Airline Industry: A History of Southwest Airlines

Airline Industry: A History of Southwest Airlines

In 1967 Southwest Airlines was a vision by and investment advisor Rollin Kind and his lawyer Herb Kelleher, they wanted to start a different kind of airline. Rollin King already had a small charter that ran between the smaller Texas cities. This new airline at first was to fly between the three largest cities in Texas, Dallas, Houston, and San Antonio. The company was first names Air Southwest Company, it later received its name of Southwest Airlines. The next year in 1968 the Texas Aeronautical Commission approved their planned

to fly between the three major cities. In the next couple of years the company went off to a flying start by the next couple of years it had acquired four planes and employed about 200 people. In the first year of operation the company lost over $3.7 million dollars. It wasn’t until the next year and a half that it was able to turn a profit and ever since then has been doing tremendous.

Herb Kelleher, who in 1982 took over as President, CEO, and Chairman of the board. He was well respected in his position focusing on employee and customer satisfaction.

By 1978 Southwest was the most profitable airline in the industry, and had already carried its 5 millionth passenger. The stock for Southwest was now listed in the New York Stock Exchange as “LUV.” By 1996 the market had added Florida and California to expand in their services. By the year 1999, in the summer Southwest has now acquired 55 cities and 29 states that they operate out of, they fly more than 2400 flight a day. Recently, last year in October Southwest was able to fly into Buffalo-Niagara International Airport, with this, it makes them the 5th largest in the industry.

External Threats

The greatest potential threats to Southwest, were to be new low-cost entrants to the industry. Some of these start-ups were initiated by major airlines sucha s Delta Express, U.S airway’s Metro Jet and Shuttle by United. These units sought to replicate Southwest’s short-haul routes, low cost practices and fares. Other threats that Southwest faces is that other airlines have the capabilities to fly into and out of more cities and bigger airports.

Southwest does not offer frequent flier mile programs that allow their customers to accumulate points and then qualify for free tickets to their destination.

Now with acquiring service to Buffalo-Niagara area, Southwest