Cover Story

A Hole in Their Plans

Why the top-rated airline in the country won’t be flying into Memphis — and what it means to you. by Paul Gerald

It’s Christmastime on a Southwest Airlines flight. True to its theory of "hire for a sense of humor, train for skill," Southwest goes well beyond the seasonally wrapped bags of peanuts on other carriers.While flight attendants wearing elf and reindeer costumes dance in the aisles, the captain sings Christmas carols over the intercom and gently sways the aircraft to the rhythm of the music.

It is the cheapest of the big airlines and the biggest of the budget airlines, and after 25 years of ever-growing success, Southwest Airlines is still just a little bit weird. But the airline that paints its planes to look like killer whales and state flags has also recorded a record 23 consecutive years of making a profit and has won the airline Triple Crown (best baggage handling, fewest customer complaints, and best on-time performance) four years in a row. It is, in short, the best little airline in the country.

And yet it doesn’t fly into Memphis, a city of more than a million people that constantly brags about its convenient location. A quick look at the Southwest route map reveals a circle around us: Southwest is in Little Rock, St. Louis, Louisville, Nashville, Birmingham, and New Orleans. What that means to the average airline customer in Memphis is often a choice between paying higher fares from home or driving to Little Rock or Nashville to save money on Southwest.

It’s a choice you might as well get used to, because Southwest isn’t coming here anytime soon, and the reason (which probably isn’t what you think it is) might sound familiar to you.

Southwest’s president and CEO, the sometime Elvis impersonator Herb Kelleher, settled a 1992 dispute over a slogan in an offbeat way. Instead of hauling the other, lesser airline into court, he challenged its leader to an arm-wrestling match in Dallas. While Kelleher "lost" the match — blaming athlete’s foot and an injury sustained while saving a little girl from being hit by a bus — Southwest retained the rights to the slogan, $15,000 was donated to charity, and both airlines got a big pile of free publicity.

When Southwest Airlines was trying to take off more than 25 years ago, it took three years of legal battles to make it happen. Apparently Braniff and Texas International (two airlines now relegated to the aviation history books) didn’t want competition in Texas, but they got it, and lost. Using such memorable marketing techniques as free drinks, stewardesses in miniskirts, and the "10-minute turnaround" of planes at the gate, Southwest took just two years to record its first profit.

When Congress passed the Airline Deregulation Act in 1978, Southwest was freed from Texas and soon found huge success in California and other states. In 1991 the airline greatly expanded its operations in Chicago, and currently flies to several Florida cities and as far up the East Coast as Providence, Rhode Island. Southwest is now the fifth-largest carrier in the nation, with 2,150 flights and 45 million passengers in 1995. It also has the lowest employee-turnover rate in the country and an esprit de corps that borders on legendary. It has never had a plane crash.

Wherever Southwest has gone, it has succeeded, and the reasons are no real mystery: Its flights average an hour and 15 minutes, 80 percent of its customers fly nonstop, and the airline makes it a point to move into large metropolitan areas by using smaller, more convenient airports (like Love Field in the middle of Dallas rather than Dallas/Fort Worth International out in the suburbs). In all these ways, Southwest keeps its costs low (probably the lowest in the industry), which in turn lets it continue to charge low fares.

It was the only major carrier in 1990, 1991, and 1992 to make net and operating profits. Southwest consistently ranks first in market share in 88 of its top 100 markets, and it began the first profit-sharing plan in the U.S. airline industry. Employees own about 10 percent of the company stock.

"If it wasn’t for Southwest, I would find it difficult to believe there is such a thing as a well-managed and profitable airline company," stock analyst Thomas J. Lewis of C.L. King & Associates in New York said in discussing Southwest’s entrance into Florida. "It does a fantastic job of entering new markets, and unless there is another airline that is as good as this company, with costs under control, Southwest will succeed in Florida big-time."

See if you can detect any jealousy in this remark from American Airlines’ chief Robert W. Baker: "That place [Southwest] runs on Herb Kelleher’s bullshit."

People calling Southwest’s reservations line have been known to request to be put back on hold. The reason? An ongoing variety/comedy/musical show during the wait. Examples: "If you’ve been waiting more than 10 seconds, press 8. It won’t help, but it might make you feel better." "Thanks for your patience — we’ll be right with you. This message will repeat itself. Thanks for your patience — we’ll be right with you. This message ... just kidding!"

So why doesn’t Southwest fly into Memphis? Well, the Wright Amendment doesn’t help. The Wright Amendment is a piece of federal legislation written and promoted by former Texas congressman Jim Wright. It was designed to protect the growth of the Dallas-Fort Worth airport, stating that flights from Love Field in Dallas can only fly to another Texas airport or to an airport in a state bordering the Lone Star State. Thus Southwest can fly nonstop from Houston to L.A., but its flights originating at Love Field in Dallas have to land in New Mexico before going on to California. The Wright Amendment was a boon for the airport in Little Rock, which became a busy stop for Southwest flights heading north and east out of Dallas.

But since Southwest literally flies circles around Memphis, the Wright Amendment is only part of the reason the airline doesn’t fly here. It doesn’t help that Northwest is such a force in town, with 80 percent of the flights in and out of the city. But there is a bigger reason.

John Jamotta, Southwest’s director of schedule planning, says the first two things Southwest looks at when considering a new city is whether or not service there would leverage existing service in another city (like expanding into Providence aids Southwest flights in and out of Baltimore/Washington) and whether the demographics in that city are such that people there tend to fly.

"If you look at the amount of people who live in Memphis and judge it against the number of times they fly, there’s not a lot of locally originating trips in Memphis," Jamotta says. "I think the fact that Northwest has such a large hub-and-spoke operation there speaks to that. There are lots of people passing through but not many making it their point of destination or origin, and we are a [destination and origin] business. Memphis has one of the lowest ratios of locally-originating passengers to total passengers in the business.

"There would also be an intense battle with Northwest, and that’s not part of a great game plan," Jamotta continues. "It’s better for us to say to our constituents, which are essentially our stockholders and Wall Street, that we found a place to do business where we can make money quickly and not face a lot of competition.

"Lastly, the [Memphis] economy has not been sterling. It hasn’t been on par with other local economies, and there’s a direct correlation between the vitality of a local economy and how much business it will generate."

Maybe those of you who followed Memphis’ long and sometimes absurd chase for an NFL team will recognize this logic: We didn’t get a franchise, essentially, because even though we’re a large city with a newly renovated airport or stadium, we are not a wealthy one, and we don’t distinguish ourselves in supporting what we have here now. (An ironic twist to this is that the next city where Southwest will expand is the same one that beat out Memphis for the latest NFL expansion team — Jacksonville, Florida.)

It’s a stormy night in St. Louis, and flights are delayed all over the airport. Gates everywhere are filled with disgruntled passengers, hassling attendants for the latest info. Not so at Southwest’s gate. There, the attendants are playing a game of "Let’s Make a Deal," handing out prizes for such things as "the first person who can bring me a hair net." When it’s time to get on the plane, some passengers seem reluctant to go, and several go out of their way to thank the attendants for making the time fly.

To be sure, Memphis has tried to land Southwest Airlines. Though officials in both mayors’ offices, as well as Kevin Kane of the Convention and Visitors Bureau, all say they have no recollection of any attempts to lure Southwest to Memphis — and why would they publicly rush to the cause of bringing in competition for Northwest? — Larry Cox, president of the Memphis-Shelby County Airport Authority, says he has had "many, many discussions over the years" with Southwest as part of a general effort to attract airlines to Memphis.

"I’ve sent them barbecue, gone to see them, and invited them to Memphis," he says. "It’s been a pretty constant effort, but you can’t tell [airlines in general] anything about your city that they don’t already know."

"[Southwest says] the day will come when Memphis will get service, but they’re always more attracted to a city that is under-serviced," says Cox, who added that his top priority is attracting more international service to Memphis.

As an example of Southwest’s priorities, Cox points to Nashville: "American Airlines closed their hub there, and now Southwest is as busy as a beaver in Nashville, adding flights monthly."

And what happens in a city when Southwest shows up? Ask Jean Way, director of AAA Travel Agency in Providence, Southwest’s latest addition.

"Fares are $100 to $150 less, across the board, than they were a year ago," she says, "and that’s on all our carriers." She says people are driving as much as three hours to catch fares like Southwest’s $160 round-trip to Florida. Between their arrival and the opening of a newly renovated airport, she says, business was up 27 percent in October.

Perhaps that’s why Southwest’s Jamotta says the airline has received requests from 115 cities just in 1996, all requesting Southwest to extend service there.

It’s 8:30 a.m. on a Southwest flight out of El Paso, bound for Los Angeles. Four college seniors on spring break had to drive all night from Dallas to Houston to catch a $100 round-trip to the coast. They have already landed in Austin and Midland/Odessa, and they’re thirsty. One requests a beer. The stewardess informs him it’s breakfast time, but he is unconcerned. Amused by this request, the stewardess doesn’t charge him for his beer. When word gets out, the others place orders, and it quickly becomes a highly festive morning flight — all for free.

So for now, depending on where you’re headed, you’re generally going to save money by making the drive to Little Rock (see box, page 13). Philip Launius, a spokesman for the Little Rock airport, says, "There’s no scientific evidence, but ... you can just go out and check our parking lot. One day we estimated 20 percent of our cars were Shelby County cars. And that’s not even counting DeSoto County cars."

What they’re driving over there for is what makes Southwest Airlines one of the best in the business: cheap fares, efficient operations, and good times.

Comparing Fares

At its best, pricing air fares is a crapshoot. But one of the things that industry analysts point to as a key to South-west’s success is that its fares aren’t just low, they’re relatively easy to keep up with. As anyone will tell you, however, it is always good to shop around, and the more flexible your plans are, the less you will generally pay. Northwest, especially, offers deals that require constant attention or a good travel agent.

With that said, here’s a rough look at comparative fares from Memphis, Little Rock, and Nashville. All fares quoted are non-sale rates, effective from January until roughly the end of April, and unless otherwise noted require advance purchase of 14 days or more.

To Dallas: This route is the most striking example of Southwest’s influence. From Memphis, round-trip fares on American, Northwest, and Delta are all in the $400 range (American has one for $202 with plenty of restrictions). From Little Rock, Southwest charges $88; the others all drop to at most $130 from Little Rock.

To New Orleans: Southwest from Little Rock is $142 with a change in Dallas or Houston. From Memphis, Northwest’s nonstop is $407, and Delta is $190 with a change in Atlanta. ValuJet is $136, with a 21-day advance purchase and a change in Atlanta.

To Florida points: Southwest, nonstop from Nashville, ranges around $125 round-trip. Due to the presence of ValuJet on these routes (roughly $150 with a 21-day advance and Atlanta stopover) Northwest and Delta offer 21-day fares of $124 and $158, respectively, to Orlando.

To D.C.: Southwest from Nashville to Baltimore/Washington International: $108. Northwest’s nonstop, 21-day advance, from Memphis to National: $170. ValuJet (21-day and Atlanta stop): $156.

To San Francisco: Southwest out of Nashville or Little Rock, with one stop, can be as low as $144. From Memphis, Northwest (nonstop), American, and Delta (both through Dallas) are all between $350 and $400.

Bette Bus Is All Smiles

There is one person in Memphis who is more than satisfied that Southwest Airlines doesn’t fly into town. He is Craig Beem, general manager of the Bette Bus, a company created just to drive Southwest passengers to and from Little Rock.

In fact, the Bette Bus was started by a Southwest passenger — Craig’s dad, Scott, a Dallas-based salesman in the garment industry who found himself driving between Memphis and Little Rock all the time. "He said, ‘Somebody needs to set up a service,’" remembers Craig, who essentially runs the show now that dad is recovering from open-heart surgery. "He got tired of the road life and moved here with his personal Good Times Van and whatever he could pack into it. He had $500, ran an ad in the paper for about a week, got a phone and some stationery, and he and his wife Bette did the driving with two other guys."

That was almost nine years ago. The Bette Bus is now an established business which, says Craig, basically runs itself while he concentrates on the other side of the outfit, a three-year-old nationwide charter and bus tour company. The Little Rock shuttle has three to five trips a day, depending on the season, and that Good Times Van ("It didn’t have a mural on it," Craig says) has been replaced by five vans driven by a revolving cast of eight or 10 people. No money has been spent on advertising since that first week; it’s all been word-of-mouth.

Beem says they’re "seriously considering" reviving the shuttle runs to Nashville, since Southwest now flies nonstop to several Florida cities from there. He also says he’s thinking of launching a "Super Shuttle" type of operation ferrying people from all over Memphis to our airport. "I’ve always been a firm believer that if you have the means to do it, go ahead and do it," Beem says.

He says the Bette Bus has no official relationship with Southwest, beyond being listed on its reservation computers as ground transportation to Memphis, but adds that they know who and where he is.

"They send me a birthday card every year," he says, his voice ringing with admiration. "I signed up for one of their business accounts one time, and ever since then, right before my birthday, I get a card from them. I mean, can you imagine Northwest or Delta doing that? That just shows you what kind of airline they are."