Glasgow Daily Times, Glasgow, KY

Business

June 15, 2012

Slate: The secret to Southwest Airlines' success

(Continued)

Other carriers use a hub-and-spoke system, in which planes are funneled into a couple of major connecting airports before branching out to their final destinations. This allows more geographic coverage. A passenger coming from Des Moines can't get a direct flight on United from Iowa to Tokyo, but she can reach Japan through United's Chicago hub.

Hubs also lead to backups, though, as planes queue up awaiting turnaround — cleaning, refueling and so forth. "You might have 25 or 30 planes all arriving at a hub around the same time," says Wahlenmeier. "That can lead to a lot of ground time, and we only make money off our planes when they're in the air." Hubs also create a single point of failure: Try getting anywhere on Delta's flight map, for instance, when there's bad weather at its hub in Atlanta. The whole interdependent system goes screwy as planes stop arriving at the proper place at the proper time.

Southwest's flights are generally point-to-point. The plane lands, goes through turnaround, and often heads right back where it came from. With less interdependence, the network can survive a problem at a single airport. The system is designed to facilitate short-haul flights, not international travel — Southwest targets the domestic business commuter, not the globetrotting jetsetter. But the airline has limited itself intentionally, to keep its operations running smoothly. "We can turn around planes in about 25 minutes," says Wahlenmeier, "which last I checked is industry leading." A simpler network also means less luggage getting lost in the shuffle. Wahlenmeier says Southwest has a 99.6 percent completion rate on bags, meaning they "show up on the other side."

Other airlines have emulated Southwest's approach. Recently, Azul — launched by JetBlue founder David Neeleman — has brought the model to Brazil. Azul focuses on domestic, point-to-point routes, and uses only two types of aircraft (Embraer E-Jets and ATR prop planes). Azul hasn't stolen market share from other Brazilian airlines. Instead, with its operations strategy holding costs down, it's made flying affordable for people who might otherwise take a bus. Azul targets city pairs for which the bus trip is 30 hours or more, then sets its ticket price equal to the equivalent bus fare.

Azul has been around only since 2008, so it remains to be seen whether it will succeed over the long term. But there's no doubt Southwest has proven its model is a winner. Sometimes the simplest operations are also the smartest.

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