A Story That’s Stalled Out

Why Southwest Airlines Has Hit Serious Turbulence—And What to Do About It

David Brownlee is a happy Southwest Airlines flier. Four years ago he was stuck traveling for business and just made a Southwest flight to get home in time for his wife’s birthday. En route to Kansas City, he made an unusual request: to sing “Happy Birthday” to his wife alongside his fellow passengers.

Southwest flight attendants Christi and Casey gave Mr. Brownlee the intercom, and he announced to the rest of the passengers: “I’m going to ask you a favor—those of you that are still awake—we’re going to sing happy birthday to my wife…because Southwest is awesome.” 

Everyone on Flight 312 joined in and Mr. Brownlee was so ecstatic he shared the video on YouTube: “The #1 customer service in the industry for good reason.” Mr. Brownlee loves flying on Southwest. 

The airline’s problem is there just aren’t enough other people like him.

Southwest’s profit is down—along with its stock (24 percent over the last two years). Elliot Management, a hedge fund that has taken an 11 percent stake in the airline, says it’s time for changes: “Southwest’s rigid commitment to an approach developed decades ago has inhibited its ability to compete in the modern airline industry.” 

According to a recent Wall Street Journal article, “Southwest is so serious about improving its finances the airline is contemplating radical changes to its hallmarks. It is studying whether to start assigning seats, shake up boarding or offer some rows with extra legroom for a fee to widen its appeal. It has started putting its fares in Google Flights, an airfare search site it long avoided because it preferred that customers book trips on its own website or app.”

Changes might be necessary at Southwest, but if it wants to make ones that both keep its current customers happy and attract new ones, the airline is asking the wrong questions. Every debate about baggage fees or assigned seating obscures the broader question: why do people love Southwest? Clarity around its strategic narrative would give Southwest the same clarity regarding what changes are likely to infuriate its fans—and which will be accepted as part of the airline’s evolution.

A brand’s strategic narrative is built on its purpose: it exists to communicate that shared belief to customers, build a relationship with the brand, and illustrate how that relationship unlocks new potential within the buyer. In moments where a company must change—whether it’s to seize an opportunity or respond to a changing market—the narrative is a framework for decision-making that keeps a brand from missteps that erode value in the long term.

Southwest’s purpose is to “Connect People to what’s important in their lives through friendly, reliable and low-cost air travel.”

The hierarchy of people, products, and profit is consistent across the Southwest brand. Its vision (“To be the world’s most loved, most efficient and most profitable airline”) follows this same structure. So it shouldn’t be a surprise that its story follows this same people-centric arc.

Roy Spence, the GSD&M founder who worked alongside Southwest’s founder Herb Kelleher to build its iconic brand, describes its story as “democratizing the skies.” 

This story and its connection to the brand’s purpose have been used before to make decisions in the exact scenario Southwest is facing today. At one point an outside consulting firm offered Southwest a plan to add $350 million in annual profit—by charging for bags (one of the very suggestions being pushed for today). The proposal was rejected by leadership and sparked the “Bags Fly Free” campaign that supported Southwest’s growth in the early 2000s.

It’s no surprise that story has inspired the culture that defines what it’s like to work at and fly on Southwest. After all, Spence notes, “Would you rather be in the airline business or the freedom business? Everyone at Southwest is a freedom fighter.”

Kelleher died in 2019. Over his four decades leading the company, the results were the envy of the entire airline industry: “I got to where I stopped questioning them, because their results were so much better than anybody else’s,” observed American Airlines CEO Doug Parker. 

But to some extent, what drove those results was always misunderstood. Southwest’s own purpose, story, and mission were clear: it was people first, product second, and profits were an output of excellence in those areas. 

Business strategies that were outputs of that philosophy, such as low fares, unassigned seating, direct ticket sales, and more, were seen by outsiders as what made the airline special. The reality is that as a story-driven brand, these were simply outputs of the brand living its own story. 

Kelleher himself reached this conclusion when discussing competition against United Shuttle: “They had all the advantages. They had first-class seats for those who don’t want to fly anything but first class. They had a global frequent flyer program, which we did not have. They probably spent $25 million or $30 million on their advertising campaign. I probably have something like a thousand letters at my office that tell you why they finally receded from Oakland. Those letters say, ‘Herb, I tried them, but I just like your people more, so I’m back.’”

So what does that mean for Southwest today? Current CEO Bob Jordan has observed that “You cannot be stubborn about change. At the same time we’re going to stick to our values.”

It’s easy for outsiders to point to culprits for Southwest’s flagging performance: other airlines’ cancellation policies becoming closer to Southwest’s, lack of bag fees, and “extras” such as legroom and priority boarding. But none of those are core elements of their story. Funds like Elliot value Southwest precisely because it has such a strong brand. That brand is its story, and that means that to preserve, its value change must happen within the framework of that strategic narrative. 

It starts with people.

Southwest’s vaunted culture has shown some cracks heading into and after a scheduling crisis in December 2022 where it canceled more than 60 percent of its flights across several days. Following the crisis—15,000 flights were canceled, the most significant and costly in airline history—Southwest’s own pilots squarely put the blame on leadership: “The impact of Southwest’s operational collapse being felt by passengers and crews over this holiday was not a surprise to anyone but the leadership of Southwest Airlines.”

The Dallas Morning News reported on challenges with Southwest’s staffing as early as April 2022, months before the crisis: “More employees are calling in sick and more are on leave. Pilots are canceling more shifts due to fatigue and blaming it on erratic schedules from delays and cancellations.”

Frustrated employees have more of an impact at Southwest than other airlines, according to Gary Leff of the View from the Wing: “Front-line people, from gate agents to flight attendants, at Southwest Airlines usually seem to like their jobs, which can be a contrast from other carriers.”

Even Southwest’s response to the crisis seemed to forget its own story—assigning some of the blame not only to underinvested systems but to employees themselves. Fliers had been willing to make sacrifices on the hard product—Southwest is no longer the cheapest option on many routes—to fly with people who seemed to “LUV” their work. But when employees on Southwest, who are now often hired on the sport to fill staffing shortages, become like those at any other airline it’s easy to see why extra legroom on a competitor can be more appealing.

A company’s story is its strategy. A strategic narrative distills the brand down to its most essential elements: the problem it solves for customers, who those people are, and why they should trust the brand to help resolve that problem. When that story isn’t defined, or the leadership loses sight of it, it becomes easy to make short-term decisions that seem right but are ultimately untethered from the brand’s purpose and erode the customer relationship. 

Before Southwest makes any changes in pursuit of higher profits, it must recommit to—and redefine—its story. Once upon a time, it took those who were excluded from air travel and gave them the freedom to experience the world. It was a compelling arc with a customer right at the center, and an empowering role for employees (“freedom fighters”), to make that journey possible.

That story is Southwest’s brand, and why customers love it. But until the band finds a way to reconnect employees with it, no changes suggested by Elliot, outside leadership, or consultants will make a difference. Just ask business owner Shauna Bowman: “If it’s two hours I’ll suffer through Southwest, if it’s more than two hours I’m going American.’’

Ms. Bowman had been a loyal Southwest flier for years. She likes American’s extra-legroom section. If Southwest wants to win her back it would be wise to re-look at its story with the same affirmation its founder once shared about competitors: “Herb, I tried them, but I just like your people more, so I’m back.’”

Ed Lynes is the Managing Partner at Woden. Read our extensive guide on how to craft your organization’s narrative, or send us an email at connect@wodenworks.com to uncover what makes you essential.