In other words, what’s their orientation?
I’m not too good at reading minds, much less corporate minds, but one thing stands out: For all practical purposes, domestic airlines in the US today are monopolies. They have left just enough market share at their primary hubs to avoid the threat of federal action, and this limited capacity means that open skies treaties won’t significantly increase competition.
When your orientation says “monopoly,” you act like a monopoly. In particular, without the threat of the marketplace, you have a lot of flexibility in the levels of service you provide — your quality — and in what you can charge. Play this game well and you can maximize the amount of money to be paid out to the the people who control the organization and to those who can fire them. Continue reading →
I hope not. Under former CEO Herb Kelleher, Southwest Airlines shone like a beacon through the gloom of top-down cultures managing to next quarter’s bottom line. Although it often produced the best numbers in the industry, Southwest maintained its focus on people — customers as well as members of its organization. As one imitator after another bit the dust, Kelleher would proclaim that “They can copy the details, like fly just one type of airplane, but they can’t copy the culture!”
Well, the latest quality-related numbers aren’t looking too good. In the Wall St. Journal‘s annual ranking of US airlines, (paywall) Southwest landed at the bottom for mishandled luggage (“On average, at least one passenger ends up missing a bag from every Southwest flight.”), and near the bottom for involuntarily bumped passengers and for on-time arrivals. The once-proud Southwest ranked 5th out of eight overall and scored at the top in only one area, two hour tarmac delays. Ironically, the airline was just fined $1.6 million (WSJ – paywall), the largest such civil penalty ever, for repeated violations of the rule allowing passengers to deplane after a 3-hour delay. Southwest says that it has made substantial investments in the interim to fix the problem. Continue reading →