How Herb Kelleher Built a Business that Rocks


Many long-time airline customers love Southwest Airlines.  Over and over, Southwest Airlines earns high marks for customer service, economic flights and excellent, easy to use rewards programs.
Originally marketed to commuters in the large state of Texas, Southwest initially offered flights for only $20.  Their initial competitor was actually the car, as they tried to get people to convert short-hop flying instead from driving those long dusty distances between Texas’ major cities.

When Southwest first took to the air in 1971, they Herb Kelleher’s new business model (and charisma) that was sure to beat out any other airline.  But, cheap seats don’t fly unless there are people in them.  So their marketing team got smart. They added cute stewardesses in even cuter uniforms. 
Southwest's attention to their employees -- and the value they add to the  business -- has not wavered.  In fact, they say that they "put customer's in second place". Southwest truly believes that if they put their employees first, then their employees' satisfaction and even enthusiasm for their work will shine through in their service to the customers.
Perhaps this focus on their employees dates back to when Southwest only had four -- make that three -- airplanes.  Faced with rising costs and little capital, Herb Kelleher made the tough decision to sell one of the company's four airplanes. However, they needed to fly the same number as flights as before in order to remain profitable.  The Southwest employees rallied around the company, and in the early 1970's when the fastest turn-around time for an airplane was 45 minutes,   Southwest employees turned their planes around in 10 minutes to keep their customer's in the air.
The uniforms have changed through the years but Southwest’s penchant for fun has not.  Their Stewards and Stewardesses are still known for turning boring safety procedure demonstration into full-blown skits with song and dance.  In this day of Web 2.0 this has only enhanced their image as entertained customers post YouTube videos of their entertaining flight crew online. Their Facebook fan page also has quite the following, boasting nearly 1.4 million members.  By way of comparison, that is almost 6 times United Airlines' nearly 270,000 members, 3 times that of Jet Blue's nearly 500,000 members and 10 times American Airlines' paltry 150,000 fan page members.
Not bad for a company with only 70 destinations.

And its obvious that this fun trickles down from the top. In 1992 Southwest found themselves embroiled in a legal dispute with South Carolina Aviation company as to who owned the slogan “Just Plane Smart”.  At Kelleher’s urging, the dispute was settled at a charity arm wrestling match titled “Malice in Dallas”.

And while the days of $20 airfare are long past us, Southwest continues to find ways to save money for their customers.  Their Rapid Rewards frequent flier program has no blackout dates and limited rewards expiration.  (They even have a Southwest Airlines Rapids Rewards credit card to match.) Their “bags fly free campaign” where customers can fly their first two checked bags for free  is estimated to cost the company nearly $500 million per year in uncollected revenue.   Recently, they started a “Change Fees Don’t Fly With Us” campaign that allows customers to change their flights - for any reason -- without paying any penalties.

Bottom line is, Southwest Airlines does whatever it takes to be both fun and cheap. And so far, that’s been a high-flying combination.