Southwest Airlines – the proto-LCC

Southwest Airlines is a Low Cost Carrier (LCC) based in Texas, USA. The legendary Herb Kelleher founded Southwest (ICAO: SWA) in 1969 to exploit a niche in the market. At the time aviation in the USA was an oligopoly of a few major airlines controlled by the US Federal government’s Civil Aeronautics Board (CAB), which set the fares and completely regulated the industry.

However the state of Texas (the largest in the 48 states on the mainland, about the size of France and Germany combined) could operate internal flights without the approval of the CAB. Seeing that many miles of highway separated the large cities in Texas, Herb decided to cater to this niche market by offering a low-fare airline to cater to the Texan community.

Inventing the LCC model

The principal airlines in Texas (Braniff, Continental and Texas International) tried to stop Southwest from ever taking flight. Kelleher, an accomplished lawyer fought them in court for over two years, before finally winning the right to fly in 1971.

Southwest is often hailed as the prototype-LCC. The incumbent airlines, with the high fares the CAB permitted, offered a luxurious level of service both in first class and economy. SWA by contrast did away with a premium cabin and had practically no service, just serving soft drinks and peanuts to its passengers, who were enticed by astonishingly low fares.

Due to financial constraints and fierce competition, SWA was also managing with just a handful of aircraft. By pioneering very rapid “turnarounds” (as short as ten minutes in some cases, as opposed to the 60 minutes that other airlines took) Southwest was able to fly these aircraft more during peak hours.

The airline also decided to operate only type of aircraft the Boeing 737 (for a brief period some leased 727s were used) for the sake of simplicity in crew training and maintenance. This is a philosophy SWA has maintained, growing its fleet from the initial two 737s to more than 750 in service today!

Texas ‘Tude

Southwest always prided itself of showing the cheeky attitude (or ‘tude) that Texans pride themselves on.  Initially SWA cabin crew wore very short “hot” pants and the advertising campaigns used provocative photos of long-legged Texas beauties (it was a more chauvinistic age).

Today’s SWA cabin crew, more sedately uniformed, often prove themselves to be wonderful brand ambassadors, with legendary safety briefings, impromptu songs and jokes being a constant feature on their aircraft. The relaxed and friendly atmosphere on board a SWA jet has to be experienced first-hand to be really appreciated.

Headquartered in Dallas’ Love airfield, many of SWA’s slogans involve the word “love” and the heart logo that is its trademark. At one stage another company disputed the “Just Plane Smart” tag line used by SWA. The two CEOs engaged in an arm-wrestling competition to decide who would use it, an event that drew a huge audience and great publicity for both companies. This was in 1992 before social-media existed, showing how ahead of its time SWA could be.

The airline grew rapidly, even in the face of the 1970s oil crisis and recession. When the CAB was discontinued in 1979 when airline “de-regulation” came into force, SWA with its tight cost controls and highly motivated staff were able to grow exponentially.

Faced with competitors who cut the fares to a point where they were losing money, SWA responded by refusing to match the fares, but instead giving away a free pint of whiskey (Chivas Regal) to passengers who bought the more expensive tickets! Since many passengers were businessmen who appreciated the gift and whose companies were paying for the ticket anyway, this proved to be a brilliant ploy. For a while SWA was the biggest buyer of Chivas in the entire USA.

Steady growth and profitability

Many of the major US airlines proved unable to cope with the newly de-regulated domestic market and in the 1980s many of the pioneers (Pan American, TWA, Eastern & Braniff among them) were forced into bankruptcy. Most of the others were compelled to merge and today only three of the “majors” survive, American, United and Delta – with Southwest making the fourth of this dominant group.

Southwest continues to expand into new markets. Today it flies to 41 states (including Hawaii) and many foreign countries in the region, such as Mexico, the Caribbean and Central America. SWA carries the most domestic passengers of any US airline, despite eschewing wide-body aircraft and sticking to the 737 as its sole type of aircraft to this day.

Avoiding the complex “hub & spoke” model that many airlines use, SWA has kept to its roots by continuing to be a “point to point” carrier. A single class cabin means that SWA has a very dense and efficient layout. No assigned seating is allocated. Instead passengers are boarded in groups and allowed to find their own seats.

SWA was also a pioneer in totally embracing the Internet – practically all of its sales come through its own website. This does away with the cost of expensive General Distribution Systems (GDS) and On-line Travel Agents (OTAs) who act as a buffer between the traveller and the airline, for a fee of course. Southwest was a pioneer in the use of “direct sales” which has now become an industry norm in the LCC world.

The value of this laser-like focus can be seen by the fact that Southwest has reported its 46^th consecutive year of profit in 2019, declaring a net income of $2.5 billion on revenues of almost $22 billion.

The Southwest “LCC Model” has been replicated all over the world, as we shall see in future columns. In a value-conscious world, controlling your costs while maintaining excellent safety practices and a pleasant passenger experience, have proved to be a winning formula.