
Employees per aircraft much lower than
industry
◦ SWA: 94, United & American: 160
◦ Industry: 135

Passengers served per employee
◦ SWA: 2,443
◦ Industry: 840

Customer service
◦ Triple Crown winner
 On-time performance
 Fewest lost bags
 Fewest customer complaints
 Fewer
employees at the gate
◦ One agent, ground crew of 6
(SWA)
◦ Three agents, ground crew of
12 (Avg.)
 Quicker
time
aircraft turnaround
◦ 25 minutes (SWA)
What is the secret of Southwest Airlines
unbelievable level of performance?
Southwest
Video
 SWA
values
◦ Work should be fun…it can be
play…enjoy it
◦ Work is important…don’t spoil it
with seriousness
◦ People are important…each one
makes a difference
 “They
can imitate the airplanes.
They can imitate the ticket
counters and all the other
hardware…..But they can’t
duplicate the people of
Southwest and their attitudes.”
 Herb Kelleher
One of FORTUNE ‘s Most Admired
Companies
 FORTUNE has ranked Southwest Airlines
in the “Best Companies to Work For”
 2005, American Customer Satisfaction
Index (ACSI) recognized Southwest
Airlines as leading the industry in
customer satisfaction
 Business Week “Top 25 Most Innovative
Companies”

Job
Requirements
Rewards
Match
Person
KSA’s
Motivation
Traditionally staffing has focused
on the match between an
applicants skills and experience
and the job requirements.
Most Companies
Job
HR Outcomes
Requirements
Rewards
Match
Person
KSA’s
Motivation
Impact
Performance
Extra Effort
Retention
Satisfaction
Commitment
Hire for the Job
SWA
Task Flexibility
Job
Requirements
Rewards
Career Progression
Values/Culture
Organization
HR Outcomes
Match
Person
KSA’s
Motivation
ATTITUDE
Impact
Performance
Extra Effort
Retention
Satisfaction
Commitment
Hire for the
Organization

It used to be a business conundrum: “Who
comes first? The employees, customers, or
shareholders?” That’s never been an issue
to me. The employees come first. If they’re
happy, satisfied, dedicated, and energetic,
they’ll take real good care of the customers.
When the customers are happy, they come
back. And that makes the shareholders
happy.”
 Herb Kelleher (1996)
Strong vision and articulation
Self-sacrificing, risk-taking
Charismatic
Unconventional,
novel behavior
Leaders
High expectations
Build self-esteem in followers
Self-confident, dynamic



Founder of SWA
Zany, crazy approach
to management – e.g.
arm wrestling to
settle business
matters
Work should be fun –
sing, dance, play but
get the job done….


Began as a secretary at
Southwest Airlines and
eventually became SWA
President
Known for
◦
◦
◦
◦
◦
Humanistic
Idealistic
Sense of Humor
Commitment to Customer
Servant Leadership
“We look for folks
who are eager, who
are “quick on their
feet” with “outside the
box” thinking and who
have caring, friendly
natures.”

About Herb and Colleen


Current president,
CEO and chairman
of the board
Long history in
SWA culture
working with Herb
and Colleen
Leadership is...
"Effectively supporting your
team of Employees."

Fuel hedging a key strategic advantage but
becoming more difficult each year
◦ SWA fuel hedging for future:






2007
2008
2009
2010
2011
2012
95%
65%
50%
25%
15%
15%
hedged
hedged
hedged
hedged
hedged
hedged
at
at
at
at
at
at
$50/barrel
$49/barrel
$51/barrel
$63/barrel
$64/barrel
$63/barrel
“Even with $511 million in favorable cash
settlements from derivative contracts in the
second quarter 2008, our economic fuel costs
increased 35.2 percent to $2.19 per gallon.” Gary Kelly



Failed acquisition
Why??
Could it have worked?
Flexible
Processes
CLAN
Internal
Maintenance
Build interpersonal
Relationships;
cohesion;
morale
ADHOCRACY
Entrepreneurial;
innovative;
Adaptable;
risk-taking
HIERARCHY
MARKET
Stability; efficiency;
Rules & regulations;
Policy development
Competitive;
achievement-oriented;
Goal-focused
Control-oriented
Processes
External
Positioning

SWA vs. S&P 500 over 10 years

Past 3 months



What has been SWA’s competitive advantage?
Can they keep this competitive advantage in
the future?
What does their future hold?