Heard and Overheard from Southwest Airlines' Leaders
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Southwest Airlines CEO Gary Kelly began his speech to the Dallas Rotary Club with a little story from his childhood. “Not many people know this, but my first flight ever was on Southwest in 1972,” he said. “I was 17 years old at the time and I was one of three people on the plane. I remember thinking ‘this airline is never going to make it.'”
Now, as the CEO of the nation’s largest and most successful carrier, Gary was proud to say that the fledgling Texas airline did make it…and in a big way.
Today, Southwest flies to 60 airports in 59 cities across the United States (note: Pittsburgh service was announced on the day of this presentation), but Gary was quick to point out that Dallas is – and always has been – home for the airline. “Southwest has its roots in Dallas,” Gary explained. “We’re a big part of this community and we always will be.”
But, despite being in the airline’s hometown and speaking to a group of influential Dallas business members, Gary wasn’t there to talk about growth in the D/FW metroplex.
“I want to talk to you about the Southwest that you don’t get to see – the Southwest that is continuing to grow.”
Gary first touched on Chicago Midway Airport – the airline’s recent airport of focus due to the acquisition of six additional gates from the ATA code-share agreement. “If you haven’t seen the new terminal, it’s worth a trip to Chicago just to go to the airport,” he joked. “Our growth there is exciting and we will be going from 145 flights to 170 flights a day by April.”
Gary touched next on Philadelphia, Southwest’s newest city. “Philadelphia suffered high air fares for many years. When Southwest came in, we didn’t just lower fares by ten-percent. In some cases we lowered them by as much as two-thirds. Traffic increased three or four fold. That’s what competition will do.”
He was quick to point out that the quick growth, although staggering, was not uncontrolled or uncharacteristic of the airline. “We are just now starting to return to pre-September 11th levels,” he said. “And although 2005 holds many challenges for us, we will maintain our focus on being a profitable Company with great Customer Service.”
“You might ask,” Gary continued, “how an airline can remain profitable in today’s unpredictable economic environment. What makes Southwest so different? The answer is low cost and high productivity.”
Gary went on to explain that controlling costs did not mean paying low wages or operating old aircraft and that, in fact, the opposite was true for Southwest. The airline built its foundation on using its planes and its people as productively as possible…which translates into more revenue-generating dollars.
“We are not built to be a hub and spoke carrier,” Gary said. “We have 417 aircraft serving 60 airports – that’s relatively low by industry standards and it allows us to utilize our aircraft to the fullest potential…something that gives us a remarkable cost advantage and allows us to keep growing while maintaining profitability.”
That statement led Gary to the obvious question of the day…if Southwest is limited to growth out of Love Field due to the Wright Amendment, why doesn’t the carrier move to DFW?
“It’s not an option,” Gary said. “DFW was designed to be a hub and spoke airport. It is not conducive to the kind of service we offer. And, we already have a significant investment in Love Field, which has ample capacity for more flights by Southwest.”
Gary concluded by saying that Southwest would remain focused on making good decisions and offering Customers the best service and destinations in the country.
“And the only thing I have to ask of you is to fly Southwest, fly Southwest, fly Southwest!”
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