How Southwest Keeps Making Money In A Brutal Airline Industry

Southwest airlines

Photo: Wikimedia Commons

It seems as though the airline industry is in a perpetual state of crisis.While virtually every major U.S. airline has declared bankruptcy in the past 10 years, Southwest Airlines has remained solvent and has consecutively generated a profit for the past 39 years.

How do they do it? Their mantra seems to be “keep it simple,” having mastered the art of cost-cutting, reports Seth Stevenson at Slate.

Here are some of the strategies employed to keep operating costs low: 

Having one type of aircraft

Southwest’s fleet is comprised of one type of aircraft: the Boeing 737.

“We only need to train our mechanics on one type of aeroplane.We only need extra parts inventory for that one type of aeroplane. If we have to swap a plane out at the last minute for maintenance, the fleet is totally interchangeable,” VP of ground operations Chris Wahlenmaier told Slate.

Using a point-to-point routing system

Another cost-cutting tactic? Forgoing the popular hub-and-spoke model, which can lead to delays in the event of inclement weather or scheduling conflicts.

Instead, Southwest uses a point-to-point routing system; with this strategy, passengers deplane the flight and, chances are, the aircraft will turn around and fly back to its starting airport.

Putting a premium on customer service

Perhaps Southwest’s real strategy for success lies in its customer service practices. There’s no first class, nor is there assigned seating, which means no wait for your section to be called before you’re allowed to board.

At a time when many airlines are applying (often obscene) surcharges to check bags, Southwest allows two pieces of checked luggage per ticket. Another added perk? Your luggage will likely greet you on the other side, as Southwest boasts a 99.6 per cent completion rate on bags.

While Southwest remains the most consistently profitable of all U.S. carriers, they still are not immune to the realities of today’s economy. According to USA Today, in April Southwest posted an adjusted first-quarter loss of $18 million due to rising fuel costs.

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