Southwest History of Management

Southwest Airlines was originally incorporated to serve three cities in Texas as Air Southwest on March 15, 1967. The investors got together and decided to start a different sort of airlines. They started it off with a simple notion that if you get your passenger to their destination on time and at the lowest possible fares then people are sure to fly through your airlines and this hold very true (Rollin King and Herb Kelleher 2007).

Some of the incumbent airlines of the time (Braniff, Trans-Texas, and Continental Airlines) initiated legal action, and thus began a 3 year legal battle to keep Air Southwest on the ground. Air Southwest eventually prevailed in the United States Supreme Court, which ultimately upheld Air Southwest's right to fly in Texas. December 7, 1970, the date of the Supreme Court decision, is considered by many to be the beginning of deregulation in the airline industry. The start of service in June 1971 was accomplished with three 737-200 aircrafts. Southwest Airlines turned its first annual profit in 1973. In 1981 Southwest co-launched the 737-300 with USAir. In 1982 the first expansion beyond the Texas area took Southwest Airlines to the west coast adding Phoenix, Las Vegas and San Diego. After the opening of Dallas-Fort Worth International Airport in 1974, Southwest Airlines was the only airline to remain at Love Field.

Southwest Airlines values employees, initiating the first profit-sharing plan in the U.S. airline industry in 1974 and offered it ever since. In 2000, Southwest offered its employees a record-setting $138M in profit sharing. This tax-deferred compensation represented an additional 14.1 percent of each employee's annual salary.

During May 1988, Southwest airlines was the first airline to win the coveted Triple Crown for a month- best on time record, best baggage handling and fewest customer complaints that has been won more than 30 times along with five annual triple crowns for the year 1992, 1993,1994,1995 and 1996 and no other airlines contributed more than the Southwest airlines.

The organization of Southwest Airlines is described as an upside-down pyramid. The upper management is at the bottom and supports the front line employees (35,000), who are the experts. This is Herb Kelleher's unorthodox leadership style, in which management decisions are made by everyone in the organization, not just the head executives. The company is described to not have