$143.
That, by Southwest Airlines’ own account, was all that was left in its bank account in the spring of 1972. The young Texas airline had spent years fighting bigger rivals in court just to win the right to fly, and its losses had reached $1.6 million.
Its president, Lamar Muse, had one move left: sell the fourth of its four Boeing 737s. The sale brought a $500,000 profit and one more shot. It also broke the timetable. The fourth plane was what let Southwest fly 14 round trips a day between Dallas and Houston, seven between Dallas and San Antonio, and its new routes between Houston and San Antonio. Some quick sums showed that to keep that schedule with three planes, each one would have to be in and out of the gate in 10 minutes. Most airlines took an hour.
“We can,” said Bill Franklin, the vice president of terminal operations. “And we will.” He told his ground crews that anyone who couldn’t do a 10-minute turn would be fired, and so would the next person, until the company found someone who could.
The crews studied pit crews at car races. A turn meant more than 100 tasks, and one late task could sink it. So the hostesses, as flight attendants were then called, and often the pilots tidied the cabin themselves instead of waiting for cleaners. Bags went into the hold as fast as they came out. There were no assigned seats. Passengers grabbed what they could, and as soon as the door closed the plane was pushed back, even if some were still looking for a seat. (Federal rules ended that in 1986.) The crews didn’t always make 10 minutes. They made it often enough for it to become the company’s signature.
By 1996, when Michael Porter made Southwest the centerpiece of “What Is Strategy?” in the Harvard Business Review, the turn took 15 minutes. Porter drew the airline as a web of linked circles. In his exhibit, “15-minute gate turnarounds” is one small circle, and others nearby read “No meals,”“No seat assignments,”“No baggage transfers” and “Standardized fleet of 737 aircraft.” Southwest flew short hops between midsize cities and secondary airports, picking routes that avoided congestion, and every plane it turned was a 737. Well-paid ground crews working under flexible union rules were part of the answer, Porter wrote. The bigger part was all the work Southwest had chosen not to do.
Continental Airlines saw how well Southwest was doing and decided to straddle. It stayed a full-service airline and launched Continental Lite to match Southwest on a number of point-to-point routes: no meals, no first class, more departures, lower fares, faster turns at the gate. Because it was still a full-service airline everywhere else, it kept its travel agents, its mixed fleet of planes, its baggage checking and its seat assignments.
The Lite planes got stuck leaving crowded hub cities or held at the gate by baggage transfers. Late flights and cancellations brought a thousand complaints a day. Lite fares couldn’t carry standard travel agent commissions, so Continental cut commissions on all its flights. Cheap tickets couldn’t carry full frequent-flier rewards either, so it cut the rewards for everyone. The results, in Porter’s words: “angry travel agents and full-service customers.”
The airline lost hundreds of millions of dollars, and the CEO lost his job.