Southwest Airlines: Kevin Smith Behind, Clear Sailing Ahead
Posted by Sheila Shayon on November 22, 2010 01:21 PM
Long before Richard Branson and JetBlue shook up the travel industry, the original maverick airline was considered Southwest. Now pushing 40, the airline handled some 86 million passengers last year — more than any other airline in the United States.
With 3,200 flights a day and a fleet of 544 planes now serving 69 US cities, it maintains consistent profitability in an industry plagued by ... well, pretty much everything. And in a year when it faced an unexpected challenge during the Kevin Smith Twitter debacle, it's heading into 2011 with a (scheduled) lack of turbulence.
Southwest revolutionized the airline business in the early 1970’s offering middle class Americans affordable, competitive air travel. Before then, fares regulated by the government were too high for the average Joe – and only more affluent Americans took to the skies.
Now a mature company, Southwest’s pilots, flight attendants, and mechanics are the best-paid in the industry. Their 5,600 pilots earned $171,000, on average, in 2009, 20 to 40% more than their colleagues who fly bigger planes at other airlines.
Southwest’s sustained success – built around frequent flights, lower fares and operating costs – is now at a critical juncture. Rivalries are heating up: JetBlue and Allegiant Airlines both offer competitive low-fares; larger airline mergers such as Delta and Northwest in 2008, and this year's United Airlines/Continental merger, offer global connections and domestic routes Southwest cannot match.
Traditionally maintaining low operating costs by exclusively flying Boeing 737’s, Southwest announced in September plans to buy AirTran for $1.4 billion and acquire its 717’s. Chairman and CEO Gary Kelly sees the move as “the single best idea we have for the next years.”
The proposed acquisition, still pending regulatory approval – would add 37 destinations to Southwest’s routes and eliminate the lowest-cost competitive carrier. But it also means integrating 86 Boeing 717’s and 8,000 employees into Southwest’s solidly unionized and acculturated workforce of 35,000.
“Our culture is our biggest competitive strength,” says COO Mike Van de Ven to the New York Times. “But we want to grow it, not protect it.”
The million dollar question: can Southwest mature while maintaining its original, more adolescent ways, or as Morgan Stanley recently suggested, “Is Southwest becoming a legacy airline?”
“We still have an underdog mentality. It’s not a comfortable country-club environment for us,” says Kelly. As for its future, “The traditions can hobble you; I absolutely concede that. We’re still a maverick.”
Part of that brand tradition is giving back to the community, including veterans and children's organizations like Kidd's Kids.
Southwest’s distinctive culture in the airline industry continues to make it a highly competitive and desirable place to work: out of 90,043 résumés submitted last year – only 831 people were hired.
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