Ah, Southwest Airlines. It's by far the quirkiest airline in America (and the one that ranks #1 for families).

Southwest also has some of the most unique policies--some of which undoubtedly cost the company money, at least in the short term. 

But the long term is what matters more. And the more I learn about the way Southwest operates, the more I'm often reminded of what the late poet Maya Angelou once said:

"I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel."

My latest opportunity to go all Poet Laureate on you? It came after reading the transcript of Southwest's latest earnings call. 

The airline is still facing financial pressure after the April 17 catastrophe that cost the life of passenger Jennifer Riordan. And when airlines--or any business--face big financial challenges, there's a temptation to shore things up, by grabbing revenue anywhere they can.

Southwest is unique among airlines, because it has several obvious moves it could make to pick up cash immediately. But doing so would run the risk of alienating some of its core customers. 

'It has to be costing you'

This point is exactly what Duane Pfennigwerth of investment bank advisory firm Evercore ISI was getting at when he asked a question during the call. 

Southwest has open seating. Almost every other airline assigns seats. Many of them make a nice ancillary income by charging customers who want to choose their seats ahead of time.

"In core Southwest markets, your customers know, appreciate, or at least understand your open seating," Pfennigwerth observed. "But in markets like New York, where you have less presence, it has to be costing you some [market] share."

And he pushed for "confirmation" that Southwest would at least consider getting rid of open seating, on at least some planes, some of the time. It's the kind of thing investors might want to hear.

But, the reaction of Southwest CEO Gary Kelly was fast and bold, and it offered an incredible example of what it means to understand your customers, and continue delivering the things that make you different. 

'Let me be very blunt'

It started with five important words.

"Let me be very blunt," Kelly said. "We are not looking at assigning seats right now. We're not talking about assigning seats now, and we're not talking about looking at it at some time in the future."

In fact, Kelly and Southwest President Thomas Nealon pointed out, Southwest actually had experimented with assigned seats more than a decade ago, on flights out of San Diego.

"That actually proved to us that we could do it if we chose to. Our customers actually asked us not to. That was the interesting thing. It was actually the business travelers, interestingly enough," Nealon said.

(Same thing on bag fees and change fees: two areas where competing airlines make lots of money, but Southwest doesn't. "We are not thinking about bag fees. We are not thinking about change fees," Kelly said.)

What makes you different?

No airline is perfect. And I can't even say Southwest is always my favorite. If I had a big travel expense account, I might choose airlines with premium cabins, for example. 

But I've usually been either a government employee, an entrepreneur, or a writer. Or a tourist--anyway, roles that put me in the position that a majority of Americans are in when they fly.

That means we're looking for reasonable cost, flexibility, efficiency--and the fewest possible headaches.

And that's part of what works for Southwest, in a way that other airlines apparently can't copy.

"We try to avoid the complexity, make it really easy. ... [W]e get tremendous brand loyalty as a consequence of that," Kelly said at another point in the call. "[W]hat we've chosen to do works very well for us and makes us the most profitable airline, so I'm just glad everybody else doesn't do what we do."

Published on: Jul 29, 2018
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