Has Southwest Airlines Forgotten Their Purpose?

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.

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5 Responses to Has Southwest Airlines Forgotten Their Purpose?

  1. oceallaigh says:

    I’m no expert, but after years of standing in Southwest’s lines listening to various “suits” complain (and realizing that there weren’t many “suits” in those lines, because when they could, the “suits” chose to pay extra for a seat they could count on in advance), I suspect they’re trying to capture more of that class of customer.

    Especially since 9/11 brought Southwest’s “laugh ’em through the lines” approach to service to an end, since the costs for Southwest’s flight crews are increasing as they gain age and experience (I understand “junior pilots” was a significant part of their advantage in the early days), and since the likes of JetBlue and Travelocity have horned in on their “cattle class” turf with lower fares and assigned seating. Looks to me like the execs have decided that, long and wonderful as the run was, the airline could no longer operate in the old same way and remain profitable. Could be that all choices are whack, and Southwest will become the new United whatever they do. But at least they’ve never been ones to sit and wring their hands.

  2. bubba says:

    The Southwest pilots are now the highest paid in the industry. These personnel costs and the associated benefits have shot up like the price of Jet-A. To look at fares on any given day and expect to see a bargain is quite naive. That is what travel agents were for in the past times, they would call you when the fare war was taking place. Now you just get an email alert and buy your ticket. Southwest simplified it’s fare structure to more closely resemble the original model during the days of airline regulations. They still get my business, and I hope to see them successful for many years to come.

  3. I flew Southwest when I was in college and very very broke. Since I started working for a living, I will only fly Southwest cases of emergency. I would actually prefer to take a bus – the caliber of fellow passengers is usually higher on Greyhound.

    However, my true gripe with Southwest is not that every flight I ever took seemed like a Trent Lott segregationist fund raiser at Shoneys, but that the company appears to have hiring policies that collect resumes at aforementioned fundraiser.

    I will celebrate when Southwest finally goes out of business.

    Boycott Southwest Airlines

  4. Charles,

    You may well be right. But isn’t there a change that they can make that is consistent with their founding purpose?

    Bubba,

    I wish Southwest well too. They have served the public honorably for many decades and have earned their success.

    Marc,

    In the unlikely event that Southwest was to fail, I assure you that airline passengers would suffer with higher prices and poorer service.

    I fly Southwest frequently and I have not noticed what you have. There is no possible mechanism, that I can conceive of, by which Southwest can discriminate among passengers who buy tickets.

    As for hiring they obviously can discriminate. But do you have any evidence for your charge? Southwest has succeeded in part because of very strong corporate values. These values are completely inconsistent with discrimination.

  5. oceallaigh says:

    isn’t there a change that they can make that is consistent with their founding purpose?

    I fear that’s a question you’ll have to pose to their accountants. The fact that this group of historically savvy and creative business people have made the choices they have is, I think, strong circumstantial evidence for the negative.

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