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DATE: 1995 (REV’D. 04/05/06)



“The workforce is dedicated to the company. They’re Moonies basically. That’s the way they
—Edward J. Starkman, Airline Analyst, PaineWebber


Ann Rhoades, vice president of people for Southwest Airlines, was packing her briefcase at the end of a 17-hour day. Tomorrow was an off-site meeting with the top nine executives of
Southwest Airlines. The agenda for the meeting was to review Southwest’s competitive position in light of recent actions by United and Continental, both of whom had entered Southwest’s low fare market. That day’s New York Times (September 16, 1994) had an article that characterized the situation as a
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However, she wanted to reflect one last time on these issues to be sure she was not missing anything. Her major concerns were whether Southwest was getting the most in competitive advantage from its own people, and whether the competition could imitate Southwest’s successful human resource practices.

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On June 18, 1971, Southwest Airlines, headquartered at Love Field in Dallas, began flying with three Boeing 737 aircraft serving the Texas cities of Dallas, Houston, and San Antonio.
Southwest’s competition was Texas International and Braniff, and, to a lesser extent,
Continental. Continental used every political and regulatory means to ensure that Southwest would not get off the ground, including keeping Southwest out of the recently built Dallas-Fort
Worth airport and waging a four-year legal battle that left Southwest almost bankrupt at the time of its first flight. One outcome of the legal battle was the so-called Wright Amendment, named after James Wright, then Speaker of the U.S. House of Representatives. The Wright Amendment prohibited any air carrier from offering direct service into Love Field from any place beyond
Texas and the four contiguous states of Oklahoma, Louisiana, Arkansas, and New Mexico. This law meant that passengers flying into Southwest’s central location at Love Field from
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