SOUTHWESTAIRLINES

SouthwestAirlines, Inc. (NYSE: LUV) is an American low fare airline based in Dallas, Texas. It is the largest airline in the United States by number of passengers carried domestically for any one year and the third largest airline in the world by number of passengers carried. SouthwestAirlines carried more customers than any other U.S. airline in August 2006, marking it the first time that SouthwestAirlines has topped the monthly list for combined domestic and international passengers, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics.[1] SouthwestAirlines is one of the world's most profitable airlines and in January 2007, posted a profit for the 34th consecutive year.[2] Its reputation for low prices and a laid-back atmosphere have made it an icon of pop culture. At the same time, the corporation's no frills approach and open seating policy have had some critics compare it to a 'flying bus' [3].
Contents
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* 1 History
o 1.1 First flights
o 1.2 Early losses and financial troubles
o 1.3 Hedging fuel
o 1.4 Southwest.com
* 2 The Wright Amendment
* 3 Destinations
o 3.1 Current service
+ 3.1.1 Markets lacking Southwest service
+ 3.1.2 Top ten destinations
o 3.2 New service
* 4 The Southwest Effect
o 4.1 Morris Air
o 4.2 TranStar Airlines
o 4.3 Icelandair
o 4.4 ATA Airlines
* 5 Corporate culture
o 5.1 Southwest experience
+ 5.1.1 Rapid Rewards
o 5.2 Playful, effective advertising
+ 5.2.1 "Just Plane Smart"
o 5.3 Colorful personalities
o 5.4 Airline
* 6 Fleet
o 6.1 Retired fleet
o 6.2 Current fleet
* 7 Livery
* 8 Incidents and accidents
* 9 Trivia
* 10 Awards and recognitions
* 11 References
* 12 External links

[edit] History

SouthwestAirlines was originally incorporated to serve three cities in Texas as Air Southwest on March 15, 1967, by Rollin King and Herb Kelleher. According to frequently cited legend, Mr. King described the concept to Mr. Kelleher over dinner by drawing on a paper napkin a triangle symbolizing the routes.

Some of the incumbent airlines of the time (Braniff, Trans-Texas, and Continental Airlines) initiated legal action, and thus began a 3 year legal battle to keep Air Southwest on the ground. Air Southwest eventually prevailed in the Texas Supreme Court, which ultimately upheld Air Southwest's right to fly in Texas.[4] The decision became final on December 7, 1970, when the United States Supreme Court declined to review the case without comment.[5] That date is considered by many to be the de facto beginning of deregulation in the airline industry.[6]

The story of Southwest's legal fight was created into a children's book, "Gumwrappers and Goggles" by Winifred Barnum in 1983. In the story, TJ Love, a small jet, is taken to court by two larger jets to keep him from their hangar, and then to try and stop him from flying at all. Taken to court, TJ Love's right to fly is upheld after an impassioned plea from The Lawyer. While no company names are mentioned in the book, TJ Love's colors are those of SouthwestAirlines, and the two other jets are colored in Braniff and Continental's colors. The Lawyer is designed to resemble Herb Kelleher. The book was adapted into a stage musical, "Show your Spirit," sponsored by SouthwestAirlines, and playing only in towns serviced by the airline
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SouthwestAirlines founder Herb Kelleher studied Pacific SouthwestAirlines extensively and used many of the airline's ideas to form the corporate culture at Southwest, and even on early flights used the same "Long Legs And Short Nights" theme for stewardesses on board typical SouthwestAirlines flights.

[edit] First flights

In early 1971, Air Southwest changed its name to SouthwestAirlines, and the first flight was on June 18, 1971. Its first flights were from Love Field in Dallas to Houston and San Antonio, short hops with no-frills service and a simple fare structure, features that became the basis for Southwest's popularity and rapid growth in the coming years.

The start of service in June 1971 was accomplished with three 737-200 aircraft that had been obtained from Boeing on favorable terms, and a fourth aircraft was obtained in September of 1971.

Over time, Southwest has added improved 737 variants but has stayed within the Boeing 737 family to reduce operating costs. Because this technique simplified training, maintenance, and ground operations, it revolutionized the industry's approach to building aircraft fleets.

In January 2005, Southwest retired its last 737-200, the oldest type in its fleet. To celebrate "putting the -200s to bed", selected employees donned Southwest pajamas for an early morning flight to celebrate the final landing at Dallas Love.

[edit] Early losses and financial troubles

The rest of 1971 and 1972 saw operating losses. One of the four aircraft was sold to Frontier Airlines of Denver and the proceeds used to make payroll and cover other expenses. Southwest continued to operate a schedule predicated on 4 aircraft but using only 3, and in so doing the "ten minute turn" was born, and was the standard ground time for many years.

Southwest turned its first annual profit in 1973, and has done so every year since — a record unmatched in commercial airline industry history. Southwest has used financial techniques to bolster its profitability and counteract many of the fiscal disadvantages of operating an airline.

By 1979 Southwest served all of the cities currently served in Texas, plus Beaumont and interstate service began to New Orleans, Oklahoma City and Tulsa was added shortly thereafter. In 1981 Southwest co-launched the 737-300 with USAir. In 1982 the first expansion beyond the Texas area took Southwest to the west coast adding Phoenix, Las Vegas and San Diego. In 1984 the 737-300 was placed into service. Chicago Midway and St. Louis service began in March, 1985, spreading low-fare service into Midwest markets.

[edit] Hedging fuel

Southwest has a longtime program to hedge fuel prices. Southwest has purchased fuel options for years in advance to smooth out fluctuations in fuel costs. Southwest substantially increased its hedging in 2001 in response to projections of increased crude oil prices. The use of these hedges helped Southwest maintain its profitability during the aftermath of the September 11, 2001 attacks and the oil shocks related to the Iraq War and later Hurricane Katrina. According to its last annual report here is the company's fuel hedge for forward years ("approximate" per barrel basis, as of mid-January): 2007 is 95% hedged at $50/barrel; 2008 is 65% hedged at $49/barrel; 2009 is over 50% hedged at $51/barrel; 2010 is over 25% hedged at $63/barrel; 2010 is over is 15% hedged at $64/barrel; 2012 is 15% hedged at $63/barrel.

[edit] Southwest.com

On March 16th, 1995, Southwest became one of the first airlines to have a web page on the Internet. Originally called the "SouthwestAirlines Home Gate", customers could view schedules, a route map, and company information.[8] The company consistently rejects syndicating their fares to fare search sites such as expedia.com or orbitz.com. [9]

Southwest.com is the number one airline web site for online revenue, according to PhoCusWright. Nielsen/Netratings also reports that southwest.com is the largest airline site in terms of unique visitors. [10] In 2006, 70 percent of flight bookings and 73 percent of revenue was generated from bookings on southwest.com. As of December 2006, 55 percent of Southwest passengers checked in for their flights online. [11]

[edit] The Wright Amendment

Main article: Wright Amendment

After the opening of Dallas-Fort Worth Regional Airport, which was the original name of Dallas-Fort Worth International Airport in 1974, Southwest was the only airline to remain at Love Field.

When airline deregulation came in 1978, Southwest began planning to offer interstate service from Love Field. This caused a number of interest groups affiliated with Dallas-Ft. Worth Airport, including the city of Fort Worth, to push the Wright Amendment through Congress to restrict such flights.

Under the restrictions of the amendment Southwest, and all other airlines, were barred from operating, or even ticketing passengers on flights from Love Field to destinations beyond the states immediately surrounding Texas. In effect, to travel through Love Field, a passenger and luggage would have to deplane and fly on a separate ticket, on a separate aircraft. The Wright Amendment left one loophole, that aircraft configured with 56 or fewer seats are exempt from the Wright Amendment. In 2000 Legend Airlines attempted to operate long distance business-class flights using older DC-9s with 56 seats, but did not have the resources to survive American's legal and marketing attacks, and quickly ceased operations. Southwest has not used the 56 seat loophole, even with its market strength at Love Field and the availability of more modern regional jets such as the CRJ-700/900 and the Embraer ERJ 145 family.

Southwest's efforts to repeal or even alter the Wright Amendment had been met with opposition from American Airlines and Dallas Ft. Worth International Airport. Both American Airlines and DFW contended that repeal of the Wright Amendment restrictions would cripple DFW, while Southwest contended that repeal of the Wright Amendment would be beneficial to both Love Field and DFW. Continental Airlines has a successful hub and spoke operation at Houston Bush Intercontinental Airport despite unrestricted competition from Southwest at Houston Hobby Airport.

In 1997, Southwest's effort began to pay off with the Shelby Amendment which added the states of Alabama, Mississippi, and Kansas to the list of permissible destination states. Southwest now offers service between Dallas Love Field and Jackson, MS, via a connection at Houston, which it couldn't do prior to the enactment of the Shelby Amendment.

Since late 2004, Southwest has been actively seeking the full repeal of the Wright Amendment restrictions. In late 2005, Missouri was added to the list of permissible destination states via a transportation appropriations bill. New service from Love Field to St. Louis and Kansas City quickly started in December of 2005.

At a June 15, 2006 joint press conference held by the City of Dallas, the City of Ft. Worth, Dallas-Ft. Worth Airport, American Airlines, and SouthwestAirlines, the said parties announced a tentative agreement on how the Wright Amendment was to be phased out. Both the U.S. Senate and House of Representatives passed Wright-related legislation on September 29, 2006, and it was signed into law by the President on October 13, 2006. The new law became effective on October 16, 2006, when the FAA Administrator notified Congress that any new aviation operations occurring as a result of the new law could be accommodated without adverse effect to the airspace. Southwest started selling tickets under the new law on October 19, 2006. Highlights of the agreement are the immediate elimination of through-ticketing prohibitions, and unrestricted flights to domestic destinations 8 years after the legislation takes effect. This agreement was a resounding success for SouthwestAirlines because of eventual nationwide service was possible and the law codified the maximum number of gates at Love Field, of which Southwest controlled all except 4 gates. American and Continental control 2 gates each. The future of the Legend Airlines terminal for use by commercial airlines is in doubt because of the limit on number of gates. The new legislation brings new questions of monopolies and unfair restraint of trade replacing questions which have been resolved by the legislation.

Southwest remains the dominant passenger airline at Love Field, maintains its headquarters, hangars, and flight simulators adjacent thereto, and reflects its ties to Love Field in its ticker symbol (LUV).

Despite the restrictions on its home base, Southwest proceeded to build a successful business on an unusual model: flying multiple short, quick trips into the secondary (more efficient and less costly) airports of major cities, using primarily only one aircraft type, the Boeing 737.

[edit] Destinations

Main article: SouthwestAirlines destinations

SouthwestAirlines currently flies to 63 destinations throughout the United States. The airline is adding its 64th destination on August 26, 2007 when it begins service to San Francisco, California.

[edit] Current service

Southwest does not use the more traditional "Hub-and-Spoke" flight routing system of most major airlines, preferring the "Point to Point" system. It has notably large operations in certain airports. These include Maryland's Baltimore-Washington International Airport, Chicago's Midway International Airport, Houston's Hobby Airport, Las Vegas' McCarran International Airport, Nashville International Airport, Oakland International Airport, Sky Harbor International Airport in Phoenix, and San Diego International Airport. Southwest also has large operations at Orlando International Airport and Tampa International Airport, where it handles a large amount of tourist traffic to various cities throughout the eastern United States. Currently, Southwest serves 63 cities in 32 states, with over 3,200 flights a day.

As part of its effort to control costs, Southwest tries to utilize secondary airports which generally have lower costs and may, or may not be, more convenient to travelers than the major airports to the same destinations. For example, Southwest flies to Midway Airport in Chicago, Fort Lauderdale-Hollywood International Airport in South Florida, Love Field in Dallas, Hobby Airport in Houston, Manchester-Boston Regional Airport in Manchester, New Hampshire, and T. F. Green Airport in Providence, Rhode Island, instead of O'Hare International Airport, Miami International Airport, DFW International, IAH International in Houston, and Logan International Airport in Boston, respectively. Southwest also serves the New York Metropolitan area at Long Island MacArthur Airport.

Southwest makes exceptions to the philosophy of serving secondary airports by flying into some larger airports in major cities, such as Phoenix Sky Harbor International Airport, Detroit Metropolitan Airport, Philadelphia International, Cleveland Hopkins International Airport, Seattle-Tacoma International and Pittsburgh International. In the Los Angeles market Southwest flies to both the major city airport, Los Angeles International, and to three of the four secondary airports, Bob Hope Airport, John Wayne Airport, and LA/Ontario International Airport (it does not serve Long Beach Airport).

Southwest withdrew from San Francisco International and Houston George Bush Intercontinental in favor of utilizing smaller airports with fewer operations nearby. In February 2007, Southwest announced its intent to return to San Francisco International Airport as their next city opening, sometime in the early fall of 2007. The airline also once served Stapleton International Airport in Denver but withdrew in 1986 because of excessive ATC delays during poor weather exacerbated by minimal separation between the runways. Southwest returned to Denver in 2006 with service to the new Denver International Airport. Southwest rarely withdraws all service from an airport. Besides San Francisco, Houston, and Denver (Stapleton International), the airline has withdrawn completely from airports in Beaumont, Texas and Detroit, Michigan.

On October 5, 2006, SouthwestAirlines started operations at Washington-Dulles Airport (IAD) with 12 daily flights from two gates in Concourse B.

Southwest is the largest intra-state airline in California, with 674 flights total in the state, 355 of those are intra-California.

[edit] Markets lacking Southwest service

Due to intense competition from near-monopoly airlines such as Delta, Northwest, Continental and others, some markets are not cost-effective for Southwest. New York City area flights are serviced from Long Island MacArthur Airport or through Southwest's codeshare with ATA Airlines to New York-LaGuardia instead of directly through the three main New York Area airports (LaGuardia Airport, Kennedy (JFK) International, or Newark Liberty International). Other large cities without Southwest service include Atlanta, Charlotte, Cincinnati, Memphis, Milwaukee, and Minneapolis/St. Paul. Geographically, there is a relatively large void in the route map consisting of Georgia/South Carolina, Alaska, and the northern part of the US stretching from Montana/Wyoming to Minnesota/Iowa.

In 2005, Southwest proposed service to Boeing Field, which is a smaller airport that is closer to downtown Seattle than Seattle-Tacoma International Airport. However, the city refused to allow a terminal to be built or service to begin.[12]

At this time, Southwest does not serve any destinations outside the United States. While other low cost carriers such as AirTran, Frontier, and JetBlue have started to fly to international destinations outside the U.S., SouthwestAirlines has not ruled out the possibility of an international market in the future, as they are within range of their 737-700 aircraft.