The Southwest Airline Flare
Walking into Southwest Airlines is like walking into an art history museum for the first time. The walls are covered from ceiling to floor with mementos, art, photos and other memorabilia that exemplifies a thriving company culture and an illustrious past. Employees walk through the halls in jeans and tennis shoes, oftentimes sporting a Southwest shirt, and the cubicles are blanketed in personal ‘flare.’
Even the conception of Southwest is a tale worth telling. Southwest Airlines was initially theorized on the back of a napkin over dinner between Rollin King and Herb Kelleher. The pair decided to launch a small, Texas-based airline that focused on three routes: Dallas, Houston and San Antonio. VOILA! Southwest was borne.
Today, Southwest is the largest airline in the world by number of passengers carried, as well as one of the most profitable airlines ever, reporting profits for 35 consecutive years.
On our Southwest visit, Dan and I had the opportunity to meet with Ryan Green, Director of Customer Loyalty in the Marketing Department, and Chris Herndon, Sr. Manager in Loyalty Marketing. It was interesting to talk with Ryan and Chris about the Southwest Rapid Rewards Program because they have decisively taken a very different approach to their frequent flyer program than other airlines. While most have added excessive fees and surcharges that ultimately make people question the validity of a ‘free’ flight, Southwest has refused to devalue their program. The value proposition is simple and clear: fly 8 round trips and get one free. No surcharges, no hidden fees, no nothing. Just one free ticket for every ninth trip you take. Pretty cool. In fact, they’ve built an entire marketing campaign around their position: “Fees don’t fly with us!”
Southwest has admittedly handled the economy with more grace than other airlines, partially due to the fact that they did a better job of hedging fuel costs before oil skyrocketed. In 2005, Southwest gambled on the probability that fuel costs would raise and locked in an average cost of $2.19 per gallon of fuel with its providers. If the price of fuel had dropped, they would have had to pay the difference, but clearly this decision has worked out for them.
Southwest Airlines is not afraid to take chances. They pride themselves in taking a different path and so far it has paid off handsomely. Thanks to Ryan and Chris for helping us understand the underlying motivations and goals that drive this successful airline. We can’t wait to have the opportunity to work with you in the future!
