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Southwest pioneered lower cost domestic travel under founder CEO Kelleher. It did not charge fees for checking in bags and seats were not assigned. This model is now being questioned as baggage fees are generating $1.3 billion at American, $1.2 billion at United and $1 billion at Delta Airlines. Even a smaller airline like Spirit generates $1 billion from baggage fees. Additional sources of income are passengers charged for seat selection. Southwest generates about $70 million from baggage fees and does not charge for seat selection. Southwest sees not charging for baggage as part of its culture and current management is not changing the status quo.

Other problems are that Boeing can deliver only a fourth of the plane Southwest ordered. As a result the airline is facing a crisis and Eliott Investment Management now owning 11% of the company is pushing for change including ouster of the CEO and the Board.

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Employee acceptance of pay cuts is a way to avoid large layoffs. Here Southwest Airlines tries this approach and says it can prevent furloughs and layoffs by doing this till the end of next year 2021. Culture makes a difference. United and American Airlines announced 32000 job cuts. Southwest has never furloughed or laid off employees and has pledged to avoid this from happening in 2020.

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A passenger hears aloud noise near the overhead bin, then sees ahole not far from his head in the fuselage of the plane. This is Southwest flight 2294, June 13, 2009, on a 30 minute 737 Boeing airplane flight from Nashville to Baltimore. outhwest inspected all of its 181 737 planes and found no problems. The National Transportation Safey Board, the FAA, and Boeing are investigating what caused it to happen. In March, the FAA ordered Southwest to pay a$7.5 million fine for aseries of safety violations in which its jets were flying with undetected fatigue cracks. The investigation also uncovered efforts by managers to cover up reports of maintenance problems at Southwest. Two inspectors filed whistleblower complaints aginst the FAA claiming that they were threatened by the superiors after warning that Southwest was flying planes too long between inspections.

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Southwest prepared for jet fuel at $3.30 a gallon by passing on cost increases to passengers. Now it is preparing for jet fuel at $3.50 a gallon, CEO Gary Kelly said in an interview. The acquisition of AirTran in 2011, increased the size of Southwest by 20%, and is expected to generate additional revenue synergies of $400 million to $500 million. It also gives Southwest access to Atlanta and increases the number of cities served from 72 to 94. Kelly sees additional opportunities for growth in the lower 48 U.S. states before looking at markets in overseas destinations close to the U.S. Southwest has an order of 100 bigger and more fuel efficient 737-800s from Boeing. Boeing's Max jets are expected to be delivered in 2017. Other opportunities for growth will be expansion from Dallas Love Field to more destinations beginning in 2014.

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Southwest agreed to give $100 million to the city of Houston to construct an international concourse at William P. Hobby Airport, the city of Houston's airport. A 33 year old federal regulation prevents Southwest from flying internationally from Dallas. If this does not win approval from the city, Southwest is looking at options of San Antonio and Austin. United is the major competitor from Houston's Hobby airport.

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Southwest's strategy in response to sluggish economic growth and slower passenger volume is to pare glights in low passenger routes and shift to add flights in routes with high demand, an example is the Denver airport which has high numbers of passengers. Southwest will increase flights from Denver and add cities it flies to from Denver. It will also take advantage of weakness of Denver based Frontier airlines. Southwest will reduce flights in some routes like Chicago to Las Vegas abd Baltimore to Ft Lauderdale, eliminating 17 roundtrips.

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During this coronavirus pandemic SOuthwest Airlines in the U.S. is expanding its network and adding new airports to its flights. Four more in 2020 and six more in 2021.

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Southwest Airlines CEO Kelly says studies have shown passengers just want to know if their flight is going to go and at what time. So he stresses these things, because travel is not perfect and its how his airline handles these situations that matters. He says its not a reach to say that Southwest is getting the 5% of revenues that is the max he thinks you can get from baggage fees, by simply not charging as passengers hate these fees. He wants to use new technology to manage fares better. Asked about things getting bette, green shoots of recovery, he isnt optimistic. He says Southwest has to be prepared for a lot of uncertainty and instability, and operate with an abundance of caution. He goes on to say what he sees as different in this downturn. Saying he wishes that steroids were legal, because the speed at which we identify issues , study them and make decisions is unlike anything he has experienced before. In Southwest's culture this is the difference between furloughing employees, grounding planes, and reducing flights and running as close to normal as possible. The cushion is gone now, and he has to manage risk much more carefully. This is good advice for other executives....

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Southwest started flights to New York's La Guardia and Boston's Logan airports in 2009 but has cut service on other routes. It is cutting capital expenditures in half 2009 and recently cut flight capacity by 4%. It has locked in 40% of ts fuel needs in secon half 2009 capped at $71 a barrel, and 30% of its fuel needs for 2010 at $77 a barrel. The new contracts allow it to use planes as collateral withcounterparties.

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The airlines are hit hard by the coronavirus crisis. Reservations have declined as fewer people travel. There is a sense that a recovery will take time, several months. Delta is cutting international capacity by about 25% and domestic flights by 15%. It is also offering voluntary leave options to employees.

Southwest CEO Kelly says the severity of the decline is being felt with loss of $300 million in revenue in March. One piece of good news for airlines that offsets the severe demand decline is the fall in oil prices. American Airlines estimates the cost savings as much as $3 billion. A decade of industry profits have put the airlines in a better position to tackle the crisis. Other cost savings moves are reducing capital expenditures and managing cash flows efficiently.

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Southwest's culture under its founder Herb Kelleher was eager to define itself a being different from the rest and giving people more opportunity to express themselves, be happy and work together as a group of people who wanted to take the customer in and give him a pleasant flying experience. The culture and the company's flying strategy both went hand in hand to attract the right kind of people for this enterprise to succeed and Kelleher pulled it off. His successors have tried to keep up this culture in as many ways as possible and CEO Gary Kelly continues this practice including dresing up in odd costumes for Halloween as Kelly did when he bacame a mom Edna Turnblad from the musical Hairspray. But this fun does not mean theey don't work hard at Southwest. In fact workers from other airlines who joined Southwest have quit because the work is too hard. One might say that the culture of having fun and the close feeling that is promoted among the workers at Southwest enables he airline to get a lot out oits workers, promote teamwork and helps its strategy of keeping the costs down so that its competitive with other cost conscious airlines. Southwest wages are some of the highest in the airline industry after pay cuts at other airlines but its still among the lowest cost airlines per mile a plane is flying. The flying experience can still be cheerful on Southwest even though Southwest has been making changes like flying more people on a single flight, no frills, a different boarding system and so on. Southwest has been consistently profitable and it has helped that Kelly devised a fuel hedging plan in 1999 that has saved Southwest about $3 billion since then and may save it another $2. billion in coming years....

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Fewer flights and stricter passenger protocols are resulting from the surge in coronavirus cases in the U.S.  Bookings are down by as much as 80% in the U.S.

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Safety lapses at Southwest show that a Southwest maintenance person and an FAA officer at the local FAA office were involved in failure to conduct certain timely inspections on 46 older model aircraft. The local FAA office allowed Southwest to continue making 1400 flights while the safety structural inspections were being made contrarty to FAA rules.

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Southwest bolsters its cash position.

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Temperatures reaching 109 in Pheonix and 105 in Tucson and across Texas from Dallas to San Antonio are expected to linger for another week. The effects of climate change are seen in the lack of thunderstorms or thunderstorms behind schedule.