Southwest Airlines Essay Research Paper Can you

Southwest Airlines Essay, Research Paper

Can you imagine if only one of those “doodles” that you have drawn while on the telephone had turned into a multi million-dollar business. Can you see your picture on the cover of Fortune magazine. Rollin King and Herb Kelleher, the creators of Southwest Airlines could.

What began as a conversation between attorney Herb Kelleher and his client Rollin King, with a drawing on the back of a cocktail napkin, has become one of the worlds most successful business testimonials.

Both men saw the need for an intrastate airline in Texas. Current airlines only offered service to the smaller metropolitan areas as an extension of a long flight from elsewhere in the country. These flights were scheduled at the convenience of the airline, not the customer. They were frequently late and were high priced; making them unwanted by businesspersons traveling within the state of Texas. What these two men proposed was a “local” airline that would serve the three major metropolises of Texas: Dallas, Houston, and San Antonio. Their goal was to offer a low fare, reliable service to meet the needs of the state’s business traveler. Even though it seemed to be a good plan, who could have imagined the road that lay ahead.

The year 1968 marked the beginning of the legal turmoil that would plague Southwest for years. Since WWII, the Civil Aeronautics Board (CAB) had regulated the airline industry. Their jurisdiction only applied to airlines that flew across state lines. Southwest’s application to start a new airline was approved by the Texas Aeronautics Commission in 1968. Other airlines, such as Braniff and Texas International, kept Southwest out of the air and in the courtroom until the Texas Supreme Court ruled in favor of Southwest’s start up. Even so, legal barriers continued to make Southwest Airlines a mere dream until the United States Supreme Court upheld the Texas Supreme Court’s decision in December of 1970.

Although Kelleher had absorbed most of the cost of the legal obstacles, Southwest’s bank account had been drained from the original $543,000.00 to a mere $142.00. They had no employees, no planes, no managers, and virtually no money. In January 1971, they hired M. Lamar Muse as president of Southwest Airlines. Through his efforts, Southwest was able to develop a management team and raise money. (Most of Southwest’s management team had been rejected or forced into early retirement by other airlines!) A much needed stroke-of-luck allowed Southwest to purchase three brand-new Boeing 737 airplanes.

When Southwest was finally about to take off, Barriff and Texas International Airlines threw a last minute roadblock-a restraining order stopping Southwest from entering into service. Kelleher immediately contacted the Texas Supreme Court, who reversed the restraining order, and Southwest Airlines was born.

They operated for nearly two years without recognizing any profits. Only one of the three legs of service seemed to be doing OK. Muse decided to try to fill every seat on the less successful flights by lowering the fares to $13.00. The Texas based giants, Barriff and Texas International, matched the price and the Texas air-war began. Through the use of innovative marketing techniques, and the “Ten Minute Turnaround” (an idea of fully unloading and reloading an airplane within ten minutes) allowed Southwest to build a loyal customer base that led to their first year of profits in 1973. Since then, they have never looked back.

With the deregulation of the airline industry (which dismantled the C.A.B) and Kelleher replacing Muse as president in 1978, Southwest was now able to expand to areas outside of Texas. It began expanding to Louisiana, westward to Arizona and California. It remained in the Midwest with flights in Oklahoma and Kansas. However, Chicago was an area of tremendous potential. Operations in Chicago’s Midway Airport were limited due to the fact that only four gates were available for Southwest’s use. When Midway Airlines folded in 1991, the same determination that made Southwest what it is today came through again to allow the airline to capitalize on a golden opportunity. Realizing that time was of the essence, Southwest quickly negotiated an agreement with the city of Chicago and was able to acquire the gates that Midway Airlines had vacated. Southwest’s profitability had enabled them to commit at least $20 million to developing the smaller airport and alleviate the city’s concern of the airport’s economic future. This commitment by Southwest again built a loyalty among its customers.

Another accomplishment for Southwest was the “Triple Crown” trophy which recognized Southwest’s record of the best on-time performance, least number of mishandled bags, and least number of customer complaints within the airline industry. They have maintained this achievement for four consecutive years and have become known as the leader in the industry for fundamental changes. It is no wonder, with this kind of service record and customer loyalty, that Southwest Airlines is one of the most profitable airlines in the world today. Where will they go next.

In 1996, Kelleher began thinking about whether or not to expand into Florida. There are only two alternatives to discuss about the proposed expansion and each one has its advantages and disadvantages. Let’s look at those alternatives no