The story of Southwest's legal fight was turned into a children's book, Gumwrappers and Goggles by Winifred Barnum in 1983. In the story, TJ Love, a small jet, is taken to court by two larger jets to keep him from their hangar, and then to try and stop him from flying at all. Taken to court, TJ Love's right to fly is upheld after an impassioned plea from The Lawyer. While no company names are mentioned in the book, TJ Love's colors are those of Southwest Airlines, and the two other jets are colored in Braniff and Continental's colors. The Lawyer is designed to resemble Herb Kelleher. The book was adapted into a stage musical, Show your Spirit, sponsored by Southwest Airlines, and played only in towns serviced by the airline.[8] Southwest Airlines founder Herb Kelleher studied California-based Pacific Southwest Airlines extensively and used many of the airline's ideas to form the corporate culture at Southwest, and even on early flights used the same "Long Legs And Short Nights" theme for stewardesses on board typical Southwest Airlines flights. In early 1971, Air Southwest changed its name to Southwest Airlines, and the first flight was on June 18, 1971. Its first flights were from Love Field in Dallas to Houston and San Antonio,[9] short hops with no-frills service and a simple fare structure, features that became the basis for Southwest's popularity and rapid growth in the coming years. The rest of 1971 and 1972 saw operating losses. One of the four aircraft was sold to Frontier Airlines and the proceeds used to make payroll and cover other expenses. Southwest continued to operate a schedule predicated on four aircraft but using only three, and in so doing the "ten minute turn" was born, and was the standard ground time for many years.[10] Southwest turned its first annual profit in 1973, and has done so every year since — a record unmatched by any other commercial airline.[11] Southwest has used financial techniques such as fuel hedging to bolster its profitability and counteract many of the fiscal disadvantages of operating an airline. To lock in the low historical prices Southwest believed were occurring at that time, Southwest used a mixture of swaps and call options to secure fuel in future years while paying prices they believed were low. The company also stated that with this new strategy, it faced substantial risks if the oil prices continued to go down, but they did not. Previously, Southwest had been more interested in reducing volatility of oil prices. Now, they hoped to reap large gains from oil price appreciation. According an annual report, here is the company's fuel hedge for forward years ("approximate" per barrel basis, as of mid-January): 2007 is 95% hedged at $50/barrel; 2008 is 65% hedged at $49/barrel; 2009 is over 50% hedged at $51/barrel; 2010 is over 25% hedged at $63/barrel; 2011 is over is 15% hedged at $64/barrel; 2012 is 15% hedged at $63/barrel. These are well below market rates, which Southwest factors into its low operating costs. However, this below-market oil cost will not continue forever; executives have said that Southwest faces increased exposure to the raw oil market every year. This is not a good sign for the airline, which is also facing tough competition from US legacy carriers that have lowered costs through bankruptcy. Southwest CEO Gary Kelly has decided to slow the airlines' growth as a response to this cost. At present, Southwest has enjoyed much positive press (and a strong financial boost) from its energy trading skills. However, while most analysts agree that volatility hedges can be beneficial, speculative hedges are not widely supported as a continuing strategy for profits. The early 2000s hedges may in retrospect be an anomalous, lucky event and also a claim to fame for Southwest Airlines' reputation as a financially adept company. When airline deregulation came in 1978, Southwest began planning to offer interstate service from Love Field. This caused a number of interest groups affiliated with Dallas-Ft. Worth Airport, including the city of Fort Worth, to push the Wright Amendment through Congress to restrict such flights.[17] Under the restrictions of the amendment, Southwest, and all other airlines, were barred from operating, or even ticketing passengers on flights from Love Field to destinations beyond the states immediately surrounding Texas. In effect, to travel through Love Field, a passenger and luggage would have to deplane and fly on a separate ticket, on a separate aircraft. The Wright Amendment's restrictions didn't apply to aircraft configured with 56 or fewer seats. In 2000, Legend Airlines attempted to operate long distance business-class flights using older DC-9s with 56 seats, but did not have the resources to survive American's legal and marketing attacks, and quickly ceased operations. Southwest has not used the 56 seat loophole, even with its market strength at Love Field and the availability of more modern regional jets such as the CRJ-700/900 and the Embraer ERJ 145 family. In 1997, Southwest's effort began to pay off with the Shelby Amendment, which added the states of Alabama, Mississippi, and Kansas to the list of permissible destination states. Southwest now offers service between Dallas Love Field and Jackson, MS, via a connection at Houston, which it couldn't do prior to the enactment of the Shelby Amendment. Since late 2004, Southwest has actively sought the full repeal of the Wright Amendment restrictions. In late 2005, Missouri was added to the list of permissible destination states via a transportation appropriations bill. New service from Love Field to St. Louis and Kansas City quickly started in December 2005. Southwest started selling tickets under the new law on October 19, 2006. Highlights of the agreement are the immediate elimination of through-ticketing prohibitions, and unrestricted flights to domestic destinations eight years after the legislation takes effect. This agreement was a resounding victory for Southwest Airlines because nationwide service became possible, and the law defined the maximum number of gates at Love Field. Southwest controls all of the Love Field gates except for the two each that American and Continental control. The future of the Legend Airlines terminal for use by commercial airlines is in doubt because of the limit on number of gates. Despite the restrictions on its home base, Southwest proceeded to build a successful business on an unusual model: flying multiple short, quick trips into the secondary (more efficient and less costly) airports of major cities, using primarily only one aircraft type, the Boeing 737. As part of its effort to control costs, Southwest tries to use secondary airports which generally have lower costs and may, or may not be, more convenient to travelers than the major airports to the same destinations. For example, Southwest flies to Midway Airport in Chicago, Fort Lauderdale-Hollywood International Airport and West Palm Beach in South Florida, Love Field in Dallas, Hobby Airport in Houston, Manchester-Boston Regional Airport in Manchester, New Hampshire, and T. F. Green Airport in Providence, Rhode Island, instead of O'Hare International Airport, Miami International Airport, DFW International, IAH Intercontinental in Houston, and Logan International Airport in Boston, respectively. Southwest also serves the New York Metropolitan area at Long Island MacArthur Airport. Southwest makes exceptions to the philosophy of serving secondary airports by flying into some larger airports in major cities, such as Phoenix Sky Harbor International Airport, Orlando International Airport, Detroit Metropolitan Airport, Philadelphia International, Denver International Airport, Cleveland Hopkins International Airport, Seattle-Tacoma International and Pittsburgh International. In the Baltimore-Washington market, Southwest has limited flights into one major airport (Washington Dulles International Airport) while maintaining their east-coast focus city at the region's other major airport, Baltimore-Washington International Airport. In the Los Angeles market Southwest flies to both the major city airport, Los Angeles International (LAX), and to three of the four secondary airports, Burbank-Bob Hope Airport, John Wayne Airport, and LA/Ontario International Airport (it does not serve Long Beach Airport). With the restoration of service out of San Francisco International Airport on August 26, 2007, Southwest now serves all three airports in the San Francisco Bay Area; the other two being Oakland International Airport and San Jose International Airport. On February 9, 2007, Southwest Airlines announced internally that it was planning to restart operations at San Francisco International Airport, a station the airline closed in 2001.[25] Southwest CEO Gary Kelly has stated that the airline plans to commence service at SFO beginning in the "early fall" of 2007. On May 11, 2007, in an e-mail to Rapid Rewards members, Southwest announced that service to and from San Francisco would begin August 26th with eight daily nonstops to San Diego, seven to Las Vegas and three to Chicago's Midway Airport. The success and profitability of Southwest's business model led to a common trend being named after the company: The Southwest Effect. Since Southwest's original mission in Texas was to make it less expensive than driving between two points (in the early 1970s, during the first major energy cost crisis in the U.S.), it developed a template for entering markets at rates that allowed the airline to be profitable, yet only on the basis of lean operations and high aircraft use. The key concept to the Southwest Effect is that when a low-fare carrier (or any aggressive and innovative company) enters a market, the market itself changes, and usually grows dramatically. For example, when fares drop by 50% from their historical averages, the number of new customers in that market may not just double, but actually quadruple, or more. Southwest has been a major inspiration to other low-cost airlines, and its business model has been repeated many times around the world. Europe's easyJet and Ryanair as well as Canada's WestJet, are some of the best known airlines to follow Southwest's business strategy in that continent (though easyJet operates two different aircraft models today). Other airlines with a business model based on Southwest's system include New Zealand's Freedom Air, Malaysia's AirAsia (the first and biggest LCC in Asia), Qantas's Jetstar (although Jetstar now operates two aircraft types) and Thailand's Nok Air. Southwest Airlines has mostly pursued a strategy of internal growth, rather than by acquisition of other airlines as commonly occurs. However, in addition to acquisition of Morris Air Transport (see above), Southwest did acquire competitor Muse Air in 1985, which operated McDonnell Douglas MD-80s. Muse Air was renamed TranStar Airlines. ATA Airlines, one of Southwest Airlines' main competitors in the Chicago market, historically operated out of Midway Airport alongside Southwest. ATA declared bankruptcy, and in 2004, Southwest injected capital into ATA that (among other things) would have resulted in Southwest's 27.5% ownership stake in ATA upon their exit from Chapter 11 bankruptcy proceedings. In late 2005, ATA secured $100 million in additional financing from the firm of Matlin Patterson, and Southwest's original deal with ATA was modified such that Southwest no longer retained the 27.5% stake (or any other financial interest) in ATA. The codeshare arrangement, however, continues to remain in place and has expanded, with some internal controversy, to include all of ATA's 17 destinations and all of Southwest's 63 destinations. In 2006, Southwest's pilot union approved a codeshare sideletter to their contract with limitations on the growth of this and other codeshare agreements. While these restrictions today are minor, outsourcing remains a growing concern in the unions current contract negotiations. During 2006, Southwest Airlines began marketing ATA only flights. ATA's dependence on the Southwest network continued to grow in 2006, and today ATA offers over 70 flights a week to Hawaii from Southwest's hubs in PHX, LAS, LAX, and OAK. Additional connecting service is available to many other cities across the United States. Plans have been announced for ATA to offer exclusive international service for Southwest by 2010. Southwest today has taken over all ground operations for ATA at MDW, OAK, PHX, LAX, and LAS. These contracts provide that Southwest ramp personnel will now handle all ground operations (loading of aircraft, ground servicing, etc.) for ATA. The details of these contracts have not been made public but represent Southwest's and ATA's growing mutually beneficial codeshare relationship. Presently, there is no plan to open the ATA/Southwest codeshare to ATA's sister carriers; North American Airlines or World Airways, even though they are co-owned by the same corporate entity created from ATA Holdings. On November 8, 2007, Global Aero Logistics, parent company of ATA, formally announced to Southwest Airlines that its code-share passengers would be flying upon North American Airlines crewed aircraft for a portion of the 2007 Christmas season. Beginning in February 2005, ATA was run by John Denison, Southwest's former Chief Financial Officer. Effective January 1, 2007, Denison turned things over to Subodh Karnik, who is now President and Chief Executive Officer. Denison remains ATA's Chairman and Chairman of Global Aero Logistics Inc., the new name of ATA Holdings. Tickets cannot be purchased through common online venues like Orbitz or Travelocity; a minority are booked through travel agents. Most of Southwest's tickets are issued directly by the airline over the phone or online at the company's website which features Web-only fare discounts. Unlike other major airlines, Southwest allows passengers to change reservations without additional cost. While this provides flexibility to customers, Southwest does not allow same-day standby travel on a different flight (usually a free service at other airlines) without upgrading to maximum fare. Customers are not assigned seats; rather, they are assigned to one of three "boarding groups" depending on their check-in time (earlier check-ins get to board earlier), and are left to choose their own seats on the plane, which helps the airline to board passengers faster. At the May 2006 shareholders meeting, Southwest management announced a study of potentially adopting an assigned-seating system in 2008, as part of a reservations-technology overhaul now under way. As of November 8, 2007 Southwest has implemented an update to their Boarding Procedure in which passengers are now assigned their Boarding letter (A, B or C) along with a number which provides them a specific place in line (Example: A32). The idea behind this is to allow customers to not have to wait in line and spend their time relaxing or catching up on work. They have also introduced Business Select fares, which adds a guaranteed "A" group boarding pass, extra Rapid Rewards credit, and a drink. As a result of the boarding policy, several independent companies have offered automatic check-in services for Southwest. These companies take customer's orders for check-in ahead of the 24 hour mark (when the airline makes a flight available for online check-in) and transmit the necessary data for check-in to Southwest as soon as the airline opens up online check-in for a particular flight. The result of this service is that people using it generally get the first boarding group (known as the "A" boarding group). These early check-in sites include Seat-Sniper.com and CheckinSooner.com. Southwest has not embraced this practice and in fact sued one company (boardfirst.com) in federal district court in Dallas for impermissible commercial use of its website and succeeded in getting the company shut down in October 2007. Southwest maintained excellent customer satisfaction ratings; in 2006, according to the Department of Transportation December year end operating statistics, Southwest ranked number one (lowest number of complaints) of all U.S. airlines for customer complaints, with 0.18 per 100,000 customers enplaned. Southwest Airlines has consistently received the fewest ratio of complaints per passengers boarded of all major U.S. carriers that have been reporting statistics to the Department of Transportation (DOT) since September 1987, which is when the DOT began tracking Customer Satisfaction statistics and publishing its Air Travel Consumer Report. In February 2006, Southwest instituted capacity controls to redeeming its free tickets. This means that the airline limits the seats offered to frequent travelers using free certificates on each flight, whereas previously if there was a seat available, one could use the award, provided the passenger was not flying on one of the five blackout dates. In early 2006, Southwest expanded its codeshare agreement with ATA Airlines and now allows redemption of award tickets on Hawaii flights at the rate of two awards per round trip flight. Southwest and ATA stress that reward availability to Hawaii will be very limited. Travelers can also earn twice the normal number of credits when they purchase airfare on Hawaii-bound flights. Instead of a lawsuit, the CEOs for both companies staged an arm wrestling match. Held at the now demolished Dallas Sportatorium (the famed wrestling facility) and set for two out of three rounds, the loser of each round was to pay $5,000 to the charity of their choice, with the winner gaining the use of the trademarked phrase. A promotional video was created showing the CEOs "training" for the bout (with CEO Herb Kelleher being helped up during a sit up where a cigarette and glass of whiskey (Wild Turkey 101) was waiting) and distributed among the employees and as a video press release along with the video of the match itself. Herb Kelleher lost the match for Southwest, with Stevens Aviation winning the rights to the phrase. Kurt Herwald, CEO of Stevens Aviation, immediately granted the use of "Just Plane Smart" to Southwest Airlines. The net result was both companies having use of the trademark, $15,000 going to charity and a healthy dose of goodwill publicity for both companies. The President of Southwest is Colleen Barrett, who has been with the company since day one. Southwest's CFO is Laura Wright. In July 2007, it was announced that Herb Kelleher will resign his position as Chairman effective May 2008. Colleen Barrett will leave her post on the Board of Directors and Corporate Secretary in May 2008 and President in July 2008. Both will remain active employees of Southwest Airlines. The American version of the reality show Airline showcased Southwest Airlines passengers and employees in daily mishaps and life at some of Southwest's major airports (BWI, MDW, LAX, & HOU). The show premiered January 5, 2004 on the A&E Network, but was canceled after 70 episodes on December 15, 2005. Southwest is the world's largest operator of the 737. Their current active fleet is over 500 aircraft. In terms of total 737 production (all models in history), deliveries of new aircraft from Boeing to Southwest accounts for approximately 9% of total production. Southwest has one of the largest fleets in North America. Southwest's original primary livery was beige and red, with orange on the tail end, and pinstripes of white separating each section of color. The word Southwest appears in white on the beige portion of the tail. (Although, on the original three 737-200s, from June of 1971, on the left side of the plane, the word Southwest was placed along the upper rear portion of the fuselage, with the word Airlines painted on the tail where Southwest is today N21SW. On the right side, the word Southwest was in the same place as today, but also had the word Airlines painted on the upper rear portion of the fuselage.N20SW. Southwest introduced the Canyon Blue Fleet in 2001, its first primary livery change in its 30-year history. Spirit One was the first plane painted in the color scheme. The new livery replaces the primary beige color with canyon blue and changes the Southwest text and pinstripes to gold. The pinstripe along the plane is drawn in a more curved pattern instead of the straight horizontal line separating the colors in the original. The original livery is gradually being phased out, but three aircraft will remain in the original livery to commemorate Southwest's original three cities. As of November 16, 2007, Southwest has nearly completed updating the fleet.[16] The first aircraft to be painted in the "Shamu" scheme was N334SW (1988), a 737-300, and it was later followed by N507SW (Shamu II) and N501SW (Shamu III), both 737-500s. Subsequent to the retirement of Southwest's 737-200s, the 737-500s began to stay within a smaller geographic area formerly operated by the 737-200s, and as such, Sea World was no longer getting the optimal national exposure from these two aircraft. Two 737-700 aircraft, N713SW and N715SW, were repainted as the new Shamu aircraft, and both N501SW and N507SW were eventually repainted in Canyon Blue colors. All three current Shamu aircraft are no longer referred to as Shamu I, II, or III. The artwork on the nose of each aircraft simply states "Shamu". The overhead bins of these aircraft display ads for Sea World, except towards the front and back of the airplane, where the bins get smaller and are no longer uniform. The first aircraft to be painted in the "Shamu" scheme was N334SW (1988), a 737-300, and it was later followed by N507SW (Shamu II) and N501SW (Shamu III), both 737-500s. Subsequent to the retirement of Southwest's 737-200s, the 737-500s began to stay within a smaller geographic area formerly operated by the 737-200s, and as such, Sea World was no longer getting the optimal national exposure from these two aircraft. Two 737-700 aircraft, N713SW and N715SW, were repainted as the new Shamu aircraft, and both N501SW and N507SW were eventually repainted in Canyon Blue colors. All three current Shamu aircraft are no longer referred to as Shamu I, II, or III. The artwork on the nose of each aircraft simply states "Shamu". The overhead bins of these aircraft display ads for Sea World, except towards the front and back of the airplane, where the bins get smaller and are no longer uniform. Triple Crown One: (1997) Livery dedicated to the employees of Southwest, in recognition of Southwest receiving five Triple Crown airline industry awards (best on-time record, best baggage handling, and fewest customer complaints). The overhead bins in Triple Crown One one are inscribed with the names of all employees that worked for Southwest at the time, in honor of their part in winning the award.(N647SW) Southwest received both the 5,000th 737 produced (February 13, 2006) (N230WN) and the 2,000th "Next Generation" 737 produced (July 27, 2006) (N248WN). The 2,000th "Next Generation" 737 is marked as such in its livery, though the 5,000th 737 is not similarly marked. All special planes prior to Spirit One originally wore the standard beige, red and orange livery colors on the vertical stabilizer and rudder. Subsequent special editions—Maryland One and Slam Dunk One, so far—feature tails with the canyon blue color scheme, and all earlier specials, with the exception of Triple Crown One have been repainted to match. On December 8, 2005, Southwest Airlines Flight 1248 skidded off a runway upon landing at Chicago Midway International Airport in heavy snow conditions. A six-year old boy died in a car struck by the plane after the plane skidded into a street. Passengers on board the aircraft and on the ground reported several minor injuries. The aircraft involved, N471WN, became N286WN after repairs. For 2007, the eighth year in a row, Business Ethics magazine lists Southwest Airlines in its “100 Best Corporate Citizens,” a list that ranks public companies based on their corporate service to various stakeholder groups. Southwest is one of only 11 repeat winners that have made the list all eight years According to Institutional Investor magazine, Southwest Airlines ranked number one in the Consumer category among all airlines as the “Most Shareholder Friendly Company” based on the effectiveness of Southwest’s governance and investor relations as part of their overall efforts to maximize share holder value. ABX Air�• Alaska Airlines�• Aloha Airlines�• American Airlines�• Astar Air Cargo�• ATA Airlines�• Atlas Air�• Continental Airlines�• Delta�Air�Lines�• Evergreen�International�Airlines�• FedEx Express�• Hawaiian Airlines�• JetBlue Airways�• Midwest Airlines�• Northwest�Airlines�• Southwest Airlines�• United Airlines�• UPS Airlines�• US Airways Associate Members: Aeroméxico�• Air Canada�• Air Jamaica�• Mexicana
