Over the past 20 years, Southwest Airlines has shown the best results in the US. airline industry. Their success may be attributed to several things. The CEO and founder Herb Kelleher has placed emphasis on humor in the organization, lie would like to build relationships with passengers and give them "an experience. The business strategy is based on simplicity, efficiency, and effectiveness. Employees are helpful to one another. Most important is the CEO'S commitment to maintaining a quality workforce.
Although some other airlines report profits, the obvious question is what is so different about this airline versus all the rest, who limped through the 1980s barely surviving, if in fact they did survive. The big airlines like Eastern that were far better positioned to take advantage of the deregulation mania in the 1980s and early 1990s found themselves out of business, whereas little old Southwest chugged along toward increasing levels of profitability.
Some may attribute Southwest's success to its dynamic CEO and founder Herb Kelleher, who has been honored as the most admired CEO in the USA by his employees. Herb would attribute It to other factors, such as the people who work for Southwest Airlines. Both seem to admire each other, as evidenced perhaps by Southwest Airlines' turnover rate, which is the lowest in the U.S. airline industry.
When Southwest first began operations, Kelleher established several basic tenets to run the business. First, he focused on building relationships with customers and making flying "an experience." Southwest was one of the first companies in the world to highlight the Importance of having a sense of humor in terms of developing its customer relationships. Similar to Ben and Jerry's ice cream company and Sun Microsystems, humor was considered a key corporate value, and in fact was measured as one of the core components in Southwest Airlines' job interviews. For example, Southwest is one of the few airlines where a flight attendant will sing the preflight instructions as a rap song. They also have a CEO who recently settled a large legal suit with a competitor by challenging the other CEO to arm wrestle with a winner-take-all outcome. Herb lost, but as he said at the arm wrestling event, so did all of the lawyers!
A second component of the business strategy is to keep things simple. All Southwest pilots currently fly 737s, With this strategy, they are able to cut maintenance and training expenses. Also, there are only a few job classifications and everyone is expected to join in and help each other to keep the planes flying. The sole restriction is that only the pilot is allowed to fly the plane, at least most of the time.
Related to simplicity, Southwest Airlines uses a very simple ticketing and reservation system. There are no frills. Also, due to the lack of boundaries in the company regarding this being "your" job versus "mine," Southwest is able to turn planes around 25% faster than competitors, thus keeping more planes in the air at any point in time. There are more planes in the air at less cost. Southwest achieves high levels of efficiency because all employees are willing to help clean the planes to get them off the gate, even Herb Kelleher, who often can be found down with the maintenance crew cleaning planes, and/or helping the baggage handlers.
Herb initially defined Southwest Airlines as being a competitor with buses, trains, and cars instead of other airlines. Specifically, he wanted it to be cheaper to fly Southwest than it would be to drive or take public transportation. Consequently, the choice becomes a "no brainer" for the customer. Would you rather drive 500 miles or take a plane in less time and for less money?
Finally, and perhaps one of the more important components in retaining a high-quality workforce, is the intense commitment that this CEO continually demonstrates to people. He frequently becomes involved in helping out employees personally. He reaches down and gets to know the people who work in his company, so they will understand what he truly values and believes in. And when asked what he feels toward his employees, he said, "I really love these people." He didn't say like, respect, trust, care, and so forth, he said he loved them. And for most people working for his airline, they seem to believe what Herb said is true, because they apparently love him too.