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Southwest Airlines Company Background

Southwest Airlines Co.

(NYSE: LUV) is an American low-cost airline. Southwest is thelargest airline in the world by number of passengers carried per year (as of 2009). Southwestmaintains the third-largest passenger fleet of aircraft among all of the world's commercialairlines.

[4]

As of May 3, 2009, Southwest operates approximately 3,510 flights daily.Southwest has its headquarters on the grounds of Love Field in Dallas, Texas. Southwest Airlines has carried more customers than any other U.S. airline since August 2006 for combined domestic and international passengers according to the U.S. Department of Transportation's Bureau of Transportation Statistics. Southwest Airlines is one of the world¶smost profitable airlines, posting a profit for the 37th consecutive year in January 2010.Southwest's successful business model involves flying multiple short, quick trips into thesecondary (more efficient and less costly) airports of major markets, and using only oneaircraft type, the Boeing 737. Southwest Airlines was originally incorporated to serve threecities in Texas as

Air Southwest

on March 15, 1967, by Rollin King and Herb Kelleher. According to frequently-cited story, King described the concept to Kelleher over dinner bydrawing on a paper napkin a triangle symbolizing the routes (Dallas, Houston, San Antonio).The original aircraft proposed for the service was the Lockheed Electra turboprop.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 legalbattle to keep Air Southwest on the ground. Air Southwest eventually prevailed in the TexasSupreme Court, which ultimately upheld Air Southwest¶s right to fly in Texas. The decisionbecame final on December 7, 1970, when the U.S. Supreme Court declined to review thecase without comment. The story of Southwest¶s legal fight was turned into a children¶sbook,

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 stophim from flying at all. Taken to court, TJ Love¶s right to fly is upheld after an impassionedplea from The Lawyer. While no company names are mentioned in the book, TJ Love¶scolors are those of Southwest Airlines, and the two other jets are colored in Braniff andContinental¶s colors. The Lawyer is designed to resemble Herb Kelleher. The book wasadapted into a stage musical,

Show Your Spirit

, sponsored by Southwest Airlines, andplayed only in towns serviced by the airline.

Southwest Airlines founder Herb Kelleher studied California-based Pacific Southwest Airlinesextensively 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 thatworked for Southwest Airlines were chosen by a committee of individuals that included thesame person who had selected hostess for Hugh Hefner¶s Playboy jet. The selection resultedin a group of female flight attendants that were described as long-legged dancers,majorettes, and cheerleaders with "unique personalities". Southwest Airlines and HerbKelleher proceeded to dress these individuals in hot pants and go-go boots.The airline adopted the first profit-sharing plan in the U.S. airline industry in 1971. Throughthis plan and others, employees own about 10 percent of the company stock. The airline isabout 87 percent unionized. The pilots are represented by the Southwest Airlines Pilots¶ Association, a union separate from the much larger Air Line Pilots Association.

Case studies learning excellence:

Southwest Airlines¶approach

lla K. Bunz and

Jeanne D. Maes

In an era in which adapting to change means survival, it is important to

study

whatsuccessful organizations have done. While the airline industry in the USA has not madethriving financial headlines, one small company has beenable to satisfy its customerscompletely and achieve a place among the Fortune 500 in a relatively short period of time. Inthree steps, this article examines what Southwest

Airlines

has done to reach this level of achievement and maintain its excellent employee and customer relations. First, the companyis defined as ³excellent´ according to the criteria established by Peters and Waterman.Second, management-employee relations,

organizational

training and strong leadership areidentified as the sources of employee motivation. Third, loss of strong leadership and

organizational

structure are discussed as possible future problems influencing motivationand service. The article closes by pointing to Southwest Airline¶s concept of serviceas the true source of motivation and excellence.

Southwest ± the ³excellent´ company

In Peters and Waterman¶s

n Search of Excellence

(1982), the authors summarize the resultsof their

study

of ³excellent´ companies. Forty-three US companies, taken from the

ortune500

list ³had to be of above-aver-age growth and financial return over a 20-year period, plushave a reputation in their busi-ness sector for continuous innovation in response to changingmarkets´ (Pugh andHickson, 1997, p. 99). The authors then applied the McKinsey 7-sframework to the selected companies. The 7-s framework describes the seven variables ³thatany intelligent approach to organizing had to encompass´ (Peters and Waterman, 1982, pp.9-10):

³Excellent´ companies are motivating

As the preceding discussion shows, Southwest fulfills all eight attributes of an³excellent´company as defined by Peters and Waterman. Most ³excellent´ companies alsohave astrong leader. In Southwest¶s

case

, this is Herb Kelleher. Therefore, Southwest

Airlines

can be classified as an ³excellent´ company. Being employed by Southwest alone ismotivating. ³Southwest

Airlines

.puts a high priority on selecting motivated people to beginwith´ (McNerney, 1996, p. 4). Yet, there are other factors especially motivating at Southwest.Three of these factors will be discussed here: management-employee relations, training atthe University for People,and Kelleher as a strong leader.