1st of February, In 1973, a mustachioed and grumpy top manager of Southwest Airlines opened today’s publication Dallas Morning News and fell into a rage. “Those bastards,” Lamar Muse yelled when he saw a full-page ad from Braniff International advertising a $13 ride from Dallas to Houston. It was Southwest’s only profitable route, and Braniff now took half Southwest’s fare. Southwest has been burning money since its first flight took off less than twenty months ago, and flight attendants walked down the aisle in shorts aboard one of the gaudy brown and orange planes. Braniff’s cutthroat pricing policy threatened to bring down the fledgling airline when it barely launched.
Southwest launched a counterattack that included a two-page Morning news circulated four days later with this irresistible offer: passengers could fly for $13 or pay the full fare of $26 and get a “free” fifth of the booze. The move dramatically boosted Southwest’s ticket sales and resulted in nationwide publicity. In the same year, the airline made its first annual profit – a net income of exactly $174,756.
At the time, Southwest had fewer than two hundred employees and only three aircraft that flew only in Texas. In the five decades since, under top executives including Muse and the now-legendary Herb Kelleher, the tiny upstart from Love Field has become the country’s most consistently profitable passenger airline. Today, Southwest has more than 64,000 employees, flies about eight hundred aircraft, and carries more passengers in the US than any of its competitors, to places as far away from Texas as Hawaii and Costa Rica. During the peak tourist season, Southwest operates about 12,000 flights every three days, more than in all of 1973.
As Southwest has grown, it has become more like a regular airline than ever before. Today, planes aren’t as gaudy, flight attendant uniforms aren’t as sexy (or misogynistic), and top management, armed with a wealth of industry intelligence, rarely makes innocuous decisions on critical issues. issues such as fares and two-page newspaper ads. But this did not always save the Southwest from turbulence. Last holiday season, the airline’s outdated system for tracking crew members was overwhelmed during a severe winter storm, causing Southwest to cancel most of its flights for several days in a row, leaving hundreds of thousands of passengers reportedly stranded. Southwest’s senior management has long known that the airline’s systems are vulnerable to this sort of failure; the airline’s union leaders blamed short-sighted management for not investing in modernization.
This is the kind of problem that a free fifth of booze won’t solve.
This article first appeared in the February 2023 issue of the magazine. Texas Monthlywith the headline “The Little Airline That Did.”Subscribe today.