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June 13, 2012

Slate: The secret to Southwest Airlines' success

The airline industry is notoriously brutal. As Warren Buffett once wrote in a letter to shareholders, "[I]f a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down." Yet Southwest Airlines just recorded its 39th consecutive year of profitability — a business sector where profits can be excruciatingly tough to come by.

How does Southwest do it? In part, by keeping operations simple. Simpler operations mean fewer things that can go awry and botch up the whole process.

Consider, for instance, Southwest's fleet of jets. While other airline fleets can employ 10 or more types of aircraft, Southwest uses just one, the Boeing 737. As V.P. of ground operations Chris Wahlenmaier explained to me, this results in all manner of cost-saving efficiencies: "We only need to train our mechanics on one type of airplane. We only need extra parts inventory for that one type of airplane. If we have to swap a plane out at the last minute for maintenance, the fleet is totally interchangeable — all our on-board crews and ground crews are already familiar with it. And there are no challenges in how and where we can park our planes on the ground, since they're all the same shape and size."

Southwest also doesn't assign seat numbers. Which means that if a plane is swapped out, and a new one's brought in with a different seat configuration (even within the world of 737s, there can be some variations), there's no need to adjust the entire seating arrangement and issue new boarding passes. Passengers simply board and sit where they like.

Most other airlines charge to check bags these days. Southwest has resisted the trend. Yes, this "bags fly free" policy is good marketing. But it also has operations benefits: "When you charge people to check bags they try to carry more on, sometimes more than can fit in the overhead bins," says Wahlenmeier. "That results in more bags being checked at the gate, right before departure. And that wastes time."

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