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Dallas-based Southwest Airlines soars on American virtues

 

Dallas-based Southwest Airlines soars on American virtues


12:00 AM CDT on Sunday, July 4, 2010

 

Scott Burns is a syndicated columnist and a principal of the Plano-based investment firm AssetBuilder Inc. E-mail questions to scott@scottburns.com.

 

Napoleon was in his bathtub when he decided to sell the Louisiana Territory.

His goal wasn’t lofty. He just needed cash for his various wars. Fortunately, President Thomas Jefferson did have a lofty goal – a vision of a coast-to-coast America. So he made the Louisiana Purchase.

The bathtub tidbit comes from The Epic of America, historian James Truslow Adams’ 1931 history of the United States.

"The character of our new acquisition to the west of ‘the river’ was not yet well known, but the exploring expeditions of Lewis and Clark in the Northwest and of Zebulon M. Pike in the Southwest had indicated that the prairies and plains were not of much use to settlers, and thus the western half of the country was to retain its reputation as the great American desert until after the Civil War," Adams wrote.

Today the population center of the United States is well west of "the river." It continues to move farther west with each census report, as it has since 1790. Back then, it took the Lewis and Clark expedition two years and much hazard to get to the Pacific Ocean from Pittsburgh.

Today Southwest Airlines flies from Pittsburgh to Seattle three times a day. Each flight covers the 2,483 miles in about seven hours, including time to change planes in Chicago. And the flight will set you back as little as $244. The average American worker earns that much in two days.

The fare figures to about 10 cents a mile. According to the American Automobile Association, that’s a bit less than it costs per mile to buy gasoline for the typical American car.

We’ve come a long way and gone a great distance.

 

‘I’ll go anywhere Southwest goes’

 

Today the greatest hardship on a trip to the Pacific Ocean is the lack of food or a seat that is a tad narrow, but that’s hard to complain about when you have a cash bar, free snacks and flight attendants with a sense of humor.

Steve Penner, a friend in La Jolla, Calif., sums it up nicely: "I’ll go anywhere Southwest goes. I won’t go anywhere else." I share that preference. I only fly other airlines when absolutely necessary.

There are reasons for this. One is that Southwest is a Jeffersonian airline, not a Hamiltonian airline. It has one class of seats, and what you see is what you get. The airline doesn’t mess with having a first-class section to separate the elite from what BP chairman Carl-Henric Svanberg would call "the small people." We’re all going down this road together, and we’re all going to get there at the same time.

Another reason I prefer Southwest is that I know I won’t get nickeled and dimed.

Both qualities are iconic American business values – making things available for everyone and doing it straight up. So it’s not really a surprise that the LUV airline has made money in periods when others lost their shirts. Nor should it be a surprise that its $8.8 billion market capitalization is second only to one airline in the entire world (Delta Air Lines ), that it is more valuable than United and Continental combined, and that it is three times as valuable as American Airlines.

 

More for less

 

It was not always this way, but it is now clear that the Jeffersonian carrier is the winning airline in America. This glass isn’t half-empty, and it contains a valuable message.

It’s also a good reminder that private enterprises, not public enterprises, are the ones that deliver more for less. In a 1999 column, I compared Southwest and Amtrak. At the time, Southwest was delivering slightly more passenger seat-miles than Amtrak, but Southwest was doing it at one-fifth the cost with one-fifth the employees and one-sixth the assets – while paying taxes rather than consuming them.

Over the last two decades, Southwest has made positive changes. It goes more places, carries more people and still ekes out a profit.

Amtrak is still losing money. It is still promising to work toward break-even, just as it was in 1981 when I first wrote about it. Yes, you read that right – 1981. That’s government in action.

Fortunately, the Southwest Airlines glass – and the glass of all great American enterprises like it – is still half full. So raise your half-full glass today to all our freedoms, to all that we do right – and to the freedom provided by Southwest to "move about" this great country.

Scott Burns is a syndicated columnist and a principal of the Plano-based investment firm AssetBuilder Inc. E-mail questions to scott@scottburns.com.

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