By: Emily Haggstrom Issue: Collaborative Leadership Section: Business
Employees and Executives Lead the Carrier to Record Profits and Bolster Corporate Collaboration
Between strict Federal Aviation Administration regulations, necessary or unnecessary, flying has become a chore. If squeezing into an economy seat with no leg room wasn’t enough, fliers now have less room because in an effort to save a little cash passengers are hauling every possible piece of luggage and property onto the plane and cramming them under the seats and into overhead compartments. Flying isn’t just about paying for a ticket anymore; passengers pay for everything short of boarding the plane. There’s a fee to book a reservation, to change that reservation, to board early, to get an economy seat, to upgrade that same economy seat, to another slightly larger economy seat and when your legs still don’t fit, the airline will then charge you to stow carry-on luggage, and don’t forget the receipts are an extra charge as well. By the time a flier sits down in the seat, the cost of the flight in some cases could almost double.
To add to the misery, the costs come at a time of economic instability when many people are nickel and diming; so it is no surprise why many Americans are aggravated by all of the added expenses associated with flying. Passengers are not only wary; they’re just plain glum and grouchy. In the second quarter of 2010, airlines reported $2.1 billion in ancillary revenue, which constitutes only six percent of the total reported industry revenue according to the U.S. Department of Transportation. Baggage fees alone accounted for $893 million for airlines, who continually claim to be struggling. Yet, second quarter 2010 profits have been the highest reported since 2007.
And while most network and low-cost carriers battle with constant pricing fluctuations, Southwest Airlines stands out from the rest.
In an effort to stay true to their business mission, Southwest highlights what they are doing for fliers rather than focusing on what other companies are not doing.
“We offer exceptional service at a low fare to the places that our customers want to go,” said Southwest Communication Director Beth Harbin, “We’ve always had a very strict eye on costs and maintaining costs, which has allowed us to offer low fares while also making money. Southwest has maintained its success for over 37 years by staying true to that mission.”
It is because of this mission that Southwest has continued to build its customer base, expand its market share and grow the brand through its September merger with AirTran. The majority of the success has been largely due to the “Bags Fly Free” program that has continued to build the company's passenger base. Harbin emphasized, “We stand out in our customer’s minds by doing things more than just low fares but doing what’s right. We focus on ourselves and what we can do in areas of controlling costs. This allows us to offer our same great service without having to go to our customer every couple of months because we need more.”
Southwest stands transparent, admitting that of course they raise fares occasionally, but Harbin emphasized that it is brand trust and preference that continues to draw consumers and prospective employees alike. And while other airlines continue to add fees and hike fares, Southwest knows that its ongoing sustainability is because consumers know what they are going to get when they fly with Southwest.
In addition to low fares, free bags, and new locations, friendly counter agents and an amusing flight staff and service-oriented ground personnel work to make the experience more enjoyable for fliers. Southwest’s leadership places substantial importance on hiring employees who genuinely enjoy customer service. Flight crews on Southwest are known to ease the tension of flying and the boring flight instructions through jokes, singing and even rapping, commanding the attention of flyers who wouldn’t have listened otherwise. “They are our biggest assets and are what keeps customers coming back,” said Harbin.
Each employee is encouraged to be themselves and “own it,” which is evident from Southwest’s internal statistics that show for every one complaint received, there are 11 more commendations that follow. “The culture is amazing and they treat their employees like no other place I’ve worked before. On my end of the job, every now and then you get some glitches but generally people are really happy with us, and that’s very rewarding,” said Heather Dejo in Customer Relations.
Employees at Southwest live the maxim of the Golden Rule which dictates, “treat others as you would like to be treated,” and “do the right thing." Southwest’s leadership realizes that by treating their employees fairly, they will in turn create a harmonious environment for their customers. By demonstrating their appreciation for employees who “own it,” Southwest’s management gives them, through the various locations, a budget that they can contribute or invest into community programs and initiatives, further solidifying bonds of trust and brand recognition.
Recognizing that the competitive landscape is ever changing, Southwest continues to forge new relationships with customers in low-cost, meaningful ways. Aside from providing transportation to commercial fliers, Southwest also provides transportation for thousands of businesses through its cargo program, offering “Must Ride” tickets to loyal shippers. "Just like our customers ‘riding above the wing,’ our ‘below the wing’ cargo customers are very important to Southwest Airlines as well. Cargo has been a terrific source of revenue for Southwest Airlines for many years, and we feel that it's important to recognize and reward our loyal cargo customers for their continued support of Southwest Airlines,” said Wally Devereaux, Director of Sales and Marketing, Southwest Airlines Cargo.
Southwest’s success also rests in its ability to strategically engage in businesses practices and to choose new markets. Just shy of 40 years this coming 2011, Southwest has quietly gained market presence with a solid acquisition of Salt Lake City-based Morris Air in 1994 and the build up to its 69 locations across the United States. Through the most recent merger with AirTran, Southwest will now become a major player on the east coast with definite prominence in the Atlanta area. “We’re accustomed to finding ourselves in new places. These new locations offer new changes and new chances to develop,” said Harbin.
And develop they will. Currently Southwest operates its low budget model by maintaining a fleet of Boeing 737 aircraft which all employees are trained to work with and on, providing obvious and immediate cost benefits. With the addition of AirTran and its 717 Boeing fleet, Southwest will likely expand and accommodate smaller market locations while still managing its low-cost structure and powerful corporate culture.
One thing is for sure, Southwest’s strategic growth is proving profitable again with third quarter gains earning Southwest a net income of $205 million. This statistic could rise in the fourth quarter as business and leisure travelers experience the new corporate culture from the Southwest-AirTran merger. The low-cost carrier will certainly shake up locations where network carriers have been king, once again proving why passengers continue to buckle up and fly with Southwest.
To learn more about Southwest Airlines, please visit www.southwest.com.
Emily Haggstrom has a B.A. in Journalism and Media from the University of Nevada, Las Vegas. She is a member of the Level One Society in Denver, Colorado and sits in on various charity committees. In an effort to impact her local community she also volunteers for Whiz Kids Tutoring, Inc. as well as Denver Health Medical Center.