Soutwest

less congested airports (e.g., Baltimore instead of Washington’s Dulles or Reagan;

Manchester, N.H., instead of Boston, Mass.).

Forty-six percent of Southwest’s passenger revenue was generated by online bookings

via southwest.com. In 2002, the cost per booking via the Internet was about $1,

compared to the cost per booking of $6-$8 through a travel agent. Terra Lycos, the

largest global Internet network, reported that Southwest received 50 percent more

searches than any other airline.

Southwest pilots were the only pilots of a major U.S. airline who did not belong to a

national union. National union rules limited the number of hours pilots could fly. But

Southwest’s pilots were unionized independently, allowing them to fly far more hours

than pilots at other airlines.

Other workers at Southwest were nationally unionized, but their contracts were

flexible enough to allow them to jump in and help out, regardless of the task at hand.

From the time a plane landed until it was ready for takeoff took approximately 20

minutes at Southwest, and required a ground crew of four plus two people at the gate.

By comparison, turnaround time at United Airlines was closer to 35 minutes and

required a ground crew of 12 plus three gate agents.

CEO Herb Kelleher, who founded Southwest, was deeply committed to a philosophy

of putting employees 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.”1 Southwest’s walls were filled with

photographs of its employees. More than 1,000 married couples (2,000 employees)

worked for the airline. The average age of a Southwest employee was 34 years.

Southwest employees were among the highest paid in the industry and the company

enjoyed low employee turnover relative to the airline industry.

Southwest’s culture of hard work, high-energy, fun, local autonomy, and creativity

was...