« Business Wars

Southwest vs. American - Clearing the Runway | 1

2018-09-11

In Texas in the 1960s, Rollin King had a crazy idea. He wanted to create a no-frills airline service that served San Antonio, Dallas and Houston. All he and his lawyer had to do was convince the Federal Regulations Bureau that they had no jurisdiction on flights that never left Texas. Of course getting Southwest off the ground would have been a lot easier if they had any planes…

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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Introducing the capital one Walmart rewards card earn five percent back at Walmart Online Games for the kids headphones for dad a laptop for mom doesn't matter, you get five percent back at Walmart. Online you'll also earn two percent Walmart in store, restaurants and travel, and one percent everywhere else. When you want all that You need the capital, one Walmart rewards card. What's in your wallet terms and exclusions apply capital one in a It is the spring of nineteen. Sixty six in steamy San Antonio Texas, two men with voices talking business over whisky at the bar of the Saint Anthony Hotel, Thirty, five year old Rollin King wishes, his glass bore. I have another, scotch rocks
runs in investment companies. Drinking with her Keller offer am represents kings business interests. Keller taxes glass. Now the turkey rocks from leafless both manner tall and athletic in transplants to Texas King gets to the point we're going to talk to you about this airline idea, we discuss the other day. Come on beer. Let's not you ve, already gotten cream in the airline business three years earlier, King bought one. Wild goose flying service and reboot. Did it Southwest Airlines, charter service shuttle San Antonio businessman around the state, but it failed and king is salvaging what he can after I did so each graphs? I want to build an all jet service operation. Little compete with branches in Texas, international and American Airlines killers. Two kings, oddball business ideas with this one tops of all Those fellows might give you a stake on board, but their flights are cancelled, half the time and the other half they lose your bag. But what
We build an airline it'll, be just for three cities: San Antonio Dallas and Houston. Forget this It will be no frills, will win on price convenience and servers? Are you kidding me rollin. The regulators will never allow it air traveller Eighteen, sixty seven is in its golden age men where their best business outfits and sit in big comfortable see since smiling stewardesses, Sir plate subprime ribbon refresh their highballs airlines After all, this, thanks to the civil Aeronautics Board, The federal agency controls everything where and what they can fly and what they can charge. For everything, from a mixed drink to a seat. Most importantly it allows airlines to charge very high fears, but king might have found a loophole theirs. Fit Pacific Southwest Airlines. They only flight
Chris State only within the boundaries of California. That mean the feds have no jurisdiction over them. We do that here in Texas to but, if we're, They get this thing off the ground. I need you on board her you're connected. What he means is that killers wife is connected she's from one of the biggest landowners families in all of Texas. That saying something wrong. Rather than the others will flatten you and how I spoke to sell this to a bunch of people who know their way around money. Well, her you're my lawyer, so you. Figured out Keller her. The last of his drink, walks away, he's thinking, no way this airline is ever gonna fly. Business wars is sponsored by Light Box ever heard of lab grown,
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twenty five dollars off that Light Box, Elijah Hd B, o ex dot com, Slash D, W don't forget code, be w- were twenty five dollars off. From wondering I'm David Byrne, and this is business wars. In our six part, Series Southwest versus American Airlines will how the bruising dogfight between the more established airlines in the scrappy, upstart or not They change the way we fly
but since some airlines crashing to their debts, you are listening to episode. One clearing the runaway Alan Kings bone is ringing is just a few after his meeting with Keller, many glasses, of Scotch killers on the line. Rather then look in India, airline idea and check in federal and state regulations, and I gotta tell you something yeah. What is it? Rollin, you're crazy. Airline idea is crazy. Now, let's do it anyway. Killer, sober as a judge days after that hazy, meeting at the Saint Anthony Hotel BAR is I am convinced that king is right, if alone Ass low frills carrier can operate without interference from federal regulators in California, then can do the same in Texas and give the fares are cheap enough. Keller, her for
Here's Texans would rather fly them Dr Long halls between Texas City. First, though Keller, has to convince some of the states richest men too, invest in air southwest that prove to be easier than expected. The invite there's agree that there is a need in the Texas market for what he is proposing They also like the idea of owning a company that flies jet plus everyone really likes Herbert, is always ready with a wise crack and whisky channel starts looking for backers by calling John Murkison CO, founder of the Dallas Cowboys and and pow aloud. John, it's her right. And cheering, and I have this idea for airline sort of a commuter airline for Texas all jets. All interests take no federal interferes Dallas used in San Antonio with very frequent low fair flight
we're raising money. You interested her Babylonian, and tell her bring on some of the biggest names in Texas business. They raise five hundred, forty three thousand dollars and incorporate on March Fifteenth nineteen. Sixty seven But a year later, the Texas Aeronautical Board certifies AIR southwest of lie within taxes, but the next day major airline competitors launch a legal assault to stop that from happening. APOLLO, ten is transmitting the first color pictures of earth from space before landing on the moon as protesters occupy the street President Nixon pledges to bring back twenty five thousand troops
confrontation between gay rights activists and police outside the stone walled in a gable in Greenwich Village, New York City escalates into a riot and at a farm in Beverly, your Woodstock, using festival, features legendary acts of Santana. The grateful dead, Janis, Joplin and Jimmy These events help define an era and they also speak to the mood in the country. People want go out the rules and challenge the establishment, in some ways. It's the perfect climate for an upstart like South West, if only it can get in the air It's been grounded for more than a year, thanks to the lawsuits, brought my Braniff trance axis and continental. They have plenty to protect too
ran up. Airlines has a monopoly on flights between the big cities in Texas. Excess international dominates. Air service between smaller cities and Continental eyes wherever the other to doubt they're all hemmed in by federal regulation, but air, South West. With that advantage South West should be in a position to soar. Hast competitors That would be a whole lot easier. If southwest actually had some planes to fly trouble is the and is burnt through most of its half a million in seed money, fighting lawsuit, king summonses Board for meeting the mood is glum. John Murkison speaks first gentlemen. We, a good fight. These other airlines are set on bleeding to death and we don't have much blood left. In the room, not in Agreement Keller, does not.
Listen everyone. I know this looks bad, but this is a legal battle. I'm convinced we can win on appeal and we need to win We're trying to do is offer Texas Superior air transportation at a low price Keller. Her nose he's asking is backers to buck the establishment to break the Earl. Its grip on taxes, but that's the zoo, guys in America at the time our combined strengthening ties up a lawsuit that a perversion of what America's supposed to be about, I won't Ray unapprized work. I want to win If you agree to, let me keep trying. I work for free up pay. The cost right out of my own pocket until we do when the board votes you're southwest were fighting eighteen long legal months later, tell her wins a ruling from the Texas Supreme Court. The bigger care,
appeal to the: U S Supreme Court, but in December nineteen. Seventy clients to overturn the Texas ruling Southwest wins. It's a remarkable legal battle, but it could be a pyrrhic victory: Child west has one hundred forty three dollars in the bank and owes more than a hundred thousand dollars still. It is in business at least. Theoretically, they need a team. The recession of uniting seventies, put a lot of good people. Out of work, and word is out, but South West is open for business by January nineteen. Seventy one Lamar Muse, an airline industry veteran is president of air. Southwest mused puts fifty thousand dollars of his own cash into the company and raises more than two million dollars he all renamed the company southward airlines and then
the mad dash, begins it's early spring of nineteen. Seventy one southwest supposed to launch its first blight within two months. A mechanic, just arrived at his new job, having just been laid off like many early southwest employees by Bankrupt, Purdue Airlines, the mechanic gonna team, or trying to open the doors at the loan hangar South West, is least at love field, the company, a strategic decision to operate from a not so busy airports, just a short drive from downtown Dallas What in the world. The hangar is a relic from the nineteen forty, the mechanic pushing on the doors, but they dont buys they sang just shut the tracks are full of sand. It takes two days pray, opened the buildings, forty foot tall doors. Meanwhile, another or Purdue airline employees is having different kind of problem, train
stewardesses there aren't any so muse runs a printer had aimed at a woman play boys been pursuing for years. It's titled an open letter to wreck Hell Welsh paper, add reads: Miss Wells, you'd, but by the girls, we're looking for warm personal great looking in hot pants, if you know of any other girls, like you at least Twenty years old, twenty fifty vision without glasses between five who, in five seven one to one hundred thirty five pounds were high school graduates, preferably with college training. Would you please them to send us a brief statement of qualifications in a recent photograph. Twelve hundred applications poor in for just thirty eight available jobs on June fifteen nineteen. Seventy one muse meets with a reporter to crow about what they have accomplished.
Within just three months, we bought three planes least gates at three airport, conch with jet fuel and other suppliers launched an ad campaign and hired in train twenty one pilots. Forty two support personnel, nine ramp agents thirty, eight hostesses? I'm probably forgotten something impressive. But what are you planning to do about the new restraining order that Braniff is obtained against you ha What restraining order the one that says you won't be allowed to fly on June. Eighteen. This is break. News to the South West President The abruptly ends the interview and speeds to love field where Keller we'll be arriving from Washington before flying on de San Antonio he's its Keller, her in the crowded rushes to hurt you gotta get asked it there's another injunction and we go into service on the eighteenth. Why, I don't even have a change of clothes, Lamar, ok, fine, to get a ticket on Braniff to ask- and I you don't want
are playing on the tarmac right. Now you get on that the route to Austin, get yourself in front of the Supreme Court there and come up with some damn thing to tell him: okay, Lamar I'll figure it out. I hope you will but her if it doesn't, work the sheriff shows up here and eighty with some kind of restraining order. What do you recommend we do the mark? The sheriff shows up. You push that. First blot out, on top of him role, ride over that son of a bitch in late tire marks on his back. It's been for you years, this has gone on long enough. Get the damn plain in the air after night at the law. Library Keller doesn't come up with much legal fodder, so Yes reminds the court that they ve already ruled in South West Favour that works nineteen hours later The captain and first officer are shaking hands with Dallas, is deputy mayor on the tarmac at love. Field
is all the pomp and circumstance the inaugural flight will see. There are no. Tching bands, no banners, no champagne corks popping, but also no sheriff three flight attendants board the Boeing, seven thirty seven there, just two paying passengers in one piece of checked luggage in the cargo hold the near empty. Lane takes off at seven a m right on time. Southwest Airlines is finally laughed, the owners and crew are ecstatic excitement short lived, won't be long. Before the airline serious turbulence. Usb a shipping rates are increasing, so now is time to save, with SAM Pro online from Pitney bows starting, adjust for ninety nine a month with simple online from Pitney Bows is just click, send and say
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everything you need to start marketing your business today and they'll, be there to help as your business growth. Now, what Melchior that's? What learn? More male chip, dot com? He's a sunday after the inaugural flight and Rollin King is in the co pilot seat for the first morning, flight from love field to Houston over muses. Three months sprint to get Southwest airlines operational king is changed items to allow mused more freedom to run the company as he sees fit king is no longer ceo, but executive vice didn't of operations and a board member he's also become certified to CO pilot is seven thirty. Seven and is just to work on a regular flight crew,
king sitting in the first officer, see lips a couple of witches and adding Whitney engine spin to roar in the early morning. Texas heat the ground through the plain to the runway. The pilot pushes the throttle forward. Plain speeds Jeanne calls out free. Like Checklist Captain Wragge said not. We won rotate flights in the air, so planes yank to the right like a dog on a leash, Jean shouts rivers, thruster deployed and it's free. A huge aerodynamic drag on one side of change, plain like having one engine push forward. While the other pulled back the thrust, her can't be closed. The plane can't climb the pilot contacts, the control Tower, Meda, we ve gotta malfunctioning thrashed or any place clear, runaway plain turns back,
clean land safely and no one is heard. The reverse thrusters checked. Deployed during maintenance. The night before closed manually, and It is an inner suspicious start is and in auspicious start Southwest director of flight operations, an American Airlines veteran response by ramping up all the airlines safety procedures. Just months after King scare, in August of nineteen seventy one meal king in the board meat to vote on a plan to accept delivery of a fourth Boeing, Seven! Thirty, seven! Two hundred is giving them a million dollar brake on the plane, as it did with the airlines. First three planes, but it's still a bit. Risk for a money. Losing air carrier Muse pushes the long
We're losing money at this point, but a fourth aircraft at a cost of four million dollars will allow us to offer more frequent service between doubtless in Houston. These men are pretty unflappable but one oral manage shaking his head, we're losing our shirts already Lamar. We were virgin seventeen passengers per flight at twenty dollars per passenger, we need thirty eight paying customers on each flat to break even, but we can name! Do that and now you by another playing me, It makes no sense. I won't be a party to rest bored likes the idea of more frequent service in votes in favour of buying the new playing the oil man, which the board The fourth plain arrives in October. Southwest finance is immediately go into a tailspin they're just aren't of passengers to cover the costs of four planes by ape
one. Seventy two, the situation is dire. Muse comes up with a desperate solution, Southwest, can sell one plain to make payroll. Serve its current schedule with just three planes. If It can turn its planes at the gate, meaning passengers than load new passengers and refuel much faster. How fast ten minutes Other airlines, after a whole lot of tinkering, if whittled their turnaround time down to twenty five minutes every. This thinking the same thing. It's impossible bill, wrangler the airlines gruff forty five year old, vice president of operations believe It can be done. He expects, it is planned to an incredulous, ground crew. Ok, our planes will pull up near the gate but thought
of a way that they can simply drive away without being pushed by talk instead of gate bridges. Soldiers will board and deep layin using stares at both the fraud. The rear, the plane departing. As usual, be lined up on the tarmac even before the plane arrives so soon, as one group get on banks will be unloaded in reloaded even but All the arriving passengers are off the plane tyres in systems will be checked. Of Fuel is being added medicine Where's the lash new passengers on board, whether seated or not hostesses we're close, a cabin doors, final tax bill. That's insane! There's no way! All of that can be done in ten minutes. Oh yeah, well If you can't turn these planes in ten minutes under a far all of you, then I'll go. Higher another group a guys and if they can't do it off, them to keep on fire.
People. Until I find someone who can do it This is the only way to save Southwest airlines. Ladies and gentlemen, Southwest Airlines welcomes you to Houston, we'll be at our gate momentarily. There will be two stairwells today that should use to deep blame. One is at the front of the aircraft, the other at the rear There's a moment of confusion among passengers who are accustomed, exiting in two directions: Ok, so here's your bag right that way, Sandra gotta get these seeds clinking. Can you get those seat belts cross captain? Can you ass, the trash and that being passengers, get off in record time and Do the passengers getting on within one. Youtube. The ten minute turn mused checks, the stat. Online departures or improving its first flight had to passengers. At the end of nineteen, seventy two, the air,
boards. Three hundred thousand passengers southwest is finally on a clear path toward profitability. Its rivals see the threat southwest posters and begin circling. The fledgling airline. Looking for its weak spot no South West's reserves are growing, but the count They still can't match their war chests on the next episode. Southwest competitor try to shoot their new rival out of the sky with rock bottom fares. Southwest response will let's just say for a while South West Airlines was fuelled by booze.
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Transcript generated on 2020-03-18.