JetBlueAUS
Topic Author
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What Is The Secret Behind Southwest?

Fri Jan 05, 2007 12:42 pm

Yes, Southwest. An airline that has been successfully profitable consecutively for over 30 years. How do they do it, and how can they "beat out" other carriers by offering the same price? When their fuel hedges run out, will they see a profit decline/loss? Are fuel hedges keeping them afloat?
Not all of us can be heroes, some of us can only stand on the sidewalk and clap as they go by.
 
nateDAL
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 12:50 pm

Have you ever flown Southwest?

It is not hard to figure out. Great schedules, great service, and more convenient airports (HOU vs. IAH, etc.)
Set Love Free
 
JayDavis
Posts: 1870
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 12:57 pm

I'd say more than anything is their focus on "The Golden Rule". Corny as it seems they treat their employees like they would want to be treated themselves. They put their employees first and make it a fun place to work. Also, they allow employees to be themselves and allow the employees to take ownership of a problem when needed.

Plus, they did first focus on staying away from large airports when they first started out, AND I think keeping their equipment the same type as well as offering a simple fare structure to begin with helped them a great deal.

Plus, they also did not have to face the scrutiny of the CAB when they first started as they only flew to cities within Texas.
 
lincoln
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 1:06 pm

Quoting JayDavis (Reply 2):
Plus, they also did not have to face the scrutiny of the CAB when they first started as they only flew to cities within Texas.

And they started with a proven business model -- that of Pacific Southwest Airlines (the original PSA). I've read several places, and had it confirmed by a former PSA executive, that Herb toured PSA's headquarters and left with a copy of the various manuals and handbooks -- which became the basis of WN's operations.

(At the time, thanks to regulation, PSA was an intra-state California only carrier and Southwest was to be a intra-state Texas only carrier so they weren't really afraid of competition with each other).
CO Is My Airline of Choice || Baggage Claim is an airline's last chance to disappoint a customer || Next flts in profile
 
atrude777
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 1:09 pm

Quoting Lincoln (Reply 3):
left with a copy of the various manuals and handbooks -- which became the basis of WN's operations.

read he took the exact handbook, and simply covered the PACIFIC part of the airline in the text and just had it labeled

SOUTHWEST AIRLINES subtracting the PACIFIC part.

Funny if it that was true.

Alex
Good things come to those who wait, better things come to those who go AFTER it!
 
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SLCUT2777
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 1:18 pm

Probably what makes WN the carrier they have become is public perception. That is most of the American public thinks they will have the lowest fares. Much of the American public that has never flown is nowadays usually introduced to flying to a particular destination by WN. Kind of like what Wal-Mart has done to the discount chains in retail.
DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
 
atlaaron
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 1:20 pm

Fuel hedges . . . and those are running out.
 
mt99
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 1:21 pm

My theory is part of ther success is vconstantly exceeding low custumer expectations. For the ticket price the costumer does not expect much, so anything that is above and beyond - no matter how small - is recieved with gratitude and fanfare.

That being said - i am sure that there are many other factors, but i would place that one pretty high up the chain
Step into my office, baby
 
BladeLWS
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 1:32 pm

Low cost, joyful employees, good destinations, good boarding system.

Thats just for the passengers, they save a boat load of money by using only one type of aircraft. They only train pilots and mechanics for one aircraft, makes running a airline much simpler.
 
JetBlueAUS
Topic Author
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 1:32 pm

Quoting NateDAL (Reply 1):
Have you ever flown Southwest?

It is not hard to figure out. Great schedules, great service, and more convenient airports (HOU vs. IAH, etc.)

I have flown them many times. In fact, I can not stand them.
Not all of us can be heroes, some of us can only stand on the sidewalk and clap as they go by.
 
SWAFA27
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 2:29 pm

Quoting ATLAaron (Reply 6):
Fuel hedges . . . and those are running out.

Ah, c'mon bud its not just fuel hedges . . . and you know it.
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co
 
commavia
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 2:33 pm

To me, the Southwest formula has always been quite simple:

. Empowered, motivated, and valued employees with a good attitude
. Convenient schedules and flights to places where lots of people want to fly
. A simple product that delivers basic customer service elements that can be perfected and delivered consistently time and again
. Low fares, of course!

Stick with the above, and you pretty much can't go wrong!  Smile
 
OPNLguy
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 2:35 pm

Alright, I probably shouldn't spill the beans here (and I hope I don't get in trouble), but the secret of Southwest's success is th#(&(-0-- p'p 'oj09oyxz6 -
NO CARRIER
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
lincoln
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 2:38 pm

Quoting OPNLguy (Reply 12):
#(&(-0-- p'p 'oj09oyxz6 -
NO CARRIER

OPNLguy is still using dialup?!?! Oh, my, we must do something about that. Big grin
CO Is My Airline of Choice || Baggage Claim is an airline's last chance to disappoint a customer || Next flts in profile
 
oneskyjet
Posts: 77
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 2:47 pm

Their ingredients in the secret sauce are:

- high aircraft utilization (fast turns)
- careful inventory management of low leisure fares (which all their competitors match and sell more of)
- aggressive pricing relative to OA's high close in business fares (this allows them to "average up" their yields by stealing share)
- Well paid employees based on productivity
- Aggressive fuel hedging
- Single fleet type: 737 (with very wide ranging mission capabilities between the various models)
- Underpromise, overdeliver
- Network focused on dense point to point markets with connectivity managed as a secondary byproduct.

They are, however, increasingly vulnerable on a number of fronts.

- Their relative cost advantage is eroding bigtime as legacy cariers shed cost through bankruptcy, layoffs, and cutbacks.
- They are increasingly flying further distances where the benefit of fast turns is reduced relative to their competition.
- The cost of fuel as caught up with their fuel hedging so this relative advange has declined.
- Though they don't claim to have much of a product, it's pretty poor compared to legacies like CO and LCCs like JetBlue and Frontier)
- They're running out of dots to connect and are increasingly finding themselves in congested, expensive airports like PHL, DEN, LAX. Hard to do fast turns at airports constantly under ground delays. Rumor has it that they are looking hard at LGA. Good luck with that!
- Their culture is very "inward looking" based on replicating what they know works. As their core business comes under increasing pressure, they will have a hard time adapting to new ways of doing business.

These guys run a great airline and have been unbeliveably successful by sticking with a winning formula. Unfortunately, the industry has gone through a significant change around them that is going to force them to change. If they're able to adapt and change, they'll continue to do well. If they don't, I predict losses showing up in the P&L soon.
 
AY104
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 3:23 pm

Quoting Commavia (Reply 11):
To me, the Southwest formula has always been quite simple:

. Empowered, motivated, and valued employees with a good attitude
. Convenient schedules and flights to places where lots of people want to fly
. A simple product that delivers basic customer service elements that can be perfected and delivered consistently time and again
. Low fares, of course!

Stick with the above, and you pretty much can't go wrong!  

I totally agree. The key word is simple. Even during the years I worked for Delta, my Station Manager always used to say that they were so successful because they always kept things simple.
Also, my belief is they don't put anybody on a pedestal: not emplyees, not management, not passengers. There is no "elite" BS, they just give everyone good service. The moment you start giving people titles like "elite", "gold", "platinum", "Flying Colonel" ( which is about the most pretentious and ridiculous thing I ever heard - even when I worked for DL, I almost puked whenever I heard it, and always went out of my way NOT to use it).
If someone has to travel a lot by air, be it for business or pleasure or whatever, there is absolutely no reason whe he or she should be rewarded by anything other than good and reliable service. The whole concept of rewarding people with upgrades and freebies is totally ludicrous. While I do realize that Southwest has a FF program, it has unfortunately come to the point where it is a matter of competition, at least their program is simple and it doesn't inconvenience other passengers by lengthy and complicated boarding announcements and a ridiculous number of preboardings. The first time I flew Southwest I was most impressed by the smoothness of the operation. Unfortunately, they don't operate into Canada, and I don't blame them as that would open up another can of worms with immigration fees, customs and a whole new set of headaches. Again, this is where they save money.
Cheers,
AY104
The only thing a customer should expect for his/her loyalty is good service
 
mayhem
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RE: What Is The Secret Behind Southwest?

Fri Jan 05, 2007 10:16 pm

Quoting Mt99 (Reply 7):
My theory is part of ther success is vconstantly exceeding low custumer expectations. For the ticket price the costumer does not expect much, so anything that is above and beyond - no matter how small - is recieved with gratitude and fanfare.

You didn't read "the service profit chain" did you?  Smile A very good management book in which they use ao WN as an example.

They state that a major strenght of WN is indeed exceeding customer expectations. Based on the "value equation" where every customer compares price to value, you're good if you get on that ratio, you're the best if you do better than that ratio.

Also they describe how the first line personnel (everybody you see at the airport/customer service/crew) has a huge thing to do with quality perception.
Fancy FF programs with status aren't necessary because people have a good experience with them and prefer that over the possible status they would get..

These are the forces that make WN get happy customers, on the other side you have their relatively low costs, which have been pointed out very well here... simplicity is a key word
 
mt99
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 1:15 am

Quoting Mayhem (Reply 16):
You didn't read "the service profit chain" did you?

Nope but we did discuss SWA in one of my MBA classes about strategy.

Quoting Mayhem (Reply 16):
These are the forces that make WN get happy customers, on the other side you have their relatively low costs, which have been pointed out very well here... simplicity is a key word

Let me give you an example. I was stuck in MCI comming back to ORD due to thunderstorms. AA cancelled their flight into ORD. It was late on Sunday night - nothing was open in MCI. No food. Several AA flight to ORD were diverted into MCI aswell. They were allowed to deplane but not leave the awfully small gate areas. The agents were running back and forth like chickens without a head.

I had to get to chicago that night. I was due a my new job at 8AM next morning. Called SWA - bought a seat on a flight to MDW that was delayed but scheduled still scheduled to go out as soon as the storms let up.

So i go all the way to the SWA area.. what a difference.. DOZENS of custumer service personnel serving coffee, orange juice and snacks to stranded passengers. Since there was no food in the airport somene probably went to the grocery store and bought snacks over for a few hundred poeple. What is the cost of that?

You are right - an empowered employee must have made the choice that a few hundred $$ in snacks would make everyone happy.

So again - beating MY expectations for a $125 last-minute 1 way ticket.
Step into my office, baby
 
ltbewr
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 1:56 am

Good value for the money is probably the secret.
Excellent management that cares about the airline and that is well run for profits with good service, not as much about how much they make.
You may not pay the cheapest fare, but one that is reasonably competive. More importantly, fares close to the departure day or time will probably be a lot cheaper than anybody else. That is critical to small business or late notice travelers.
Carefully selection of employees that put the customer service first.
Employees get good pay, not massive cuts like at other airlines, inspiring loyalty to the pax and airline, so better productivity.
Exceptional productivity of aircraft operations. No wasted moves, wasted fuel and fast turn arounds.
Careful growth.
Mostly short haul non-stop flights until recently.
Not trying to go head to head with majors as to airports served, routes, pricing.
Many items that lower costs without looking cheap including:
One-class service, yet with seat pitch that is probably better than most majors; Never served meals or had electronic IFE, so never those hassles or overhead costs, as well as shorter turnarounds.
 
JayDavis
Posts: 1870
Joined: Wed Jan 10, 2001 1:09 pm

RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 2:45 am

Truthfully, Southwest DID go out to PSA's headquarters when they were first starting up. IIRC, Southwest was in the process of buying aircraft. PSA had some spare aircraft and was trying to sell them to WN. WN wasn't interested in purchasing them and all of a sudden, PSA wasn't so helpful anymore.

One other thing that many people fail to realize is the brilliant leadership that WN had when it first started. Lamar Muse does NOT get NEARLY the amount of credit that he rightfully deserves for getting that airline off the ground. Yes, Herb gets a ton of credit but Herb didn't know sh** about the airline business at the time. He learned it very well, but he didn't know anything about it from the get-go. Lamar Muse DID !! He brought with him a ton of veteran leadership from various airlines when they were first starting up and that helped a great deal as well.

While he was President of WN, Lamar also had one of the most brilliant sales strategies ever. BN and TI were trying to put WN out of business and they decided they were going to "lower" their fares from DAL to HOU to $15 each way. Lamar was pissed to say the least. He then took out a sheet of paper and made one of the advertising industry's classic ads. It said, "Nobody is going to shoot Southwest Airlines out of the sky for a lousy $15"

What WN did was this........they still charged a person the normal fare of $25 on the route, because most of the people flying on Southwest at the time, during the day, which was when the $25 fare was in affect, were on expense accounts, so their company was paying for the plane ticket, not the traveler. Southwest then gave each of these people flying on the $25 fare, a bottle of booze. For a month, WN was the largest liquor distributor in Texas.

Many case studies have been done about this stroke of genius from Lamar. He truly does not get enough credit for the success of WN and I blame that on Rollin King, who was the very jealous "founder" of Air Southwest which became Southwest Airlines. The guy just hated Lamar and that is what lead to Lamar's demise, sadly enough.
 
beech19
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 3:20 am

Quoting JetBlueAUS (Reply 9):
I have flown them many times. In fact, I can not stand them.

Why am i not surprised. Look at your name... shocker...

Now if your name was SouthwestAUS i think we would all be a little more surprised by your statement.  Wink
KPAE via KBVY
 
sphealey
Posts: 286
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 3:27 am

Reasonable prices. Everyone experienced traveller knows that Crandall's insight that tickets have a time-based value was correct, and that one should have to pay a premium based on the load factors (generally meaning, pay more for last-minute).

Southwest knows that the ratio for the premium ticketing should be kept _reasonable_ and _reasonably fixed_ so that the customer does not feel ripped off. My company and I know that a last-minute flight will cost more; that is fine and Southwest's 2x (sometimes 3x) premium from an already-reasonable base is understandable. The carriers that were charging 12x (even 20x in some cases!) premiums? Not so much.

sPh
 
bond007
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 3:38 am

Quoting AY104 (Reply 15):
at least their program is simple and it doesn't inconvenience other passengers by lengthy and complicated boarding announcements and a ridiculous number of preboardings.

Most airlines, FF's are simply included in the first boarding group - never heard any 'complicated' announcements or procedures??

Quoting AY104 (Reply 15):
If someone has to travel a lot by air, be it for business or pleasure or whatever, there is absolutely no reason whe he or she should be rewarded by anything other than good and reliable service. The whole concept of rewarding people with upgrades and freebies is totally ludicrous.

I disagree, but more importantly to this discussion, regardless, I don't think this has anything to do with their success. WN lose as many business customers as they gain from not having a FF program, and by treating everyone the same. Like it or not, most business travellers DO want to be rewarded.

Their success IMO, it probably, as others has mentioned, pure simplicity - their pricing structures alone must save a fortune in systems and maintenance. It's no coincidence that the more successful airlines also have very simple fare pricing.

...and as others said.. single airplane type, limited domestic routes, great corporate policies... etc.

I don't fly them, but respect them as one of the great airlines.

Jimbo
I'd rather be on the ground wishing I was in the air, than in the air wishing I was on the ground!
 
beech19
Posts: 887
Joined: Fri Jul 21, 2006 11:30 am

RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 3:43 am

Quoting Sphealey (Reply 21):
The carriers that were charging 12x (even 20x in some cases!) premiums? Not so much.

yeah... i once for kicks watched a price of a specific flight from Manchester, NH to Seattle via Detroit on Northwest(pre-911). At 12 days out the price was $212.50 roundtrip, that is the price i always paid, twice a month i did this flight. At 7 days out it went up to $400+ (still a very good price). The day of flight when i checked in i asked if i were to purchase a ticket for this flight right now (within 2 hours of leaving) they quoted my a price of $1700!!!!

Remember... this was when demand was NOT close to supply. We are talking 80-100 people on a A320(Manchester to Detroit) and 150 people on a DC-10 (between Detroit and Seattle).
KPAE via KBVY
 
OPNLguy
Posts: 11191
Joined: Tue Jun 15, 1999 11:29 am

RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 3:45 am

Quoting AY104 (Reply 15):
"Flying Colonel" ( which is about the most pretentious and ridiculous thing I ever heard - even when I worked for DL, I almost puked whenever I heard it, and always went out of my way NOT to use it).

I think Air Florida's DC-10 service across the Pond had that beat not only for pretentiousness, but for stupidity as well. The heavily-promoted "Upper Class" service naturally and inevitably led the coach folks to surmise that they were "lower class", and our PR folks had their work cut out for them...

Quoting JayDavis (Reply 19):
While he was President of WN, Lamar also had one of the most brilliant sales strategies ever. BN and TI were trying to put WN out of business and they decided they were going to "lower" their fares from DAL to HOU to $15 each way. Lamar was pissed to say the least. He then took out a sheet of paper and made one of the advertising industry's classic ads. It said, "Nobody is going to shoot Southwest Airlines out of the sky for a lousy $15"

What WN did was this........they still charged a person the normal fare of $25 on the route, because most of the people flying on Southwest at the time, during the day, which was when the $25 fare was in affect, were on expense accounts, so their company was paying for the plane ticket, not the traveler. Southwest then gave each of these people flying on the $25 fare, a bottle of booze. For a month, WN was the largest liquor distributor in Texas.

Pretty much correct, except that the fares were $26 and $13, and we were the largest distributor of Chivas Regal, Crown Royal, and Smirnoff for a couple of months...

http://www.tsha.utexas.edu/handbook/online/articles/SS/eps1.html

http://globalgateway.thunderbird.edu...nderbird/case_series/a07050006.pdf (Page 4)

Lamar did bring some seasoned vets in early on; Captain Don Ogden from AA was the first VP of Flight Ops; and then there was W. W. "Bill" Franklin in Ground Ops. Lots of former TTA/TI and BN folks, and the latter's "Cowboy" rez system (inherited by AA after BN v1.0 went under in 1982) continued as our rez system.
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
JayDavis
Posts: 1870
Joined: Wed Jan 10, 2001 1:09 pm

RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 4:29 am

Hi OPNLguy, thanks for the clarifications. I knew most of the story but wasn't 100% on the exact facts of the whiskey promotion.  Smile

Speaking of drinking, when are we finally going to meet up at Club Schmidtz's one of these days? Not for drinking, just to meet up. They have a mean hamburger there, The Double Double !!  Smile

One other thing that helped WN at the start was the 10 minute turn around. An airline ONLY makes $$$ when the plane is in the air, not on the ground. WN had 4 737's to start with and then times got hard, so they came up with the 10 minute turn around and sold the other 737 and make a tidy profit on it................

Also, I did not realize you used to work at Air Florida. I wanted to work for them so badly in the late 70's and early 80's. I loved their paint scheme. I'm sure that is a good reason why I wanted to work for them.  Smile ha ha !!
 
OPNLguy
Posts: 11191
Joined: Tue Jun 15, 1999 11:29 am

RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 4:42 am

Quoting JayDavis (Reply 25):
One other thing that helped WN at the start was the 10 minute turn around. An airline ONLY makes $$$ when the plane is in the air, not on the ground. WN had 4 737's to start with and then times got hard, so they came up with the 10 minute turn around and sold the other 737 and make a tidy profit on it................

Not exactly from the start... We started ops with 3 -200s in June 1971, and the 4th -200 came in September 1971. As best as I can recall from original employees (I didn't start the first time until 1977), the original ground times were not 10 minutes, and were either 20 or 25. Southwest was later forced to sell 1 of the 4 (to Frontier v1.0), and going to 10-minute turns as a result of that sale allowed the remaining 3 to operate a schedule based on 4 aircraft.
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
FLY2LIM
Posts: 1095
Joined: Thu May 06, 2004 6:01 am

RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 4:43 am

Quoting NateDAL (Reply 1):
Have you ever flown Southwest?

It is not hard to figure out. Great schedules, great service, and more convenient airports (HOU vs. IAH, etc.)



Quoting ATLAaron (Reply 6):
Fuel hedges . . . and those are running out.



Quoting BladeLWS (Reply 8):
Low cost, joyful employees, good destinations, good boarding system.

Thats just for the passengers, they save a boat load of money by using only one type of aircraft. They only train pilots and mechanics for one aircraft, makes running a airline much simpler.



Quoting Commavia (Reply 11):
To me, the Southwest formula has always been quite simple:

. Empowered, motivated, and valued employees with a good attitude
. Convenient schedules and flights to places where lots of people want to fly
. A simple product that delivers basic customer service elements that can be perfected and delivered consistently time and again
. Low fares, of course!

Stick with the above, and you pretty much can't go wrong! Smile



Quoting Oneskyjet (Reply 14):
- high aircraft utilization (fast turns)
- careful inventory management of low leisure fares (which all their competitors match and sell more of)
- aggressive pricing relative to OA's high close in business fares (this allows them to "average up" their yields by stealing share)
- Well paid employees based on productivity
- Aggressive fuel hedging
- Single fleet type: 737 (with very wide ranging mission capabilities between the various models)
- Underpromise, overdeliver
- Network focused on dense point to point markets with connectivity managed as a secondary byproduct.

Everyone is forgetting one major factor contributing to their success. Southwest has an excellent SAFETY record. Add that to the lists made above and you have a real winner.

Quoting Oneskyjet (Reply 14):
These guys run a great airline and have been unbeliveably successful by sticking with a winning formula. Unfortunately, the industry has gone through a significant change around them that is going to force them to change. If they're able to adapt and change, they'll continue to do well. If they don't, I predict losses showing up in the P&L soon.

Yes, but up to a point. The "other guys" are not creating new formulas for success. They are trying to catch up to WN's formulas for success. B6, AA, DL, they are not going to come up with a new way to reduce their costs below those of WN. They are simply trying to get to the same level. And, let's face it, once legacies like AA and UA catch up, what is their product going to look like? I am a loyal AA customer, but isn't their current product just a notch above what WN offers? And I'm sure many of the AA haters would say that WN's product is better.
I think that WN will continue with their success until someone comes up with a formula that is better than theirs. Until then, Southwest Airlines will continue being the industry leader that it is.

FLY2LIM
Faucett. La primera linea aerea del Peru.
 
DC8FanJet
Posts: 167
Joined: Sun Aug 27, 2006 9:25 am

RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 6:38 am

Southwest has also always done a really good job of hiring. Good employees & a simple plan have made them successful thus far, but they need to keep growing to continue to succeed, and the "low hanging fruit" has all been plucked.
How they manage the next few years as their fuel hedges run out and the legacies' cost structures go below Southwest in many cases will be the challenge.
 
NASBWI
Posts: 922
Joined: Fri Feb 18, 2005 1:12 am

RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 6:53 am

Quoting OPNLguy (Reply 24):
The heavily-promoted "Upper Class" service naturally and inevitably led the coach folks to surmise that they were "lower class", and our PR folks had their work cut out for them...

Doesn't VS still refer to its premium product as "Upper Class"?
Fierce, Fabulous, and Flawless ;)
 
PanAm747
Posts: 4713
Joined: Mon Mar 01, 2004 4:46 am

RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 7:03 am

One aspect of Southwest's success that no one has mentioned yet is that they do something almost unheard of anymore - in fact, it strikes me as almost un-American: LONG TERM PLANNING!!

If you look at the corporate strategies for many companies, it's all about short-term gain - enter a market of some sort, drive out the competition, and deal with the results later. Forget the costs, forget investment, forget everything - showing the investor an immediate profit is what it's all about, even if that strategy is ludicrously unsustainable. The world is littered with Enrons, Worldcoms, Braniffs, and so on. Even now, some airlines refuse to restructure their archaic business patterns, because it's cheaper in the short-term to cut costs like wages and maintenance.

Southwest, on the other hand, does NOTHING without a full and complete long-term strategy. As an example, they could be flying anywhere they wanted to from DFW, but looking at the factors involved, they decided it wasn't viable to their quick-turn around business plan. But LAX (and the mess that it is) is a completely different story - their analysis shows that it's worth it.

When a business is run well, it shows - from the CEO to the lowliest employee. It will never be perfect, but with a long-term outlook instead of a short-term profit, Southwest will continue to be successful.
Pan Am:The World's Most Experienced Airline - P(oor) S(ailor's) A(irline): San Diego's Hometown Airline-Catch Our Smile!
 
AirWillie6475
Posts: 2372
Joined: Thu Jan 27, 2005 1:45 pm

RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 7:27 am

Quoting JetBlueAUS (Thread starter):
Yes, Southwest. An airline that has been successfully profitable consecutively for over 30 years. How do they do it, and how can they "beat out" other carriers by offering the same price? When their fuel hedges run out, will they see a profit decline/loss? Are fuel hedges keeping them afloat?

Southwest's success is probably contributed to the amount of flights they have, you'd be surprised how many people choose an airline because of the time of a flight rather than prices. Southwest doesn't offer anything special, in fact if you look at it they don't offer anything at all. However, the fact that they are able to keep new planes in the air while legacies are fixing broken planes on the ground and the fact that they keep their overhead low to offer reasonable prices for 1 hour flights is why they are here and have been profitable. Not because of happy employees or their whole "we love you" campaign. It all boils down to cost of ticket and flight times for the customer.

The only problem they have now is that airlines are bouncing back and are making money, especially the legacies. Also, not to mention fuel prices. WN prices will go higher and they will start to lose pax going coast to coast and probably 2-3 hour flyers also. I predict they will still be successful on 1 our flights, after all that is where their business lyes.
 
ATCme
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 7:53 am

Quoting Mt99 (Reply 17):
DOZENS of custumer service personnel serving coffee, orange juice and snacks to stranded passengers. Since there was no food in the airport somene probably went to the grocery store and bought snacks over for a few hundred poeple.

If I remember right they have some fancy name for this and they almost always do that when there is bad weather or something. Saw it on Airline.

Quoting JayDavis (Reply 25):
the 10 minute turn around

Even at 25 minutes it is still amazing compared to the Legacy carriers. I'm appalled that at some of them the turn times are horrendous. I mean when I went on NW this summer I sat there for a 4 hr layover looking at the DC9 that was going to take me to GFK for 3 hours. Thats crazy!

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Indy
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 8:08 am

Quoting BladeLWS (Reply 8):
Low cost, joyful employees, good destinations, good boarding system.

I disagree on the boarding system. But that is my opinion.

I think the reason for their success is simple. They found a target audience and developed a business model to serve that audience. Their system wasn't broken for them so they didn't "fix" it like too many businesses do. Also their jets aren't full of dead seats (feed). The real money is with O/D and because they don't have a hub & spoke system they can have the best O/D percentage of all the major airlines.
Indy = Indianapolis and not Independence Air
 
Australia1
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 8:11 am

WN will eventually have to look at bigger aircraft (they are probably already) & may do same a Jetblue/Virign Blue & have 2 types in their fleet, besides for quite a while they have 737-200's & 737-700's in their fleet & they are very different aircraft. 737-300's also very different to 737-700's.
 
grantcv
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 9:31 am

I think their convenient website also plays a role in their successs. As a regular flier of Southwest, you use it often. Pretty soon it becomes THE way you book all your travel - including rental car and hotel. And then you forget to use the other websites that give you a choice of carriers - so you don't even bother looking. And you fail to notice that you can get a better price elsewhere, you just assume that because it is Southwest, it is the lowest fair.

And when you do remember to use the other websites, it becomes an exercise in frustration - waiting while they "search" for fairs, low fairs that disappear immediately after you do the search so you can't actually book them (a practise that should be illegal), and pages and pages of different fairs and routings. I always just go back to Southwest and pay whatever they ask.
 
txagkuwait
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 10:43 am

Quote:
Pretty much correct, except that the fares were $26 and $13, and we were the largest distributor of Chivas Regal, Crown Royal, and Smirnoff for a couple of months...

Lamar did bring some seasoned vets in early on; Captain Don Ogden from AA was the first VP of Flight Ops; and then there was W. W. "Bill" Franklin in Ground Ops. Lots of former TTA/TI and BN folks, and the latter's "Cowboy" rez system (inherited by AA after BN v1.0 went under in 1982) continued as our rez system.

OpnlGuy, I was gonna offer up that correction, but you beat me to it.

Hope all is well.

You guys overlooked the 10 minute turn....that the first system schedule of 10 minute turns was done on a scrap of notebook paper by Bill Franklin's kid - a sophomore at Richardson High School - then taken to Harold Reilly who did whatever had to be done with it to make sure it could be crewed and everything.

And that ten minute turn was based on the fact that Trans Texas Airways had managed to turn DC-3s in 3 minutes, that 30 or 35 psgrs was considered a REAL GOOD load on Southwest at that time, and that the scheduled 50 minute trips were generally flown with 34-38 min enroute times. A couple of Cuban pilots taught everyone else how to taxi a little faster and voila' - you had 36 trips a day with 3 airplanes making 10 minute turns and the on-time record improved to 97.6% - not within the CAB 15 minute grace period, but within 5 minutes of scheduled arrival.

Remember you heard it here first - Southwest's first full month of operations making 10 minute turns saw an on time record of 97.6% of their flights arriving within 5 minutes of scheduled time.

But why are they successful today? Because they have so far avoided changing much of anything on the perpetual money machine given to them by Lamar Muse. His motto - feed the rich and grow poor, feed the poor and grow rich. It works in the restaurant business, and it works in the airline business too.

By the way, OPNL, I bought some of your stock a few days ago, so gitcherbutt back to work.

Regards

TxAg
 
atrude777
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 10:57 am

Quoting Bond007 (Reply 22):
I disagree, but more importantly to this discussion, regardless, I don't think this has anything to do with their success. WN lose as many business customers as they gain from not having a FF program, and by treating everyone the same. Like it or not, most business travellers DO want to be rewarded.

Uhm...They do have a Frequent Flyer Program, its called Rapid Rewards, and what do business folks earn after flying WN so much? Well after they earn 100 credits in a year, or about 50 round trips per year, which isn't to much for a business flyer who travels weekly, they earn a FREE COMPANION TICKET for a whole entire year, so they can take anyone they want with them on their trips, their partner, spouse, brother, or mom, or a sister, and it is free for that year. On top of the Free drink coupons you get on every free ticket you earn with SWA. I think that is a very nice reward for business travelers on SWA, no it doesn't get them intl, but what it does is it rewards them.

Quoting AirWillie6475 (Reply 31):
Southwest doesn't offer anything special, in fact if you look at it they don't offer anything at all.

Couldn't be farther from the truth. Offer nothing at all? Ok, I guess they don't offer free drinks? (They do) Don't offer Free Pillows, blankets?(they do, like other airlines do), they don't offer snacks on flights? (they do, peanuts/pretzels on 1hr flights, bag of crackers on 2hrs or so flights, and up to 3 hrs or more a FREE SNACK BOX, which is the same size offered by UA and AA, and guess what they charge, SWA doesn't). So Airwillie, what dont they offer then in service wise?

Quoting AirWillie6475 (Reply 31):
keep their overhead low to offer reasonable prices for 1 hour flights is why they are here and have been profitable.

Overhead low? What does that Mean.? In actuallity, 1 hr flights are more expensive, and costly to operate then a long haul flight for SWA, so short haul flights are not the main reason SWA is profitable.

Quoting AirWillie6475 (Reply 31):
Not because of happy employees or their whole "we love you" campaign. It all boils down to cost of ticket and flight times for the customer.

Right, Southwest Airlines has been profitable for over 30 years because of flight times and cost of ticket?  Yeah sure

Quoting AirWillie6475 (Reply 31):
I predict they will still be successful on 1 our flights, after all that is where their business lyes.

Not quite true, they are more succesful on other things, not due to 1 hour flights.

Alex
Good things come to those who wait, better things come to those who go AFTER it!
 
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lightsaber
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 11:01 am

Quoting DC8FanJet (Reply 28):
Southwest has also always done a really good job of hiring.

This probably matters more than anything else.

Quoting Oneskyjet (Reply 14):
- Underpromise, overdeliver

Amazing how well that works... Yet WN gets critisized for that again and again...

Quoting Oneskyjet (Reply 14):
- Their culture is very "inward looking" based on replicating what they know works. As their core business comes under increasing pressure, they will have a hard time adapting to new ways of doing business.

Yes, their biggest fault. Core strengths become core rigidities once they are out of date. WN is adapting... but very slowly.

Quoting AY104 (Reply 15):
If someone has to travel a lot by air, be it for business or pleasure or whatever, there is absolutely no reason whe he or she should be rewarded by anything other than good and reliable service.

 checkmark  And yes, I read the post about the boarding groups. Ok... no muss, no fuss. I avoid certain airlines as the only way to get decent service is to be one of those "flying Colonel's."  rotfl  What airline *really* had that term?

Quoting Mt99 (Reply 17):

So again - beating MY expectations for a $125 last-minute 1 way ticket.

And there is the key. I just paid $600 for a one way on another airline and was quite happy. Its cost versus expectations.

I also think the boarding sytem helps. It creates a rush and thus shortens turn times. Like? Dislike? Hey, that's why there are dozens of airlines to chose from!  bigthumbsup 

Lightsaber
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LHRBFSTrident
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 11:48 am

...and no bloody hubs to maintain...
 
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par13del
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 11:53 am

Good management, good management, good management, pretty simple.

A lot of the detail as to why WN is successful have been tried by other carriers to no avail. Simplified fares, DL tried that for a while. Greater than 30" pitch, other carriers have now followed suit, AA had MRTC for a while and gave it up. Leather seats, who started that on a fleet wide basis? Fuel hedges, they were "smart" enough to spend cash on hand while the other more intelligent airline managers spent their cash on hand on _______ ( fill in the blank ). One type of a/c by choice, large enough fleet now that you can't say the benefits diminish when fleet size goes over a certain size. Give people what they want when they choose to fly, more flying and less sitting on the ground, only way they do that is by going into non-major airports, and for those who mention DEN and PHL, please remember that WN just started flying there within the last 5 years or so......Frequency to accomodate travellers, rather than less frequency to have a higher pax load, as long as its legal, who cares how you make your money, they have pretty low load levels, but they make money.
 
bond007
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 12:17 pm

Quoting FLY2LIM (Reply 27):
Everyone is forgetting one major factor contributing to their success. Southwest has an excellent SAFETY record

Most if the WN customers have no clue about their safety record, and although it might be better than the other US airlines, its all relative - they are all excellent anyway. I don't think many WN customers ever take this into consideration - in fact the whole MDW incident probably did more harm to WN - that's what folks remember recently ... not stats.


Jimbo
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AirEMS
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 12:23 pm

I always thought that it was Voo Doo and Ms. Cleo that were helping Southwest along... Or are they apart of the whole new world order thing that has it's head quarters under DIA?


Again bringing my warped sense of humor to A.net!
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If Your Dying Were Flying
 
AirWillie6475
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 1:16 pm

Quoting Atrude777 (Reply 37):
Right, Southwest Airlines has been profitable for over 30 years because of flight times and cost of ticket? Yeah sure

What, do you think it's because of the singing and dancing and the gleeful atmosphere WN people portray to the customers?
 
atrude777
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 1:29 pm

Quoting AirWillie6475 (Reply 43):
What, do you think it's because of the singing and dancing and the gleeful atmosphere WN people portray to the customers?

Yep!

It isn't the SOLE reason, but a huge part of the friendly customer service WN provides that keeps the customers coming back, and obviously it works. WN is by far the largest Domestic Airline in terms of Passengers boarding, larger then AA's domestic AND Intl passenger count combined too!!

So yes again, it plays a huge part in it.

Alex
Good things come to those who wait, better things come to those who go AFTER it!
 
AirWillie6475
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 1:40 pm

If you found a ticket on SW for 300 and UA for 200, who would you fly?
 
atlaaron
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 1:47 pm

Quoting SWAFA27 (Reply 10):
Ah, c'mon bud its not just fuel hedges . . . and you know it.

Actually if we are looking at this from a profit standpoint then yes it is. If Southwest was paying the same fuel price that the legacies hedged at then I BELIEVE they would be losing money.

As far as their safety record it is no better than FL (post Valujet as most consumers do not know the connection), DL, B6, F9, etc.
 
Tbird
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 1:48 pm

Yes I agree with Alex, WN's success is a good part related to their customer service and free spirited culture.
 
atrude777
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 1:56 pm

Quoting AirWillie6475 (Reply 45):
If you found a ticket on SW for 300 and UA for 200, who would you fly?

Absolutely no question.

United Airlines. Simply because of the cost difference.

I am one of the cheapest guy ever when it comes to buying tickets, however United has usually been one of the most expensive airlines at STL, so i have never even flew UA because of that reason.

SWA just continues to be cheapest most of the time.

I flew NWA over SWA also due to the cost difference, NWA was 148 r/t with 2 connections, WN was 250 r/t and n/s, still no question, I'd book NWA.

Though I have no Idea what that has to do with anything else? Most of us ARE lead by price, regardless of who the airline is usually.

Quoting ATLAaron (Reply 46):
As far as their safety record it is no better than FL (post Valujet as most consumers do not know the connection), DL, B6, F9, etc.

Uhm..ya it is. WN is one of the WORLD's safest airline, WN has never had a crash where a passenger was killed. DL has, AA has UA has, NW has, CO has, keep going. B6, FL and F9 are also all just as safe as WN too. But comparing safety records with WN and the legacies are two different things.

Alex
Good things come to those who wait, better things come to those who go AFTER it!
 
lincoln
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RE: What Is The Secret Behind Southwest?

Sat Jan 06, 2007 2:27 pm

Quoting Atrude777 (Reply 48):
Uhm..ya it is. WN is one of the WORLD's safest airline, WN has never had a crash where a passenger was killed.

WN may have never had a crash where a passenger was killed, but they have had a crash with a fatality, and a couple well-publicised incidents (including a runway overrun at Burbank with the aircraft stopping just feet short of a gas station).

I beleive off the top of my head that WN had the most recent fatality of any of the listed airlines [excluding natrual causes].

I'm not saying that Southwest isn't safe -- they have quite an envyable safety record. I think though that the passenger doesn't care about the facts, just the reputation or perception. Southwest has mantained its good reputation, unlike the stereotypical "cheap" airlines...and this has undoubtedly helped.
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