Southwest Airlines operations and business model

Southwest Airlines: A Story of Success

In modern aviation history Southwest Airlines is truly one of America's best-noted 'rag-to-riches' stories. Southwest Airlines was a visionary business venture started by two entrepreneurs, and friends, from San Antonio, Texas in 1966 -- Rollin King and Herb Kelleher. Although the birth of the airline came about in 1966 it was not until 1971 that the public was offered passage on its inaugural flight. The period from 1966 to the maiden voyage of 1971 was no easy road, however, as the path was fraught with court rulings all the way to the Supreme Court and fierce competition. Today, however, Southwest Airlines enjoys an image of low cost no frills air travel, customer satisfaction, and employee loyalty. The remainder of this paper will focus on the internal success of the airline from the perspective of employee loyalty and how the airline maintains this loyalty in an era of airline bankruptcies, flight delays, union strikes, and employee layoffs.

Employee loyalty and satisfaction is not a corporate trait that exists in a vacuum, as excelled leadership is required as a mainstay. From the very beginning the corporate heads of the airline recognized that in order to have satisfied and loyal employee base the leadership had to be strong, visionary, and involved in a strong strategic management process - a nine step process that involves strategic planning, implementation, and evaluation. As a side bar note it is interesting to note that once Kelleher put into place the airline's strategic management program a question was put forth by his Mother: "Who comes first, your employees, your shareholders, or your customers?" His response was that his Mother always taught him "...your employees come first. If you treat them well, then they will treat the customers well, and that means your customers will come back and your shareholders are happy" (240-1). To this end Kelleher took the time to meet with all employees from every department of the operation, including customers. Meetings are, to this day, consistently and continually held with flight attendants, mechanics, baggage handlers, and customer service/ticket representatives. From these meetings Kelleher learned, examined, and listened to all that he could as for him "...you've got to take time to listen to people's ideas. If you tell someone no, that's and act of power and, in my opinion, an abuse of power. I don't want to constrain people in their thinking" (71).

Today the biggest asset Southwest Airlines has is its employee loyalty. Always considered to be valued employees over profit and money and this is exemplified by the fact that the airline has never had a lay off of any kind - with the exception of laying off three employees early in the business but hired them back in a short amount of time. Southwest's company loyalty to their employees has made them stronger organization and has saved them a significant amount of money. Trust and security shown by Southwest employees is evidenced in how they do their job. There definitely exists a bond of loyalty that is hard to break, as the employees know they have a future in the good times as well as the bad times. In addition the management segment of the airline believes front line employees are the most important assets of the airline. In fact Kelleher management structure is often viewed as an upside down pyramid wherein the top of the pyramid is representative of the employee. Another significant aspect of employee loyalty within Southwest Airlines is the company's willingness to make the employee part owner of the airline itself, namely in providing employees a stock option plan. Today the employees now own 10% of the company's outstanding stock. All in all, the seemingly limitless employee loyalty is clearly evident in the airline's day-to-day operations of the airline as they go out of their way to make sure the airline stays on time to continually accommodate the traveling customer. There is no doubt that the success of Southwest Airlines is a reflection of the company's goals and management style.