Why a Texas icon will fly high again

Why a Texas icon will fly high again

The whiff of smoke from Herb’s cigarette wafted through the air long enough for him to let out one of his signature belly laughs.

“Jason, I think you’ll make a great Baylor Bear!”

And just like that, I went to Baylor University on a Southwest Airlines scholarship endorsed by Herb Kelleher himself, the founder and CEO of the venerable Texas company Southwest Airlines, a company that Herb had founded just a few years earlier in 1971. .

For a working-class Hispanic kid from Oak Cliff, this was a special moment for me.

To be honest, I had an advantage. My mother had worked for Herb and Colleen Barrett, chairman emeritus of Southwest, for more than 25 years. Mom started with Southwest in the early days, when headquarters was still just a row of dilapidated aluminum buildings on the south end of Love Field. She drove Colleen to work in the mornings, acted as her executive assistant during the workday, and wrapped gifts for various SWA employees on Colleen’s behalf in the evenings. Mom loved Southwest Airlines because to us, Southwest wasn’t just a job, Southwest was family.

Me, my pop, mom, sister and brother-in-law all worked for the airline. To this day, my 72-year-old father starts his day as an SWA mechanic making coffee for the guys in the engine shop before everyone starts inspections and wiring details.

As special as the airline is to us, we know what happened to Southwest customers over the Christmas holidays is unacceptable. Due to a variety of factors: weather, outdated technology, poor planning, failure to anticipate unforeseen circumstances, and just plain bad luck, Southwestern families failed across the country in unprecedented fashion.

Conventional wisdom has become that the airline’s traffic stoppage was largely due to the use of an outdated software system or a lack of foresight on behalf of the company’s management. While these were undoubtedly contributing factors, they do not tell the whole story.

As someone who worked for Southwest Airlines as a financial analyst before attending law school, I have some knowledge that may help provide additional information about what happened.

Most Texans agree that Southwest Airlines is a Texas icon. Either because of the company’s financial success (they’ve been profitable nearly 95% of the time since their inception), or because of Southwest’s employee-centric culture fueled by Herb’s natural charisma.

What most don’t know, however, is that Southwest has historically maintained a competitive edge that enabled it to grow from a small startup airline to one of the largest and most profitable airlines on the planet, employing tens of thousands of Texans. .

When Herb and Rollin King were devising the airline’s business strategy, they determined that what people wanted from air travel were cheap, short-haul flights that allowed travelers to sleep in their own beds at night after a day of business travel. . Southwest Airlines was born, flying point-to-point, from Dallas to Houston to San Antonio and back home. Due to the shortened flight time frame and limited baggage required for short-haul daily trips, SWA was able to operate more flights per day than any of their rivals. Doing the math, that means Southwest was able to generate more dollars per plane per day than their competitors.

Most major airlines, then and today, use a hub-and-spoke model. This means they accumulate assets in major cities such as Los Angeles, Denver, Dallas and New York in order to make shorter flights to smaller markets. Throughout its history, Southwest Airlines has been able to avoid this logistical limitation by using a sophisticated asset allocation model that allows it to operate on a point-to-point basis throughout its system. The result is that for 50 years, Southwest has been more timely, more profitable and more effective in getting travelers from one city to another than any other airline in the country. As the airline has grown, Southwest’s advantage has diminished as it naturally uses some hub-and-spoke model in its overall strategy. But even with these changes, Southwest maintains a significant number of point-to-point flights.

This point-to-point model, however, has an Achilles’ heel. If a coast-to-coast storm shuts down most of the nation’s short-haul and long-haul airports simultaneously, Southwest’s most valuable assets (people and planes) would be so scattered across the country that they would be unavailable. to move between it. multi-node operational centers. Hub-dependent and hub airlines, on the other hand, have all their assets parked in just a few locations, making them easily accessible and easier to get back online when the storm passes. Therefore, hub-and-spoke airlines will be able to recover much faster than Southwest in such a situation.

This weather pattern materialized during Christmas week 2022, the busiest travel week in nearly a decade. Coupled with the effects of Southwest’s legacy logistics software system, it was literally the “Perfect Storm.”

In other words: point-to-point + outdated software systems + nationwide storm = Meltdown

Southwest Airlines knows and understands what happened. They are working diligently to improve, modernize and strengthen their technology systems and logistics models so that this never happens to you and your family again.

I admit that my personal experience with the airline may bias my perspective. But make no mistake, I am a trained economist, financial analyst and business lawyer. Likewise, I have had the benefit of working for the airline and had a quick look behind the curtain. I can tell you with the utmost certainty that this will never happen again.

As a fellow Texan, I ask you to join me in supporting a member of our Texas family. Like many family members, Southwest has been there for all of us on many occasions. I hope you will let them be there for you moving forward.

Southwest Airlines is a family, and they will make it right.

Jason Villalba is the CEO of the Texas Hispanic Policy Foundation and a former member of the Texas House. He wrote this for The Dallas Morning News.

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