Strong Management
The public face of Southwest Airlines for a generation, hard-drinking, chain-smoking, always-leave-'em laughing Herb Kelleher, finally stepped away from the carrier earlier this year. Kelleher's bonhomie masked the discipline that Southwest has had throughout its history. The airline has always avoided fads and eschewed anything that increased costs or complicated the basic travel proposition. When it has changed—last year it ended its infamous cattle-call boarding process to favor its most frequent fliers and highest-fare customers—it has done so without slowing down the movement of aircraft. Management ranks are lean, but well compensated and, most importantly, productive.
I once calculated that the top executives of Southwest generated 10 times more revenue per dollar of compensation than did the C-suite types at some of the network carriers.
A Relatively Happy Workforce
Network carriers have railed for decades about the power of their employee unions. But guess who's the most unionized carrier in the nation? Southwest, of course. The airline says that 87 percent of its employees belong to a union. Southwest has never had a strike, and now that the network carriers have whacked away at salaries and benefits, Southwest staffers are generally the highest paid in the industry. But since Southwest has about 30 percent fewer employees per aircraft than its network competitors, it has the lowest non-fuel C.A.S.M. (cost per available seat mile) of any of the major carriers.