Speeches and Presentations from Southwest Leaders
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“Southwest’s Secrets to Keeping Maintenance Costs Low, Productivity High” Gary Kelly, CEO and Vice Chairman of the Board of Directors |
Before Gary Kelly shed some light on the secrets to Southwest Airlines’ longstanding success to attendees of Aviation Week’s MRO 2005 conference, he helped put things into perspective for a volatile and sometimes hostile industry.
“Last June, Southwest celebrated its 33rd anniversary,” Kelly said, speaking to a crowd of 1,000 people gathered in an aviation industry conference at the Gaylord Texan Resort and Convention Center in Grapevine. “And in an industry that has recorded a net loss from its very beginning to the present, Southwest has remained profitable every year since 1972, and every quarter since September 11, 2001.”
Kelly recognized the People of Southwest Airlines as the airline’s top secret. Along with its People, Kelly cited a business model that was built around low costs and low fares, as well as the ability to offer nonstop flights ontime with excellent Customer Service, as the major ingredients to the success of Southwest Airlines.
When asked if he felt the need to add inflight electronic entertainment devices to Southwest’s fleet, Kelly responded by pointing out that such additions would not result in more revenue, and he reiterated Southwest’s commitment to offering Customers what they want.
“One thing that our Customers know us for is low fares,” Kelly said. “And that is where the future lies in this industry. We are determined to remain the low cost airline.”
In an industry riddled with high energy prices, a glut of seats, and fierce competition, Kelly pointed to several items that have helped the airline maintain control of its costs. Among the items listed: operating a single aircraft type (Boeing 737), high asset utilization achieved through quick turns, avoiding high cost airports, focusing on Customer wants and values, high productivity, and outsourcing major maintenance projects.
Taking some of the major maintenance projects outside, including the retrofitting of Southwest’s fleet with new spirit interiors and the addition of blended winglets, has helped the airline maintain a consistent work force while absorbing the peaks.
“We currently have 2,428 maintenance Employees, and I am very proud of the safe and reliable product that they produce,” Kelly said.
Kelly outlined several maintenance efforts underway that will further allow the Company to minimize costs while keeping operations running smoothly. He noted that the maintenance department is moving toward an automated workflow. For example, Southwest is implementing electronic task cards that allow mechanics to access real time information, which has improved workforce speed by 10 percent.
Kelly also recognized the value in maintaining a healthy relationship with Southwest’s suppliers. He noted that using several suppliers, thereby increasing competition, has contributed to Southwest’s ability to control costs and acquire high quality products.
“We love our suppliers,” Kelly joked, “but we’ll love you more if you lower your prices.”
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