Southwest Airlines

11551 Words47 Pages
9-803-133
REV: MARCH 11, 2003

JAMES L. HESKETT

Southwest Airlines 2002: An Industry Under Siege
Amid Crippled Rivals, Southwest Again Tries To Spread Its Wings; Low-Fare Airline Maintains Service, Mulls Expansion In Risky Bid for Traffic — Front Page Headline, The Wall Street Journal, October 11, 2001 The Age of “Wal-Mart” Airlines Crunches the Biggest Carriers; Low-Cost Rivals Win Converts As Business Travelers Seek Alternatives to Lofty Fares — Front Page Headline, The Wall Street Journal, June 18, 2002 Vaunted Southwest Slips In On-Time Performance; Airline Famous for Reliability Now Ranks Next-to-Last — Page D1 Headline, The Wall Street Journal, September 25, 2002 Having weathered an unimaginable series of events during the
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The Founding Strategy
Because federal regulation of the airline industry made it difficult to start an airline providing interstate service, Southwest’s founders decided to create an intrastate carrier connecting Dallas, Houston, and San Antonio, Texas, roughly an hour’s flying time apart from one another. Their strategy was centered around costs low enough to enable Southwest to establish fares below the cost of driving a vehicle over the same route. With three new Boeing 737s bought at favorable prices because of overproduction, Southwest finally flew its first flights on June 18, 1971 on two legs of what would become a triangular route connecting the three metro areas. Based at Love Field in Dallas and with a need to get attention, the airline’s new president, Lamar Muse, adopted the “love” theme in executing its strategy. As a result, drinks served on board were called “love potions,” ticket machines were called “love machines,” and cabin “hostesses” (there were no males at that time) were selected for their striking appearance and dressed in suits with “hot pants” and boots (the fashion rage at the time). The hostesses were featured in what today would be called highly sexist ads extolling the distinctive features of the airline, such as stewardesses with seductive voices intoning “what you get at Southwest is me.” Southwest’s point-to-point service enabled it to achieve high levels of on-time service. Its frequent departures enabled passengers to catch a

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