Nov. 21: It is halftime at Southwest Airlines’ annual Halloween party — a ritual meant to celebrate the carrier’s exuberant employees and freewheeling culture — and Mr Gary Kelly is feeling a bit wistful. “I was determined to be a man this year,” he says.
Gone is the flamboyance of his previous costumes. He has attended as Edna Turnblad from the musical “Hairspray” and as Dorothy from the “The Wizard of Oz.” In one particularly memorable impersonation, he was Gene Simmons of the hard-rock band Kiss.
This year, Mr. Kelly, who also happens to be Southwest’s chairman and chief executive, is dressed as Woody, the friendly pull-string doll from “Toy Story.”
“As long as you don’t mind being ridiculed all day,” he says of his Halloween outfits, “it’s part of the routine.”
Nearby, Mr Mike Van de Ven, the chief operating officer, is rolling on the floor, posing for pictures, and greeting children and parents with a wide grin in his Buzz Lightyear costume. “This shows you how little we have to do to run the airline,” says Mr. Van de Ven. “The less we do, the better it runs.”
Southwest doesn’t quite fly on auto-pilot, but as it prepares for its 40th birthday next year, it is flush with success. Last year, it flew 86 million passengers, more than any other airline within the United States. It operates 3,200 flights a day, owns a fleet of 544 planes and serves 69 domestic cities.
When rival airlines were bleeding billions of dollars, Southwest was churning out consistent profits as a low-cost carrier — even when fuel prices soared.
And in September, in its boldest corporate move since it started flying outside of Texas, Southwest announced that it would buy AirTran Airways for $1.4 billion, increasing both its revenue and its capacity by nearly 25 per cent in a single stroke.
Yet Southwest finds itself at a pivotal moment. Its success was built on a signature cocktail of low costs, low fares, frequent flights and a rapid expansion into new cities. But with high fuel prices, growth has been harder to find, and analysts have questioned whether the airline can sustain its singular operating style.
Battered in part by Southwest’s growth, traditional airlines have restructured their operations over the last decade — often through painful bankruptcy proceedings — and have narrowed the gap.
Through mergers and global alliances, Delta Air Lines, which acquired Northwest in 2008, and the more recently merged United Airlines and Continental are now more formidable rivals. They can offer their passengers access to cities across the United States along with connections to the four corners of the world — something Southwest cannot do.
Newer rivals, meanwhile, often modelled after Southwest, are thriving at the other end of the spectrum. Thanks to efficient operations, lower costs and an attention to customer service, these carriers — such as JetBlue Airways and Allegiant Airlines — are threatening Southwest’s dominance in the low-fare trade.
“Southwest’s business has become more complicated than the simple model that served them so well for 39 years,” says Mr Swelbar, a research engineer at the International Center for Air Transportation at MIT “They are at an inflection point. They are not a young and nimble corporation anymore. It’s a mature company now .”