Key Moments In The History Of Southwest Airlines
As an entrepreneur I love a good business story, and there’s no question that the success of Southwest Airlines is a great one. I recently watched a documentary on CNBC about the co-founder and CEO, Herb Kelleher, and was amazed by some of the gutsy calls he made as CEO. There were key moments in the history of the airline where things could have gone horribly wrong, but he came up with out-of-the-box solutions that not only saved his business, but made it thrive. And while watching this story, I couldn’t help but think of this history as a series of icons.
For those who aren’t familiar with the Southwest story, I’ll go over some brief points, but I do recommend watching the full story on CNBC Titans.
When Southwest started in 1971 they were just a small regional carrier flying from Houston to Dallas. But to make themselves unique, they selected beautiful flight attendants with unique personalities and then put them in hot pants and go-go boots. I love it when a company makes non-traditional choices while operating in a very traditional industry. That’s differentiation!
They also realized they needed to get more from less. They knew if they purchased all the same types of planes — the 737 — they could save money on maintenance costs. They wouldn’t have to train mechanics and carry parts for, say, five different types of planes. They still run a single model of plane today, and this has saved them a great deal of money over the long term.
But when competitors dropped their prices (even below their own costs) it forced Southwest to once again think outside of the box. If they matched those prices, Southwest would go out of business. Instead they decided to give all frequent flyer passengers a free bottle of whiskey each time they flew Southwest. For a few months, Southwest Airlines was the largest whiskey distributor in Texas and eventually the other airlines brought their prices back up.
And then there are the peanuts. While every other airline was serving in-flight meals, Southwest chose to be the no-frills airline by offering just a small snack of peanuts. There was a time when lower management tried to convince Herb that they should offer their passengers something more substantial, like a Snickers. Herb’s response was, “Do you know what the difference in cost is between peanuts and Snickers?” No need to verbalize the answer to that one; it’s pretty clear.