Excellence - Courage & Determination To Succeed
We all must therefore find ways to inspire ourselves and make the best attempt for an achievement
I read the book – NUTS - and I found lots of encouragement. I would strongly recommend each one of you to read this book and see for yourselves as to how a regional based American Airline Company, made it to the top of the American Airline Industry inspite of all the difficulties they faced in the market place from the bigger players and that too after the financial disaster.
I will share couple of incidents out of the book to make a point as to what courage; determination, a focused approach and also unconventional methods can do to an enterprise in being successful.
A Banker, an Advocate and a small Airline Operator in the Texas State started the South West Airlines in 1967. The objective of the company was to start a regional based intra-state airlines operating between only three locations namely Dallas, Houston and San Antonio. There were already large airline companies operating in and out of Texas from all the three locations as a hub but point-to-point services between these locations were not being provided.
The promoters therefore formed the company named South West Airlines and raised share capital worth $ 500,000 from the market. Though the requirement of fund for such a regional based company was only $ 250,000 but they raised a large capital that was double of what they really needed. Then they applied for the certificate to fly their planes. While, the government was in the process of considering their application for issue of certificate to fly, the competitors did not want the new player to enter the market. So the major competitors got together to form a cartel and brought a restraining order for not issuing the certificate to fly to South West.
The company therefore had to fight a legal battle. South West lost the battle at a Lower Court. Then, they went in for an appeal to the High Court and lost it too. Subsequently, they went to the Supreme Court. At the end of four years, South West won the legal battle at the Supreme Court. But at what cost??? Firstly, they had lost the valuable time period of 4 years. Secondly, not only they lost their entire share capital of $500,000 but were also in the debt of $80,000.
It was a tragedy that when Southwest had money, they had no certificate to fly and when Southwest had certificate to fly they had no money to start the operation. At this point any other company would have closed down the operation. But the Southwest decided to start the operation and hired people and planes.
From that point in 1971, Southwest has grown to become today the number one airline company in USA. Today, South West is considered to be the safest airlines in the world and it ranks first for services and on time performance. South West has the lowest employee turn over and is rated twice as one of the ten companies to work for in America. South West is the only airline to be profitable each year since 1973 when many of other airlines have lost billions of dollars and posted loss.
How did they make it happen?
Their mission was to give ordinary people a chance to fly and open up the skies for the larger population. Therefore they decided to keep the fares low and consequently keep costs low. They were the first to introduce two-tier pricing structure. Peak time fare and off-peak time fares that other airlines then followed. They also introduced many unconventional methods to keep costs low and improve revenues. They are like:
· Decided that their competition was not with other airlines but their competition was with the ground transport. Therefore the fare on their airline used to be something like $ 15 instead of $ 62 priced by the other competitors.
· Fly lots of short trips. Keep the airplanes as much as possible in the air so as to keep the productivity high.
· Ten minute turn around – “ Don’t walk but run”
· Don't follow the crowds. Avoid bigger and heavy traffic airports and instead serve smaller airports.
· Not serving any in-flight meals like breakfast, lunch and dinner and instead serve only peanuts.
· No to diversify and stay with a single model of aircraft 737 so as to keep all operational costs low viz. spares inventory, training, back ups, higher efficiency since everyone is familiar with single model.
I read the book – NUTS - and I found lots of encouragement. I would strongly recommend each one of you to read this book and see for yourselves as to how a regional based American Airline Company, made it to the top of the American Airline Industry inspite of all the difficulties they faced in the market place from the bigger players and that too after the financial disaster.
I will share couple of incidents out of the book to make a point as to what courage; determination, a focused approach and also unconventional methods can do to an enterprise in being successful.
A Banker, an Advocate and a small Airline Operator in the Texas State started the South West Airlines in 1967. The objective of the company was to start a regional based intra-state airlines operating between only three locations namely Dallas, Houston and San Antonio. There were already large airline companies operating in and out of Texas from all the three locations as a hub but point-to-point services between these locations were not being provided.
The promoters therefore formed the company named South West Airlines and raised share capital worth $ 500,000 from the market. Though the requirement of fund for such a regional based company was only $ 250,000 but they raised a large capital that was double of what they really needed. Then they applied for the certificate to fly their planes. While, the government was in the process of considering their application for issue of certificate to fly, the competitors did not want the new player to enter the market. So the major competitors got together to form a cartel and brought a restraining order for not issuing the certificate to fly to South West.
The company therefore had to fight a legal battle. South West lost the battle at a Lower Court. Then, they went in for an appeal to the High Court and lost it too. Subsequently, they went to the Supreme Court. At the end of four years, South West won the legal battle at the Supreme Court. But at what cost??? Firstly, they had lost the valuable time period of 4 years. Secondly, not only they lost their entire share capital of $500,000 but were also in the debt of $80,000.
It was a tragedy that when Southwest had money, they had no certificate to fly and when Southwest had certificate to fly they had no money to start the operation. At this point any other company would have closed down the operation. But the Southwest decided to start the operation and hired people and planes.
From that point in 1971, Southwest has grown to become today the number one airline company in USA. Today, South West is considered to be the safest airlines in the world and it ranks first for services and on time performance. South West has the lowest employee turn over and is rated twice as one of the ten companies to work for in America. South West is the only airline to be profitable each year since 1973 when many of other airlines have lost billions of dollars and posted loss.
How did they make it happen?
Their mission was to give ordinary people a chance to fly and open up the skies for the larger population. Therefore they decided to keep the fares low and consequently keep costs low. They were the first to introduce two-tier pricing structure. Peak time fare and off-peak time fares that other airlines then followed. They also introduced many unconventional methods to keep costs low and improve revenues. They are like:
· Decided that their competition was not with other airlines but their competition was with the ground transport. Therefore the fare on their airline used to be something like $ 15 instead of $ 62 priced by the other competitors.
· Fly lots of short trips. Keep the airplanes as much as possible in the air so as to keep the productivity high.
· Ten minute turn around – “ Don’t walk but run”
· Don't follow the crowds. Avoid bigger and heavy traffic airports and instead serve smaller airports.
· Not serving any in-flight meals like breakfast, lunch and dinner and instead serve only peanuts.
· No to diversify and stay with a single model of aircraft 737 so as to keep all operational costs low viz. spares inventory, training, back ups, higher efficiency since everyone is familiar with single model.
posted by Sudhin Choksey @ 11:59 PM
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