In 1993, Southwest had an average of 81 employees per aircraft while United and American had almost

double that number of employees. Every Southwest employee served about 2, 443 customers, which

was three times the industry average. Also, the employees were usually paid less than the industry

average. This was where most of the low-cost was rooted in. Southwest Airlines’ competitive

advantage, a low-cost niche strategy, can be seen in their cost structure, shaped, in part, by the

extraordinary productivity of the employees. This productivity stems from the high employee

motivation and the work culture, at Southwest.

Below are some examples of how, high employee motivation is leading to lower costs for the airlines:

1. Southwest Airlines is known for its low turn-around time, which is made possible because of quick

on-boarding and minimalist processes. Southwest boarding gates are typically manned by a single agent

and a ground crew of about six, whereas other airlines have three and twelve respectively. The high

employee motivation is not because of the pay structure as we can observe from Exhibit 6.

2. Southwest pilots have a pay-per-flight compensation structure. This enables Southwest to

directly tie down their costs with their revenues since higher airtime means higher revenue and

higher pay for the pilots. Southwest employees have less per-hour wages but have the flexibility to

work more hours and earn more. Flight attendants and pilots often help clean the aircraft or check-in

passengers. This gets more work with fewer people and develops a sense of fidelity to the job.

3. Customer Satisfaction: The airlines does not provide any frill-services like in-flight meals or

priority check-ins, but atones it with a superior customer experience. The employee behavior and

response to special needs and emergencies is remarkable, and creates outstanding service levels.

In the airline industry, the metrics of a good service are on-time performance, fewer lost bags,

and low number of customer complaints. Southwest has excelled in all three of these metrics and

has been awarded for the same year on year.