The disarray that engulfed Southwest Airlines this holiday season left observers as bewildered as the carrier’s hapless passengers. How could Southwest—whose consistent profitability, efficient service and low prices once made it the exemplar of skillful airline management—melt down so disastrously? In the coming years, the business school professoriate will publish case studies. Politicians and regulators will have their say. I have some modest personal experience to share that might help to explain it.
From 1996 to 2006 I was vice chairman and general counsel of Spirit Airlines. Spirit was and is a much smaller company than storied Southwest, but both were once startup carriers that succeeded, after many challenges, in winning a place among the established giants of the industry. In fact, Southwest has grown so impressively that it is now among the largest and most profitable U.S. carriers. For its part, Spirit endured and grew for more than 32 years, until agreeing last year to a transaction with JetBlue that, if consummated, will create the nation’s fifth largest carrier and a major competitive challenge to Southwest.
