1. Executive Summary
Southwest Airlines Company is a domestic airline that provides primarily short-haul, high-frequency, point-to-point, low fare services to 53 airports in 52 cities in 26 states throughout the United States. Southwest focuses primarily on point-to-point service, providing more direct nonstop routes for short-hauls customers and, therefore minimizing connections, delay and total trip time. The company is average trips length is 441 miles with an average flight time of approximately one-hour.
It was Rollin King’s and Herb Kelleher’s vision to start an airlines that with a mission to get its passengers to their destinations when they when to get there, on time and to provide this service at the lowest fare possible.
On February 40, 1968 the Texas Aeronautical Commission approved Herb Kelleher and Rollin King’s plans for Air Southwest Company to provide service for the three major cities in Texas. The approval was soon opposed and blocked by three major airlines. After three years a legal battles, broke, deep in debt and with four airplanes Southwest began service in June of 1971 with a motto still lived by today, “if you get your passengers to their destinations when they have a good time doing it, people will fly your airline” This motto has been effective for the company, in 1973 Southwest made its first profit and has never looked back because they recently reported their 58th straight quarterly profit.
Milestones at Southwest Airlines
▪ 1966: Rollin King marched into Herb Kelleher’s law office with a plan to start a low-cost/low-fare airline that would shuttle passengers between San Antonio, Dallas, and Houston. Thought of this idea because businessmen were complaining about the commute.
▪ 1967: Kelleher filled papers to incorporate the new airlines and submitted an application to the Texas Aeronautics Commission for the new company to serve Dallas, Houston, and San Antonio – 4 years legal and regulatory battle from rival airlines.
▪ 1971 (January): Lamar Muse brought in as the CEO to get operations under way. Boeing supplied three new 737s, discounted price by $1 million and finance 90% of the $12 million deal.
▪ 1971 (June): Southwest initiated its first with a schedule that soon included 6 round-trips between Dallas and San Antonio and 12 round-trips between Houston and Dallas. Disappointing results despite only $20 fare compared to rivals $27-28. Their funds stretched thin and they were putting fuel on Muse’s credit card. Employee morale was high.
▪ 1971 (November): Muse came out with idea to offer $10 fare to passengers on the Friday-Night, Houston to Dallas flights. The flights sold-out without advertising. Muse came up with a two-tier on-peak and off-peak pricing structure. Beginning of the No-Layoff Policy, the have never lay off or furloughed any employees.
▪ 1972: Move flights in Houston from the newly opened Houston Intercontinental Airport to the abandoned Houston Hobby Airport (for money and location reasons).
▪ 1972: Reported its first-ever annual profit in 1973, introduced a profit-sharing plan for senior employees (first in the airlines industry).
▪ 1977: Listed on the NYSE
▪ 1978: Muse resigned, Howard Putnam became CEO after Kelleher turned down the offer.
▪ 1979: First route outside Texas (New Orleans)
▪ 1981: Putnam resigned, Kelleher became CEO, Kelleher was well known inside and outside the company for his combativeness, particularly when it came to beating back competitors. Kelleher also was strong believer in the principle that employee, not customer come first.
▪ 1983: Three additional Boeings’ 737 are purchased; Southwest flies more than 9.5 million passengers.
▪ 1984: Southwest is ranked first in customer satisfaction among the U.S airlines for the fourth straight year.
▪ 1985: Service begins to St.Louis and Chicago Midway airports, Southwest names the...