Ailines
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Twenty-nine years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline. They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.
Within 28 years, Southwest Airlines became the fifth largest major airline in America. With the addition of service to Buffalo-Niagara International Airport on October 8, 2000, fly more than 57 million passengers a year to 57 great cities (58 airports) all over the Southwest and beyond. And she does it over 2,600 times a day.
Company also got more than 330 of the newest jets in the nation, with an average age of 8.4 years. In her fleet are included three flying killer whales, Shamu One, Two and Three. Lone Star One, painted like the Texas flag, to celebrate Southwest Airlines 20th Anniversary in a style and manner second to none. Arizona One, a symbol of the importance of the state of Arizona to Southwest Airlines; California One, a high-flying tribute to the state of California; Silver One, our 25th Anniversary plane; Triple Crown One, dedicated to the Employees of Southwest Airlines for their marvellous achievement of five consecutive annual Triple Crown awards and the newest member of the family – Nevada One, a high-flying tribute to the state of Nevada.
In May 1988, were the first airline to win the coveted Triple Crown for a month – Best On-time Record, Best Baggage Handling, and Fewest Customer Complaints. Since then weve won it more than thirty times, as well as five annual Triple Crowns for 1992, 1993, 1994, 1995, and 1996.
And no other airline has contributed more to the advancement of the commercial airline industry. Southwest were the first airline with a frequent flyer program to give credit for the number of trips taken and not the number of miles flown.
Also pioneered senior discounts, Fun Fares, Fun Packs, a same-day airfreight delivery service, ticket less travel, and many other unique programs.
In 1966, Herb Kelleher was practicing law in San Antonio when a client named Rollin King proposed starting a short-haul airline similar to California-based Pacific Southwest Airlines. The airline would fly the “Golden Triangle” of Houston, Dallas, and San Antonio, and by staying within Texas, avoid federal regulations .
Because of the fact that, U.S government was imposing very strict regulations regarding commercial airlines by regulating airline route entry and exit, passenger fares, mergers and acquisitions, and airline rates of return, the primary idea was to focus on a single state area (avoiding governments interfering) and to a substitute market (local) where major operators weren’t giving the proper attention.
Typically, by that time only a few carriers provided service in the market, although there were routes covered by only one carrier. Cost increases were passed along to customers and price competition was almost non-existent. The airlines operated as if there were only two market segments: “those who could afford to fly and those who couldn’t.”
Kelleher and King incorporated a company, raised initial capital, and filed for regulatory approval from the Texas Aeronautics Commission. Unfortunately, the other Texas-based airlines, namely Braniff, Continental, and Trans Texas (later called Texas International), opposed the idea and waged a battle to prohibit Southwest from flying. Kelleher argued the company’s case before the Texas Supreme Court, which ruled in Southwest’s favor. The U.S. Supreme Court refused to hear an appeal filed by the other airlines. In late 1970, it looked as if the company could begin flying. Southwest began building a management team and the purchase of three surplus Boeing 737s was negotiated.
Meanwhile, Braniff and Texas International continued their efforts to prevent Southwest from flying. The underwriters of Southwest’s initial public stock offering withdrew and a restraining order against the company was obtained two days before its scheduled inaugural flight. Kelleher again argued his company’s case before the Texas Supreme Court, which ruled in Southwest’s favor a second time, lifting the restraining order. Southwest Airlines began flying the next day, June 18, 1971
In October 1978 when Deregulation accomplished, airline fares tumbling and allowed many new firms to enter the market. The financial impact on both established and new airlines was enormous. The fuel crisis of 1979 and the air traffic controllers’ strike in 1981 contributed to the industry’s difficulties, as did the severe recession that hit the U.S. during the early 1980s. During the first decade of deregulation, more than 150 carriers,
Many of them new start-up airlines, collapsed into bankruptcy. Eight of the major 11 airlines dominating the industry in 1978 ended up filing for bankruptcy, merging with other carriers, or simply disappearing from the radar screen. Collectively, the industry made enough money during this period to buy two Boeing 747s3 . The three major carriers that survived intact—Delta, United, and American—ended up with 80% of all domestic U.S. air traffic and 67% of trans-Atlantic business.
Competition and lower fares led to greatly expanded demand for airline travel. By the mid-1990s, the airlines were having trouble meeting this demand. Travel increased from 200 million travelers in 1974 to 500 million in 1995, yet only five new runways were built during this time period.
During the 1980s, many airlines acquired significant new debt in efforts to service the increased travel demand. Long-term debt-to-capitalization ratios rose dramatically: Eastern’s went from 62% to 473%, TWA’s went from 62% to 115%, and Continental’s went from 62% to 96%. In contrast, United and Delta maintained their debt ratios at less than 60%, and American Airline’s ratio dropped to 34%.
Despite the financial problems experienced by many airlines started after deregulation, new firms continued to enter the market. Between 1992 and 1995, the FAA certified 69 new airlines. Most of these airlines competed with limited route structures and lower fares than the major airlines. The new low-fare airlines created a second tier of service providers that saved consumers billions of dollars annually and provided service in markets abandoned or ignored by major carriers.
One such start-up was Kiwi Airlines,