I agree in part that poor management has been the problem at many airlines, but the another real problem is that the airline industry has high fixed costs in a perfectly competitive environment. Before the airlines were deregulated in the 80s, ticket prices were high, everyone made money. The 90s ushered in low oil prices with strong US economic growth (good for cyclical businesses).
After deregulation oil stayed cheap until the mid 2000s. For whatever reason, South West hedged far more oil than industry practice and when oil went up dramatically in the mid 2000s the airline benefited dramatically. I have looked at their 10Ks, Qs, (P&Ls) and have studied the topic in some level of depth.
South West has a great culture, which could be unrelated to their profitability, but no one knows that for sure. Their profitability has far more to do with fuel hedging than any other single factor. My argument which cannot be proved, but I hope is considered is that the culture has more to do with the employees being compensated well, and the airline seeming stable than the reverse.
After deregulation oil stayed cheap until the mid 2000s. For whatever reason, South West hedged far more oil than industry practice and when oil went up dramatically in the mid 2000s the airline benefited dramatically. I have looked at their 10Ks, Qs, (P&Ls) and have studied the topic in some level of depth.
South West has a great culture, which could be unrelated to their profitability, but no one knows that for sure. Their profitability has far more to do with fuel hedging than any other single factor. My argument which cannot be proved, but I hope is considered is that the culture has more to do with the employees being compensated well, and the airline seeming stable than the reverse.