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Southwest Airlines CEO Gary Kelly Talks Company Culture, Promises Improvements

WHAT I WAS THINKING: The honorary Chicagoan and leader of the popular airline discusses the AirTran acquisition, baggage fees, and more

Gary Kelly, CEO of Southwest Airlines

Though you’re based in Dallas, we’re making you an honorary Chicago CEO because Southwest operates more than 200 flights daily from Midway Airport, and its fares over the years have often forced United and American to hold down theirs at O’Hare to compete. So welcome—and what’s up with those not-so-great on-time results out of Midway? Southwest’s overall stats in the fourth quarter kind of sucked.
We’re not satisfied. In 2009, we were number one [in on-time performance]. Chicago has taken a bit of a hit. Weather. Record load factors [i.e., crowded planes]. We’ve been holding flights for connecting passengers. It will improve.

I fly Southwest a fair amount, and my only real gripe is getting through security at Midway. Southwest has an 87 percent market share there. Anything in the works to ease the bottleneck?
Admittedly, we have some work to do. We have to work with the Transportation Security Administration. It’s a function of being popular.

Your acquisition of AirTran Airways is pending. Will that do anything for Chicagoans?
More Midway destinations. Atlanta and Washington, D.C. Reagan in particular.

What about La Guardia? You have a few flights to and from there, but the suits with BlackBerrys want hourly service. AirTran has many more La Guardia slots than Southwest. Any chance you’d use them to go head to head with American and United, Chicago to New York?
I wouldn’t discount that idea. If the demand is there and we can get the slots, absolutely we’d look at that.

Southwest doesn’t charge for checked bags. Other guys do, earning hundreds of millions in fees. Besides goodwill, what do you gain?
We’re getting business! I’m happy for them to take the fees; we’ll take the customers. We’re gaining market share.

The wonderfully simple Southwest frequent-flier plan, one even a journalist could understand—16 one-way flights equal one free roundtrip award—is kaput in favor of one based on points and flight distance and . . . ah, geez, my head is spinning. Can we go back to the old system?
If we do, that will take away from you. What we’ve got is a much-improved customer benefit. It will reward you for the money you spend with us. The old one [all one-way flights, regardless of length, were treated equally] never did, though it was simple. We’re trying to be responsive to the complaints we had. Now no flights are blocked out.

The happiness factor seems intact among your employees, even though the company is not growing so rapidly and nobody is getting rich on the stock. Are you running on goodwill fumes, or is something else sustaining it in an industry that’s mostly grumpy these days?
Oh, no, it’s not fumes. I would argue our culture is stronger than ever. Battle hardened. Our employees’ situation, in terms of benefits and compensation [compared with airlines that went through bankruptcy], is better than it’s ever been. But there’s more: This is a place where human relationships matter. We are in good spirits.

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