Uncommon: Southwest Airlines set itself apart with its unusual corporate culture and commitment to low-cost service. But rapid growth and a new ticket tax may force changes. OFF THE WALL AIRLINE

September 14, 1997|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

DALLAS -- It's mid-afternoon when two dozen number crunchers leave their cubicles in the Finance Department for a monthly meeting of the Outrageous Committee. Decked out in his usual khakishorts, sports shirt and tennis shoes, Southwest Airlines comptroller Bill Lyons convenes the session with a report on the previous week's bowling scores.

Quickly, he moves to Halloween. For the $3.4 billion a year Fortune 500 company, Halloween is sacred -- more cherished than its annual Chili Cookoff, more fun than the Elvis look-alike contest, or the Friday night deck parties, or its Olympics and the cucumber-between-your knees race.

For sure, this is an airline that knew how to have fun, almost before it knew how to make money. But beneath the frivolity is a well-disciplined corporate family that understands, right down to the last gate agent, that low costs are critical to its self-proclaimed, egalitarian mission of making flying more affordable.

The benefits of that philosophy have not been lost on Baltimore.

Tomorrow marks the fourth anniversary of Southwest's arrival at BWI. In the airport's 47-year history, there have been few more significant events. With its low-fare allure, the Dallas-based carrier has put the one-time stepchild airport on the map, boosting its traffic to second behind Washington National and ahead of Dulles International airports.

"It was like the late 20th century version of a railroad coming through town," said former Maryland Transportation Secretary O. James Lighthizer. "They changed everything."

Since Southwest's arrival in September 1993, passenger traffic at BWI has soared from 8.8 million to 13.4 million, despite sharp cutbacks by the airport's dominant carrier, US Airways. In the Providence-Baltimore market alone, 100,000 more people flew during the first three months of this year than during the same period a year earlier, before Southwest began flying there. The average one-way fare has plunged from $194 to $46.

The pattern has been repeated in cities throughout the country where Southwest has forced down fares. Airports still vie fiercely to lure Southwest. Yet today, the carrier finds itself at a crossroads, its costs rising significantly because of a recently enacted ticket tax structure that hurts carriers that that fly frequently over relatively short distances.

In the coming months, Southwest must decide how far it will stray from the short-haul strategy that has made it consistently the most profitable carrier in the airline industry. And perhaps most significant, it must decide whether it will abandon service in some cities.

Yet as it faces that task, the Southwest culture -- the almost-cultlike enthusiasm that permeates the 25,000-worker company -- is almost certain to endure, "That's really the hardest thing for other airlines to compete with," said Herbert D. Kelleher, the airline's 66-year-old chief executive officer, a consummate promoter who has drawn attention to Southwest by dressing up like Elvis and the Easter Bunny.

At the three-story headquarters building overlooking Dallas' Love Field, the workplace is as unorthodox as Southwest's flights.

Employees dress in shorts or slacks (the casual dress code was their reward for winning in two consecutive years the industry's Triple Crown -- best on-time performance, fewest customer complaints and lost bags).

The aroma of hot popcorn wafts from the People Department (a.k.a. personnel), where the machine earns money for the employee catastrophic fund. In the lobby, a raffle takes place for a mechanic undergoing a triple bypass.

Framed pictures of company parties line the walls, along with every irreverent ad. When Northwest Airlines claimed the best on-time record, Southwest (whose ticker symbol is LUV) fired back with a full-page ad headlined: "Liar, Liar, Your Pants Are on Fire."

Mannequins of Southwest flight attendants -- dating from the bright orange hot-pants and white go-go boots -- line a wide, skylighted hallway.

There's a playhouse for employees' children in the cafeteria, on-site massage therapy for $15, Pac-Man and table tennis. In the People Department, an orientation video in rap music opens with a message from Herb, as he's known to all workers, introducing himself as Southwest's "big daddy."

From the time he shows up in his modest interior office, often wearing bluejeans, the maverick San Antonio lawyer-turned-airline chief sets the tone. To Southwest workers,

Kelleher's a hero who rewards them with praise -- and profit-sharing.

He remembers their names -- and often those of their spouses and children. In return, he receives a measure of devotion that borders on fanaticism. (Southwest workers were once described Branch Davidians without automatic weapons).

"The corporate culture comes from Herb Kelleher," said Michael C. Boyd, president of Aviation Systems Research, a Golden, Colo.-based airline consultant. "This is an incredibly intelligent and able businessman who, unlike many, doesn't take himself seriously."

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