Southwest Spirit Customer Service

TB00417 The Southwest Spirit Customer service far beyond the norm in the airline industry was not unexpected at Southwest and hadits own name—Positively Outrageous Service. Some examples of this service included: a gate agentvolunteering to watch a dog (a Chihuahua) for two weeks when an Acapulco-bound passenger showedup at the last minute without the required dog crate; an Austin passenger who missed a connection toHouston, where he was to have a kidney transplant operation, was flown there by a Southwest pilot inhis private plane. Another passenger, an elderly woman flying to Phoenix for cancer treatment, begancrying because she had no family or friends at her destination. The ticket agent invited her into herhome and escorted her around
Southwest pilots belonged to an independent union and not the Airline PilotsAssociation, the union that represented more than 60,000 pilots. The company encouraged the unionsand their negotiators to conduct employee surveys and to research their most important issues prior toeach contract negotiation. At its 1994 contract discussion, the pilots proposed a 10-year contract withstock options in lieu of guaranteed pay increases over the first five years of the contract. In 1974,Southwest was the first airline to introduce employee profit sharing. Through the plan, employeesowned about 10% of the company’s stock. Herb Kelleher summed up the Southwest culture and commitment to employees: We don’t use things like TQM. It’s just a lot of people taking pride in what they’re doing….Youhave to recognize that people are still the most important. How you treat them determineshow they treat people on the outside. . . I give people the license to be themselves andmotivate others in that way. We give people the opportunity to be a maverick. You don’thave to fit in a constraining mold at work—you can have a good time. People respond tothat.15 Southwest Imitators Southwest’s strategy spawned numerous imitators, most of which failed. Two of the more successfulstart-up firms, Midwest Express and America West, both went through Chapter 11 bankruptcy pro-ceedings. ValuJet
JetBlue had a fleet of 194 Airbus A320 aircraft and 30 Embraer 190 regional jet aircraft. JetBlue revenue in2007 was $2.6 billion, one-quarter the size of Southwest. The company had a net loss in 2005 and 2006but returned to profitability in 2007. A major ice storm that hit New York in early 2007 severely testedthe company. More than 1,200 flights were cancelled over a six-day period. Not long after, DavidNeeleman was asked by the Board to step down as CEO. He remained as Chairman. Southwest Expansion Southwest grew steadily over the years prior to 2008, but the growth was highly controlled. New air-ports were carefully selected, and only a few new cities were added each year. As Kelleher wrote to hisemployees in 1993, “Southwest has had more opportunities for growth than it has airplanes. Yet, unlikeother airlines, it has avoided the trap of growing beyond its means. Whether you are talking with anofficer or a ramp agent, employees just don’t seem to be enamored of the idea that bigger is better.”17In October 1996, with the initiation of flights to Providence, Rhode Island, Southwest enteredthe northeast market. The entry into the northeast region of the U.S. was, in many respects, a logicalmove for Southwest. The northeast was the most densely populated area of the country and the onlymajor region where Southwest did not compete. New England could provide a valuable source