2024-01-22 00:08:34
Big news often comes from small details. If we are to believe the legend, this is what happened with the creation of the “low cost” concept. At the beginning there is an exceptional personality, in this case Herb Kelleher who practiced the profession of lawyer in Texas. The story goes that the fundamentals of “low cost” were created on a restaurant tablecloth in San Antonio following a discussion between Herb Kelleher and Rollin King, one of his clients, who founded Air Southwest and Co. in 1967. After some ups and downs due to the fight against the two major Texan carriers at the time: Braniff and Continental Airlines, Southwest Airlines was finally able to begin its operations in 1971.
Jean-Louis Baroux, President of World Connect by APG
At that time, it should be remembered, air transport was completely regulated, even in the United States. A license was required to operate in several states, but Southwest Airlines did not have it. We had to wait for the famous “Deregulation Act.” signed by President Carter in 1979 so that airlines could operate anywhere in the United States and charge whatever rates they wanted. This marked the true development of Southwest Airlines which revolutionized American domestic transportation.
The creators of the concept ultimately did not invent anything, but they found a way to maximize revenue while selling a service very close to that of traditional companies at a lower price. To do this, you have to win on all counts: set up a very efficient operation by flying planes much more than those of other traditional operators, avoid downtime by all means, eliminate as many intermediaries as possible, create a simple pricing that everyone can understand. It remained to put these principles into action.
This is how Southwest Airlines has built all its operations around a single type of aircraft, the Boeing 737, of which it received its 1000th copy in 2023. To improve productivity, Southwest Airlines is not organized into “hubs”. “, operating flexibility is guaranteed by the use of a single type of aircraft, which improves crew management and leads to considerable savings for the training of flight crew and the management of spare parts, while facilitating maintenance operations. Boarding operations have been optimized to save an average of 10 minutes for each flight, compared to competitors. The prices have been simplified: one price per flight and if you want to make a round trip, simply add the two flights. No intermediaries for distribution, everything is done directly. In the 1980s, the Internet didn’t exist and everything was done over the phone. I remember visiting the company’s reservation center at Dallas Love Field at that time. It was in a huge hangar where there must have been 200 operators, each of them in front of a computer to which a small mirror was stuck in the upper left corner. As I was surprised by the director, she replied “It’s very simple, when the operators respond to a customer, they have to look at their computer and they see themselves, and they tend to smile at each other. This is reflected in the quality of their response.” Small means, big effects.
And the recipe worked. Southwest Airlines, which only had two managers between its creation in 1971 and 2022: Herb Kelleher until 2001 and Gary Kelly until 2022, has always made money except in 2020, a cursed year. If we ignore this year, the company generates an average net profit of more than 2 billion dollars per year. And the concept spread across the entire planet as the liberalization of air transport spread, despite the skepticism and hostility of traditional companies who had to adapt to this phenomenon. at least for their short/medium haul journeys.
In Europe, “low cost” has gradually taken a dominant role in journeys of less than 4 hours while those in charge of traditional carriers swore that the continent was not suitable for it. Ryanair, EasyJet, Wizz Air, Vueling, Volotea, Pegasus Airlines and so on, have demonstrated the opposite. Asia entered this era with Air Asia, Lion Air and Indigo. South Africa has its “low cost” carriers waiting for them to arrive elsewhere and Latin America is seriously starting to be irrigated by companies such as Gol or Azul.
It is no longer possible to imagine air transport without “low cost” carriers who are also ordering a huge quantity of new aircraft in order to have the most modern and therefore most efficient fleets, including in the face of ecological constraints. .
Herb Kelleher was an exceptional man, good-natured but a great manager, who did not hesitate to settle a dispute with the director of a company who wanted to use a commercial catchphrase from Southwest Airlines to fight a duel with him instead. than to start a long legal procedure. He lost his duel, but his opponent returned ownership of the slogan to him.
Thank you Mr. Kelleher.
Par Jean-Louis BarouxColumnist
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