Tuesday, July 08, 2008

Southwest: A Model of Airline Profitability

I cajole people to read two books -- Groundswell and The World is Flat -- because they each present case studies about companies using technology the right way.

Southwest Airlines is one of the examples oftentimes cited. They are the lone bright spot in the U.S. air industry. While other carriers are reducing aircrafts and cutting back on flights, Southwest continues to grow -- and remain profitable.

Wired has a great 7-point article about why the company has continued to grow, but the one thing they left out was the company's aggressive use of technology. Long before other companies were using online boarding mechanisms, Southwest was -- in the words of Thomas Friedman -- turning its customers into ticket agents by allowing them to print out their boarding passes from home.

Southwest CEO Gary Kelly talks about the fuel hedging the company does as well -- a neat trick the company plays to keep its fuel prices as low as possible, which is another part of the flattening world. That is: you fix your supply chain so that your company is spending as little overhead as possible.

This is no easy task. However in the modern world it's important that companies find ways to use emerging technologies to ease the cost burdens.

In other words, Southwest isn't profitable because it's a better air carrier; it's profitable because it deploys technologies in a way that allows the business to run leaner.

Posted By Brad at 04:10 PM
Permanent Link: Southwest: A Model of Airline Profitability | Comments (3)

(3) Comments on Southwest: A Model of Airline Profitability

Profitability is important. I just wrote something about the cleverness of the Virgin America folks though which is also worth quite a bit to passengers.

I love the Southwest folks.

But I also love the JetBlue and the Virgin folks because they refuse to see the airline industry as it is and prefer to try to reconfigure it into what it could be.

Comments by Rob Mark : Tuesday, July 08, 2008 at 09:51 PM

I used to fly SW all the time -- and the past few years, I've flown other airlines.

But I'm giving up on the rest of them. I'd rather puddle jump and get there -- and give my money to a company that's creating a modern, streamlined company.

Comments by Brad King : Tuesday, July 08, 2008 at 11:59 PM

Technology and gas futures are key drivers behind Southwest's success. Too bad that it's not about customer experience - unless you consider the vaudeville routines performed by their crew during the flight.

But I am not here to bemoan the airline industry and Southwest...I wanted to add my support to your comment regarding Groundswell. I picked it up last week and it's a fascinating read that makes you think.

Comments by patmcgraw : Tuesday, July 15, 2008 at 11:06 AM

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