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Friday, Apr 20, 2018
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Southwest aims to keep traditions, foster ambitious growth

Alison Hoefler got a job with Southwest Airlines in 1996 after crafting a résumé that unfolded like the pop-up books she read to her 3-year-old nephew. It opened to a Southwest airliner flying above a map of a new route from Texas to Florida.

The imaginative résumé helped set the Texas Tech University graduate apart from thousands of applicants for jobs in Southwest’s inaugural year in Florida. It captured the attention of a recruiter for the airline that has focused on a fun-based culture since it began service in 1971.

But today’s airline industry is radically different from even five years ago, when recessionary red ink forced major changes among Southwest’s competitors.

To maintain its competitive standing, Southwest, with the largest market share at Tampa International Airport, has embarked on a five-year plan that preserves its longstanding culture while implementing key initiatives, foremost of which is the acquisition of AirTran Airways.

“I think we are showing our commitment to Florida,” said Hoefler, Southwest’s Community Affairs & Grassroots Regional Leader for Florida. “In Tampa, we want to continue our success here as the largest carrier. We are going to work hard to ensure that happens.”

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Southwest’s five-point plan launched in 2011 involves integrating AirTran Airways, which it acquired in 2011; modernizing its fleet, including new interiors; adding larger-capacity Boeing 737-800s; implementing a new reservation system to support its first international service; and making a transition into a new frequent-flyer program.

The AirTran consolidation scheduled to be completed by the end of 2014 will enable Southwest to do things it couldn’t previously do, said Southwest spokesman Chris Mainz, who has worked closely with Gary Kelly, Southwest’s chairman, chief executive officer and president, on major initiatives.

“AirTran was a profitable, formidable competitor that did things we did not,” Mainz said. “They had a large presence in Atlanta, which was a gaping hole on our map. They had international routes (to Mexico and Caribbean destinations). They had access (to airport landing slots) in the Northeast that we did not.”

AirTran’s primary aircraft is the Boeing 737, the only type Southwest flies. Southwest arranged a deal with Delta Air Lines to take its AirTran Boeing 717s, ensuring a fleet of similar aircraft for efficient maintenance operations.

Southwest has ordered more than 50 of Boeing’s latest model 737-800s, with 38 more seats than current versions, the first of which went into service earlier this year.

Newer, thin seats are enabling Southwest to add an extra row of seats in earlier model Boeing 737s and increase seating capacity from 137 to 143.

To improve its frequent-flyer program, Southwest inaugurated Rapid Rewards so passengers gain credit based on fares rather than flight segments.

The new reservation system, with the capability to handle different currencies required to support international flight bookings, is scheduled to begin in 2014.

“We had record earnings, record earnings per share, record revenue,” Kelly said during a July 25 conference call with financial analysts. “I want to thank (employees) for the tremendous progress we’re making on our strategic plan and especially our five strategic initiatives.”

For Hoefler, the plan represents an evolution to ensure the airline is prepared for the future.

“The plan affects all of us,” said Hoefler, who began her Southwest career as a customer service agent in Fort Lauderdale, then became an airport ground operations supervisor and Florida marketing manager before her current job, which includes meeting with business and community representatives statewide. “We all have a job to do to keep the brand strong, to make our involvement in the community visible,” she said.

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Southwest has faced challenges in each decade of its history, Hoefler pointed out.

The late 1960s and early 1970s were marked by legal battles just to start business. The 1980s were marked by the challenge to fly beyond Texas. Legacy carriers in the 1990s created low-fare spinoffs to challenge Southwest’s low-cost business model. The past decade brought the post-9/11 travel slump and the recession.

Southwest’s five-year plan reflects an airline in transition and an industry in flux, Mainz said.

“We are flying into bigger airports, flying longer routes, expanding into international service,” he said. “We always have plans for future years, but it just so happened we estimated the need for a five-year plan with different stages throughout.”

In Southwest’s early years, one component of its strategy was to fly into a lesser-used metropolitan airport with lower fees, such as using Oakland to serve California’s Bay area; Providence, R.I., and Manchester, N.H., to serve the Boston area; Islip, N.Y., on Long Island to serve New York; and Baltimore to serve the Washington area.

The company has added San Francisco International, Boston Logan International, Newark and LaGuardia in the New York area and Dulles and Reagan National in Washington.

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Southwest has become Tampa International’s busiest airline, with 32 percent of the market share at about 389,000 passengers in June; AirTran accounted for another 8.1 percent market share and 114,000 passengers.

Only two Southwest and AirTran routes from Tampa overlap — Indianapolis and Baltimore — so local airport officials foresee little major change, although Southwest has trimmed flights, and June ridership at Tampa International was down 14.3 percent from a year ago.

“The changes we envision from the Southwest-AirTran merger so far appear to be a positive thing for us,” Tampa International spokeswoman Janet Zink said. “Southwest believes in our market and recently added Memphis as a destination.”

With the extended range of newer planes in Southwest’s fleet, the airline can consider Hawaii, Canada, Mexico, the Caribbean and the northern edge of South America, Mainz said.

Tampa International officials have said they clearly covet any international expansion Southwest might make.

Regardless of Southwest’s fresh initiatives, Hoefler said the airline will continue to draw upon a business concept that seemingly reverses the way many major corporations set their priorities: Southwest puts employees first, customers second and shareholders third.

“The concept is that if employees are treated well, they are happy and in return they give great service to customers who come back time after time, which makes the business strong.” Hoefler said. “With that comes profits — Southwest has four consecutive decades of profitability.”

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