After the September 11, 2001 terrorist attacks, Southwest Airlines (Southwest) and the entire airline industry in the US faced devastating losses. To reduce their losses, airlines in the US cut the number of flights by 20% and laid off 16% of their workforces in the weeks following the attacks. However, Southwest avoided layoffs altogether and stuck to its mission of caring for its employees. It was felt that avoiding layoffs in the face of a dramatic decline in demand would jeopardize Southwest’s short-term prospects. However, Southwest was willing to suffer damage even to its stock prices, to protect the jobs of its people. Southwest’s no-layoff response to September 11 was a reminder to its employees of the organization’s tradition of caring for its people. Southwest has been profitable every year for 31 years since it started its operations in 1971. During this period most airlines have struggled to achieve three or four years of consecutive profitability. Many analysts feel that the remarkable performance of Southwest is because of its ability to build and sustain relationships characterized by shared goals, shared knowledge and mutual respect between employees. All these characteristics were ingrained in the organizational culture of Southwest. Southwest’s objective was to provide safe, reliable and short duration air service at the lowest possible fare. With an average aircraft trip of roughly 400 miles, or a little over an hour in duration, the company had benchmarked its costs against ground transportation. Southwest focused on short-haul flying, which was expensive because planes spent more time on the ground relative to the time spent in the air, thus reducing aircraft productivity. Thus it was necessary for Southwest to have quick turnarounds1 of aircraft to minimize the time its aircraft spend on the ground. Southwest limited the turn time for each plane to ten minutes or less. It has managed to limit airplanes’ turn time to (about 20-25 minutes) over the years. A quick turnaround strategy was more relevant to Southwest than to its competitors as it had a point-to-point flight between cities rather than a hub-and-spoke network2. A hub-and-spoke system was characterized by longer wait time for both passengers and airplanes, more planes, extra computer systems, extra salaries to ground staff and additional commissions to travel agents. In addition, the airlines had to pay rent for the gates, as the planes were kept idle at airports waiting for the connecting flights. Recognizing these disadvantages, Southwest persisted with its point-to-point flights between cities. There are many ways of being cost-effective such as cheap labor and cheap equipment. But Southwest chose quicker turnaround of its aircrafts. Kelleher had realized the importance of building confidence in his employees so as to get things done faster. Kelleher also strove hard to make Southwest’s employees understand the importance of ‘quickness’, a term he preferred to ‘speed’. He explained that though quickness brought discomfort, “there can be security in discomfort.” Southwest’s organizational culture was shaped by Kelleher’s leadership. Kelleher’s personality had a strong influence on the culture of Southwest, which epitomized his spontaneity, energy and competitiveness. Southwest’s culture had three themes: love, fun and efficiency. Kelleher treated all the employees as a “lovely and loving family”. Southwest attempted to empower its employees to work on new ideas. When Southwest employees came up with the idea of ticketless travel, they did not make a formal presentation to senior executives. They just went ahead with the implementation. Company sources stressed that Kelleher had never tried to single out an employee for a mistake that had been inadvertently made. Southwest also laid great emphasis on integrity. Integrity at Southwest meant sticking to promises and actions. Southwest pilots entered into a 10-year long wage contract with the company because they probably believed in the integrity of persons on the other side of the negotiating table. There were also differences in the degree of shared knowledge between Southwest employees and employees of other airlines. Southwest chose to grow very conservatively, expanding only into one or two cities each year, so that it could devote the necessary time and attention to spread its unique culture in each new city. Southwest used in-house newsletters, videos, annual reports and cultural exchange meetings to diffuse its culture as the company grew big. Southwest instituted a mechanism called the Culture Committee in 1990 for the sole purpose of reinforcing the spirit of Southwest.

1. Southwest demonstrated tremendous commitment towards its employees. Explain how Southwest demonstrated this commitment towards its employees? 2. Southwest’s objective was to provide safe, reliable and short duration air service at the lowest possible fare. Describe briefly, how it met its objective?