Southwest Airlines Summary

  • Last updated on November 10, 2022

A major U.S. carrier.

In the early 1970’s, Herb Kelleher and Rollin King were growing frustrated with short-haul flights in Texas and the Southwest. Kelleher and King believed that flights were not only too expensive but also not frequent enough to accommodate the needs of business travelers. The two decided to target this niche, and Southwest Airlines was born. On June 18, 1971, Southwest inaugurated service with flights between Houston, Dallas, and San Antonio. Southwest has since grown into a major U.S. carrier, with revenues in excess of $1 billion yearly, employing more than thirty thousand workers and operating more than 2,700 flights a day.

History

In 1971, Southwest Airlines inaugurated service among three Texas cities: Dallas, Houston, and San Antonio. At this time, Houston flights took off and landed in Houston Intercontinental Airport (now called Bush Intercontinental). Many passengers disliked Houston Intercontinental because it was located 23 miles north of downtown, entailing a 40-minute drive to take a 45-minute flight. Because of passenger frustration, Southwest in 1972 transferred all flights originating or terminating in Houston to Houston’s Hobby Airport, a mere 7 miles from downtown.

The next year, 1973, marked Southwest’s first profitable year. At this time, Southwest applied to the Texas Aeronautics Commission (TAC) for permission to extend service to the Rio Grande Valley.

During 1974, Southwest carried its one-millionth passenger. This year also marked a capital outlay for the company as it remodeled its Houston terminal by adding two new boarding gates and departure lounges, at a cost of $400,000.

The TAC did not approve Southwest’s request to provide service to the Rio Grande Valley until 1975. The commission permitted four roundtrips to the valley via the Harlingen Airport each business day. The TAC must have been satisfied with Southwest’s flights because in 1976, the commission gave Southwest clearance to fly to Austin, Corpus Christi, El Paso, Lubbock, and Midland/Odessa.

Several milestones for Southwest occurred in 1977: the airline carried its five-millionth passenger, and Southwest stock was listed on the New York Stock Exchange as “LUV.”

Several organizational changes happened during the following year. After Lamar Muse stepped down as president, Herb Kelleher filled in as interim president, CEO, and chairman of the board. Later in the year, Howard Putnam was unanimously elected president and Chief Executive Officer. Kelleher stayed on as permanent chairman of the board.

Southwest Airlines continued to grow, and in 1979, the airline extended service to the first city outside of Texas: New Orleans, Louisiana.

In 1980, Southwest purchased its twenty-second Boeing 737. This plane was the first 737 in the fleet to be completely owned by Southwest Airlines.

In 1982, Kelleher took command as permanent president, CEO, and chairman of the board. Under his leadership, Southwest expanded its service area, spreading its wings to San Francisco, Los Angeles, San Diego, Las Vegas, and Phoenix. Southwest’s next big expansion came in 1985, when the airline extended service to St. Louis, Missouri, and Chicago’s Midway Airport. In 1989, service began from International Airport in Oakland, California.

In 1990, Southwest passed the billion-dollar revenue mark and became a major airline. With major airline status came an ever-widening geographic reach: in 1993, the company expanded to the East Coast and began service to Baltimore/Washington International Airport. Reaching out not only to the East Coast but also the Pacific Northwest, during the next year, 1994, Morris Air merged with Southwest. Service began to Seattle, Spokane, Portland, and Boise.

During this time, Southwest decided to take advantage of emergent technology to deliver better service to customers. Ticketless travel (travel with an electronic rather than a paper ticket) became available systemwide in January, 1995.

In 1996, Southwest started service into Florida: Tampa Bay and Fort Lauderdale in January, and Orlando in April. In October, Southwest inaugurated service from Providence, Rhode Island. Southwest started out 1997 with service to Jacksonville, Florida, its fiftieth city. Service to Jackson, Mississippi, was added in August. The following June, Southwest Airlines added service to Manchester, New Hampshire. In 1999, Southwest Airlines broadened service on the East Coast to include Islip, New York, in March and to Raleigh-Durham International Airport, in North Carolina, in June. Service to Hartford, Connecticut’s Bradley International Airport began on October 31, 1999. New service to New York’s Albany International Airport began in May, 2000, and to Buffalo-Niagara International Airport in October.

Financial Information

Southwest’s common stock is traded under the symbol “LUV” on the NYSE. Net income for 2000 totaled $625.2 million, a result of having carried 63.7 million passengers. Southwest flights in 2000 were 70.5 percent full, on average. The company took in a total operating revenue of $5.6 billion.

An important component of Southwest’s revenue is its World Wide Web site (www.Southwest.com). In 2000, Southwest reported that $1.7 billion, or approximately 30 percent of its 2000 revenue, was generated from online bookings. Southwest’s World Wide Web site saves the company money, because having customers make reservations over the Internet is approximately ten times less expensive for the company than having to pay travel agents to book reservations.

Fleet

As of January 24, 2001, Southwest operated 346 Boeing 737 jets. On average, planes in the company’s fleet were 8.2 years old. Southwest’s flights average 492 miles in length and last 1.5 hours. Each aircraft makes eight flights per day on average, spending about twelve hours a day in the air.

Bibliography
  • Feldman, Joan M. “Seriously Successful: Southwest Airlines’ Rapid-fire Growth, Consistent Profits and Employee Spirit Have Made It More Than Just an Airline.” Air Transport World 31, no. 1 (January, 1994): 60-67. An article detailing the elements of Southwest’s consistent growth.
  • Freiburg, Kevin. Nuts! Southwest Airlines’ Crazy Recipe for Business and Personal Success. Austin, Tex.: Bard Books, 1996. An examination of Southwest’s uniquely successful business strategy.
  • Henderson, Danna K. “Winning Ugly: Southwest Airlines Passengers May Find Its Livery Unsightly but Their Instant Recall Contributes to the Carrier’s Unbridled Success.” Air Transport World 34, no. 9 (September, 1997): 66-68. An article about one element of Southwest’s marketing strategy.
  • Jennings, Mead. “Staying the Course: Southwest Airlines Has Proved to Be One of the Consistently Successful U.S. Carriers, and a Potential Bounty of Opportunity Is Arising from Failures and Cuts at Other Carriers.” Airline Business (February, 1992): 52-55. Describes the airline’s successes and potential successes.

Air carriers

Airline industry, U.S.

Boarding procedures

Overbooking

Ticketing

Categories: History Content