Jetrader - September/October 2013 - 12

the appropriate “carve outs” to preserve
or enhance competition where factually
needed.
Federal economic deregulation in the
1970s brought fare competition to the U.S.
interstate air passenger market for the ﬁrst
time in 40 years, so it was axiomatic that, as
a competitive effect, some of the incumbent
carriers would fail or become so debilitated
that they were “acquisition bait.” Despite the
presence of fewer air carriers today, fares,
in constant dollars, are substantially lower
now than the CAB fares in effect in 1978.

JT: What do airlines need to focus on
today in order to better serve customers
and increase profits?
HK: In order to better serve customers,
while increasing proﬁts, I think that our
industry, as a whole, needs to focus ferocious energy on bringing the Next Gen ATC
system to pass. Next Gen potentially offers
considerably better on-time performance
with considerably less fuel consumption,
thus saving both airlines and their passengers fuel costs and time, “time” in both
cases equaling money.

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12 The ofﬁcial publication of the International Society of Transport Aircraft Trading
23/04/12

584275_Contrail 1

JT: Of the new aircraft entering the market, do you see any as game changers for
the industry?
HK: If fuel costs continue to remain
high, as judged by historical standards,
I think that every new model commercial airplane that provides substantially
increased fuel efﬁciency is potentially a
“game changer,” in the sense that less
fuel-efﬁcient ﬂeets will be less competitive; provided, of course, that the acquisition and maintenance costs of such new
aircraft do not materially offset their fuel
efﬁciency.
JT: What in your view were the biggest
reasons for the success of Southwest
Airlines?
HK: For many years I stated that
Southwest Airlines’ basic strategy was very
simple: “low costs and high spirits.”
JT: Why is employee engagement so
important to the success of a company?
Can you give some examples?
HK: Employee engagement is just as
critical to a company as esprit de corps
is to the U.S. Marine Corps. Southwest’s
Employees have risen to every occasion and
triumphed over every adversity for many
decades because they regard Southwest
as a cause, not just the source of a job.
Thousands of examples abound, but I’ll
cite just three:
a. In 1982, when Southwest was faced
with a lot of “enemy action” occurring
in the midst of a ﬂoundering economy,
our pilot’s union, SWAPA, voluntarily,
took a one year pay freeze.
b. In the ﬁrst years of the 1990s when
crude oil and jet fuel prices soared as a
consequence of Desert Shield, followed
by Desert Storm, our Employees, without
my knowledge, created a Fuel from the
Heart program whereby they individually
selected percentage reductions in their

The development,
application and
proliferation of
ancillary fee charges
has also become a
factor in the low cost
carrier market.
11:46 PM
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Jetrader - September/October 2013

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