetBlue. Virgin America is also nice, but they have are very limited in their destinations and they are only at JFK.

[thrillme]

Personally my DS and I get chuckles out of SW employees "spunk". I love the stewardess's who tell you things like:

"Please take everything with you...anything left behind including electronics and small children will be auctioned off on the next flight"

"Whoa, Plane Whoa"

We even had one cute little gal who sung a little "Fly Southwest" ditty.

[mickeys_princess_mom]

It's all about a great corporate culture that rewards success, truly cares about the customer, and does it all while maintaining a solid sense of humor about it.

I agree. The caring really comes through, the humor is refreshing, and the prices are reasonable--great specials! As our new friend gojoe said, the ground crews keep things flowing! I love watching them set up when the planes are headed in. They are in place and ready to move. Thanks, Southwest!:plane:

[caryrae]

We don't have SW airlines here in the Twin Cities but I think another airline that is pretty good is Sun Country. We used them last April from Fort Myers to Minneapolis and upgraded to 1st class for $75 per ticket, that was really fun. Also we have 2 terminals here and Sun Country is at the smaller one which is nice, you don't have to do much walking to get to the gate and easier for the people who are picking you up.

We have usd them several times and not one problem *knock on wood* with delays, lost baggage, bad flight, ect.

[Sean Riley Taylor's Mom]

We are big fans of southwest! They are the only airline that flies direct from our smaller sized, more local airport to MCO. They keep us from having to go to JFK or Laguardia!

Ditto!:thumbsup:
We only fly SW out of Islip. My family goes into JFK and flies Jet Blue. I have told them for the past few years that they are nuts but, they are set in their ways.