Southwest Airlines in 2010: Culture, Values, and Operating Practices

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When the airline industry getting mentioned negative thoughts and emotions rush to peoples’ mind. 9/11 was not too long ago causing a huge drop in revenues and putting many large companies to the brink of bankruptcy. High ticket prices as well as a plethora of additional fees continue to plague frequent air travelers. However amongst all the chaos and disarray, one company continued to show profits and wow its customers. Every year since 1973 Southwest Airlines has continued to be profitable where others have lost millions on dollars. This is due to the genius operating methods put into place that have stressed Southwest’s goals of having low operating costs, low fares, and customer-pleasing service. The formation of Southwest Airlines did not take place over night. It was a process that gradually expanded by having a solid core that. In the late sixty’s a San Antonio entrepreneur had a dream and sought out the man who would make this work: Herb Kelleher. Kelleher was a successful lawyer based in the San Antonio area. The original idea that started Southwest was to service business people with a low-cost/low-fare between the major metropolitan cities in Texas. Kelleher was immediately on board with this idea and went to work to get the company going. He fought many legal battles from big rivals to block the potential new entrant; however in 1971 two court appeals were won granting Southwest entrance to the Texas market. Immediately they looked outside for financing and found Lamar Muse, who was brought in as CEO. Once Southwest launched, their first move was to undercut the competitors in price to attract customers. However they still were attracting few customers. The marketing team then went to work coming up with new ideas to keep this company in the air. From stewardesses in high-heeled boots, free alcoholic beverages on certain, incredible deals on tickets, and a loveable tag line Southwest caught the publics’ attention. On the operational side, the ground crew came up with a routine to unload the plan in record time compared to the competition. Finally with the expansion into the Houston Hobby Airport rather than the Intercontinental Airport they were able to attract many business customers due to the proximity to the city. All this paid off and resulted in the first every annual profit in 1973. Throughout the rest of the 1970’s Southwest found itself involved in an array of legal battles. The competition wanted this fast growing threat out before they would be considered a real competitor. From getting the airline to change hubs to denying Southwest access to smaller regions, the complaint rose. And the man to step in the pilot’s seat was Herb Kelleher. Kelleher fought everything that was thrown against him with determination and eventually took over as CEO in 1981. Kelleher was a very unique CEO due to the fact he was very involved with the daily operations of airline. He made a point of visiting with maintenance crews, attendants, and pilots out in the field. He was a very “chill” CEO known for his love of whiskey, fine cigarettes, pranks, and Hawaiian shirts which earned him the nick name the “clown prince”. Kelleher strongly believed in the principle that employees came first not customers. By treating the employees right they in turn would treat the customers with just as much respect. This attitude instilled by Kelleher was one of the building blocks which made Southwest the giant in the sky that it is today. From the emergence of Southwest they have stressed the low-cost/low-price strategy that has been implemented over the years. This made airfare accessible to a good portion of the U.S population. They went to extreme measures to make sure that they were the best cost provider in the industry. Their rivals instituted a series of add-on-fees such as fuel surcharges, bag fees, fees for changing flights, and fees for in flight snacks to compensate for the skyrocketing price of jet fuel (which increased to...
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