Recently I delivered a two-day leadership seminar. Participants in the seminar had flown in from various points on the East Coast. At five o’clock, at the end of the first day of the seminar, quite a few people took out their BlackBerries and began to check-in with Southwest for their next day’s flight.
As many of you know, Southwest does not pre-assign seats, but instead assigns spots in a queue. That assignment begins twenty-four hours before a flight. I listened to the conversation among the participants as they clicked away on their BlackBerries; what surprised me was the level of frustration in the room. My seminar attendees were checking in minutes after their twenty-four hour window opened, and yet, some were already forty-fifth or higher in their queue. Based upon past experiences, they may have expected to be fifth or less.
What had happened? As I listened, I recalled that Southwest had recently changed both their fare structure and how they assign seats. Now it is possible to buy yourself a higher place in a seat assignment queue. I couldn’t help but wonder, was this change a wise business decision on Southwest’s part?
After the seminar ended, I took a look at Southwest’s new fares. Before there were five different fares, including discount fares and web-only specials. Now there were only three fare categories: “business select,” “business,” and “wanna get away.” All three fares were considerably higher than I was used to paying for routes I had traveled on Southwest. I was annoyed—and I wasn’t even booking a flight.
Admittedly, this is anecdotal evidence. I’ve only described the experience of several customers. I have been such a satisfied Southwest customer that when I’m booking a flight on a route that Southwest flies, I don’t even check competitive airlines. Why? The Southwest experience has been a good one for me and my family. Their fares are low, their customer service is excellent, their flights are almost always on time, and their policies about rebooking flights are consumer friendly. Given that, why would I fly on another airline?
Now, it is admittedly foolish to armchair manage a highly successful corporation like Southwest. While other airlines go in and out of bankruptcy, Southwest is the world’s most profitable airline.
However, I do know this—Southwest’s success has been more than just good fortune. Southwest’s success has been driven by a clear understanding of their purpose.
Roy Spence, the advertising guru who helped to sell Southwest to the public, has said: “Anybody who’s running a business has to seek out the higher calling of that business, its purpose. Purpose is about the difference you’re trying to make—in the marketplace, in the world. If everybody is selling the same thing, what’s the tie-breaker? It’s purpose.”
According to Spence, in the early years, as Southwest examined its purpose, they realized that they were “not in the airline business, (but) in the freedom business. (Southwest) is in the business of democratizing the skies.”
Spence writes at the moment of realization of Southwest’s purpose:
We knew that being in a higher-calling business long term is a clearer and more compelling place to be—not only in the minds of the consumers, but also in the hearts of the employees. At Southwest Airlines, every decision we make, we have to decide if it enhances people’s freedom to fly or curtails it.
Are these new Southwest policies taking them from their purpose “of democratizing the skies”? I suspect so, but only time will tell. If they do, Southwest’s decision will prove to be disastrous. They will no longer be a unique airline with a unique purpose. Customers will begin to consider alternatives; and when they do, you can be sure of one thing—Southwest’s unbroken string of profitable years will be over.