- Southwest Airlines, the US’s largest domestic carrier, celebrated its 50th anniversary in June.
- The airline found success using unconventional marketing strategies focused on humor, booze, arm wrestling, and go-go boots.
- Southwest grew its network by beating the Wright Amendment, a law implemented to restrict operations out of its Dallas Love Field base.
- See more stories on Insider’s business page.
Southwest Airlines is the US’s largest domestic carrier, serving over 100 destinations across the country. The carrier has been in operation since 1971 and just celebrated its 50th anniversary in June.
Southwest started as a small carrier based in Texas and only operated intra-state routes between three cities, San Antonio, Houston, and Dallas. The airline, which was originally called Air Southwest, was dreamt up by Rollin King and Herb Kelleher on a cocktail napkin in 1966.
King mapped the network he envisioned, making a triangle between the three key cities. He explained to Kelleher that operating solely in Texas would make the company exempt from the Civil Aeronautics Board’s federal regulations, which controlled fares, routes, and schedules.
From 1938 to 1978, the airline industry was federally regulated under the CAB as means to ensure major carriers like United and Pan Am were profitable. Fares were sky-high and only business travelers and deep-pocket leisure customers could afford the luxury of flight. The downside was that a lot of the time, planes flew half empty.
Because Air Southwest was certified under the state’s aviation regulator, the Texas Aeronautics Commission, it was not bound to federal rules – a clever loophole King unapologetically copied from California carrier Pacific Southwest Airlines.
The loophole allowed Air Southwest to fly freely in Texas and undercut competitors’ fares, offering more customers the option to fly instead of drive in the large state. The business model was game-changing and a threat to legacy airlines.
In 1967, three airlines operating under federal rules, Braniff, Trans-Texas Airways, and Continental Airlines, took legal action against Air Southwest, saying it does not have the right to fly in Texas.
The lawsuit took three years to resolve, and in 1970, the Texas Supreme Court ruled Air Southwest could fly in the state. The three airlines then took the case to the US Supreme Court, which declined to review it.
Air Southwest’s right to fly in Texas was finalized in December of 1970. The carrier officially changed its name to Southwest Airlines in 1971 and commenced operations on June 18 of the same year. The carrier launched with two routes from Dallas Love Field to Houston and San Antonio using three new Boeing 737-200 aircraft. Flights between Houston and San Antonio commenced in November 1971.
Part of Southwest’s immense success was due to Kelleher’s focus on unconventional marketing and unique corporate culture.
Kelleher used Pacific Southwest Airways’ idea of “Long Legs And Short Nights” for hostesses, as they were called at the time, keeping with the theme of hiring attractive women to work Southwest flights.
The airline’s first flight attendants were described as long-legged dancers and were handpicked by a committee that included the same individual who picked the hostess on Hugh Hefner’s Playboy jet.
Kelleher dressed the flight attendants in a bright orange top, orange hot pants, a white belt around the hips, and white side-laced go-go boots. He also pushed for a laid-back, casual inflight experience and only hired female hostesses who were fun, engaging, and had a sense of humor.
Southwest also provided a winter version of the uniform, which included orange and white striped hot pants, a blazer, a white top, and an ascot.
Kelleher continued the playboy theme by creating a “love” culture at Southwest. The carrier was called the “love airline,” automatic ticket dispensers were “love machines,” inflight snacks were “love bites,” and drinks were “love potions.”
The airline also crafted its own special inflight cocktails, which were free for passengers. A few were appropriately named Kentucky Matchmaker, the Pucker Potion, and the Lucky Lindsay.
He even went on to create ads centered around humor and attractive women. In the context of the 1970s, using attractive female flight attendants to gain customers was an industry norm.
In 1972, Southwest made a game-changing, innovative marketing move. The company introduced the “two-tier” fare system, which established two separate price points aimed at different types of travelers.
The fares were the regularly priced “Executive Class Service” at $US26 ($AU36) one-way and the “Pleasure Class” at $US13 ($AU18) one-way or $US25 ($AU34) roundtrip. “Pleasure Class” fares were available after 6:59 p.m. on weekdays and all day Saturday and Sunday.
The two-tier structure was a wild success, with Southwest increasing its average passenger load from 17 before the move to 75 after.
In 1973, the company launched a $US13 ($AU18) one-way “half-fare” sale on all flights to San Antonio. Southwest’s rival, Braniff, responded with its own “get acquainted sale” with $US13 ($AU18) fares between Dallas and Houston. This was the start of the $US13 ($AU18) Fare War.
Southwest knew $US13 ($AU18) fares on its only profitable route would run it straight into bankruptcy, so King quickly came up with a marketing campaign that would put Southwest on top. “Nobody’s going to shoot Southwest out of the sky for a lousy $US13 ($AU18),” read the bold ad.
Southwest matched Braniff’s fare between Dallas and Houston, which was met with praise and respect from customers. As part of the campaign, the airline also offered a free fifth of liquor for passengers who paid the full $US26 ($AU36) fare.
Business travelers loved the promotion, and lucky for Southwest, three-fourths of its customers opted to pay full price and pocket the free booze. The airline soon became a fan favorite among many Texas business communities, and Braniff was fuming.
By the end of 1973, Southwest finally turned its first profit and would continue to profit for 47 years until the coronavirus pandemic ended the streak. Meanwhile, Braniff lost the battle and the war, ceasing operations in 1982.
Southwest’s early challenges did not end with Braniff. In 1964, the Civil Aeronautics Board demanded the city of Dallas build an airport to serve the entire Dallas/Fort Worth area. In 1968, every air carrier operating out of Love Field agreed to move to DFW when it opened in 1974.
However, Southwest was not a part of that agreement and filed suit that it would not move from Love Field when the new airport opened. The airline claimed there was no legal reason to end commercial traffic at Love Field and that the company made no written agreement to move its operations.
The city and the DFW Airport Board sued Southwest, saying the CAB rule applied to the airline even if it was made before Southwest was officially founded. However, Southwest argued that its intra-state flights fell outside the jurisdiction of the CAB, so it did not have to leave Love Field.
A federal district court agreed with Southwest and ruled that it could operate out of the airport as long as it remained open. When DFW opened in 1974, every airline except Southwest left Love Field.
Southwest continued to grow through the 70s, acquiring 10 aircraft and carrying its five-millionth customer by the end of 1977.
By 1976, Southwest Airlines had been profitable for three years and proven that government regulation was not necessary for airlines to be successful. Deregulation was a top priority for Jimmy Carter’s administration, and it passed the Airline Deregulation Act in 1978, effectively abolishing the Civil Aeronautics Board.
Source: National Review
Finally, Southwest Airlines was free to operate interstate flights and the airline began to thrive. Meanwhile, major carriers like Eastern Airlines, Trans World Airlines, and Pan Am spread themselves too thin as they tried to rapidly expand.
Unlike major carriers, Southwest maintained a simple strategy for success after deregulation, like only operating one aircraft type, cleaning the aircraft before landing to allow for a quicker turn, and focusing on humor in marketing.
Source: USA Today
And its strategy worked. Southwest was prospering while other airlines like Pan Am and TWA collapsed. However, it was not long before the Wright Amendment put another wrench in the company’s plans.
After deregulation, Southwest wanted to commence interstate flights from Love Field to New Orleans in 1979, but officials at DFW airport feared the increased traffic would hurt the airport financially. So, US Congressman Jim Wright drafted, sponsored, and helped pass a bill restricting passenger traffic at Love Field.
The law, known as the Wright Amendment, was signed in early 1980 and amended the International Air Transportation Act of 1979. It restricted flying out of Love Field to cities in Texas and the surrounding states of Louisiana, Oklahoma, Arkansas, and New Mexico. The law was meant to keep Southwest from expanding operations out of Dallas.
It only applied to carriers that operated aircraft with more than 56 seats, which Southwest did. So, the airline had to rely on short-haul flights in the five-state area to bolster Love Field operations.
In 1997, Kansas, Alabama, and Mississippi were added to the list of reachable states. In 2005, Missouri was also added.
However, in 2004, Southwest CEO Gary Kelly launched efforts to repeal the Wright Amendment, using the slogans “Set Love Free” and “Wright is Wrong” in the campaign.
In 2006, an agreement was made between Southwest, American Airlines, Dallas, and Forth Worth to phase out the law. They agreed that in eight years, the amendment would be gone, but until then, carriers could fly to any US destination out of Love Field as long as at least one stop was made in any of the nine states under the Wright Amendment.
On October 13, 2014, at exactly 12:01 a.m., a countdown clock at Southwest’s Headquarters in Dallas hit zero, officially ending the Wright Amendment. A few minutes after, the airline’s first scheduled flight outside of the nine Wright states took off from Love Field to Denver.
The deal also capped the number of gates at Love Field to 20, and the airport still only has 20 to this day.
While the Wright Amendment restricted expansion out of Love Field, Southwest was still able to bolster its network out of other Texas cities in the 1980s, 1990s, and 2000s.
Throughout the 1980s, the airline expanded north into cities like Tulsa, Oklahoma City, and Kansas City, and west to Phoenix, Las Vegas, Albuquerque, and California. The airline moved east in the late 1980s with flights to Nashville and into the Midwest with flights to Chicago Midway and Detroit.
The airline also updated its livery in the 1980s. Southwest wanted to stand out in the skies and make its brand easily recognizable, so it wrapped its fuselage in desert gold and other warm colors. It received its first 737-300 jet in 1984, dubbed Spirit of Kitty Hawk.
Southwest’s flight attendant uniform was also updated by the 80s. Instead of hot pants and go-go boots, the airline allowed employees to wear real pants and skirts.
In the 1990s, the network expanded further east to cities like Baltimore, Cleveland, Columbus, Tampa, Fort Lauderdale, Providence, Islip, and Raleigh-Durham. The airline also began its Pacific Northwest expansion with the acquisition of Morris Air in 1994.
In 1991, the “Friends Fly Free” campaign was launched to battle the recession. The promotion allowed anyone 18 or older to bring a friend of any age free on their flight. It was so popular that Southwest offered the promotion for the next five years.
In 1992, Southwest’s most infamous marketing stunt occurred between Herb Kelleher and Kurt Herwald, chairman of Stevens Aviation.
Southwest had been using the slogan “Just Plane Smart” in its ads, but Stevens Aviation sent a letter to Kelleher noting its similarity to its “Plane Smart” slogan.
Instead of entering a legal battle over the phrase, a Steven Aviation executive suggested an arm-wrestling competition between Herwald and Kelleher. The victor would have full rights to the slogan.
Kelleher marketed the event, dubbed the “Malice in Dallas,” which received worldwide press coverage. “Smokin” Herb Kelleher and “Curtsy” Kurt Herwald put on a full show at the arena, which even earned a congratulatory note from President George Bush.
At the turn of the century, Southwest revealed the livery that most people know today. The Canyon Blue color scheme debuted in January 2001.
While many airlines opted to introduce fees for things like checked bags and flight changes to recuperate funds, Southwest refused. Instead, the airline launched its “bags fly free” campaign which allows customers two complimentary checked bags. Southwest has not gone back on the offer to this day.
Throughout the 2000s, Southwest continued to focus on humor in its marketing. Its Wanna Get Away commercials proved successful, which promoted $US49 ($AU67) one-way fares.
By 2010, Southwest added “Transfarency” to its brand. The airline would not have any hidden fees and would remain customer-focused with an emphasis on Hospitality and Heart. The recognizable tri-color heart was added to its airplanes and workplace.
In 2011, Southwest acquired AirTran Airways, which opened slots up out of Atlanta and gave it more network expansion opportunities in Mexico and the Caribbean. The two were fully integrated by 2014.
Also in 2014, the company’s livery got another new look, with a harder focus on the heart, a new logo, and a sleek new color scheme.
In July 2014, the airline officially became international with its first flight to Oranjestad, Aruba. In the same month, Southwest also started service to Nassau, Bahamas, and Jamaica.
The company’s flight attendant uniform got an update in 2017, marking the first time in 20 years the airline changed the look. Womenswear included two dresses, one black with blue and red stripes and the other gray with red and black stripes. Menswear included a black blazer, a gray shirt and pants, and a red tie.
Source: Travel + Leisure
In October 2017, Southwest became the launch customer for the Boeing 737 MAX 8 jet, with its first revenue flight occurring on October 1. However, the aircraft was grounded in 2019 after two fatal accidents involved the MAX. The airline did not fly the plane again until March 2021.
In 2019, Southwest reached its goal of operating flights to Hawaii with its inaugural service from Oakland to Honolulu.
In 2020, Southwest ended its 47-year profit streak when the coronavirus pandemic hit. Since last March, the airline has remained focused on the health and safety of its customers and employees.
While the pandemic was a major blow to Southwest’s operation, the carrier has continued to grow with 18 new cities announced in 2020.
Today, Southwest is the country’s largest domestic carrier and continues to bring low fares to its customers.