Love Triangle

It started over 30 years ago with a simple drawing of a triangle on a cocktail napkin; today Southwest Airlines, headquartered at Love Field in Dallas, is the 4th largest major airline in the US.

March 2004

With his entrepreneurial spirit, attorney Herb Kelleher got together for cocktails with Texas businessman Rollin King , to discuss the first three cities (Dallas, Houston and San Antonio) they would fly passengers to;and Southwest Airlines, "triangle of love" became a reality. Keeping their focus simple, the rest is history as they say. Get your passengers to their destinations on time, make sure that they are paying the lowest fares, and do it all while having fun. Southwest continued to add triangles to their flight pattern until it finally flew beyond the Texas borders to serve a total of 58 cities in 30 states. When you take a look at Southwest's mission statement, which includes the phrase "the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit," its employee promise declaring "above all, employees will be provided the same concern, respect, and caring attitude within the organization" and add the fact that Southwest is based at Love Field, the "triangle of love" becomes more apparent.What's Fueling Southwest? Fuel management at Southwest Airlines is broken up into two groups: fuel purchasing and fuel operations. "The way we look at it is our fuel purchasing team buys the fuel and then ships the fuel to the airport, then it's our responsibility to store the fuel and see that it gets to the aircraft clean and dry. That's our primary goal," states Glenn Hipp, Director of Fuel Operations. Generally the airlines don't own their own fuel farms (fuel storage facility), however, at Southwest, they sometimes do. Southwest has four fuel farms: three in Tulsa, Oklahoma; Burbank, California; and Houston, Texas and one under construction in Sacramento, California. With a definite tone of percipience, Hipp reasons, "Why pay someone else rent when we can own the primary airline storage facility, lease space in it to other carriers to store their fuel and reduce all of our overall costs." Certain parameters are required by Southwest of both the airport and the carriers to uphold the mulit-million dollar investment. The first is that the airport agrees that Southwest's will be the only facility at that location. The second is that rather than having a fixed cost, the carriers cost for fuel per month, including Southwest's, will float depending on the expenses incurred at that facility. The third is the cooperation of the other carriers serving the airport. Though fuel prices are going up, making it problematic for all of the carriers, Hipp notes that Southwest has an advantage with it's strong hedge position and fuel purchasing folds looking for spot purchases out in the market. In today's economy the practice of hedging can only work if you have credit and capital. Unfortunately, there are a number of carriers right now with neither the credit nor the capital who cannot hedge, hence paying much higher costs. As Hipp states, "It's the first time in my career the fuel prices skyrocketed at the same time the economy tanked for the airlines and they just didn't have the money they needed to hedge." Hipp is confident that fuel prices are going to come down in the summer, nonetheless he believes it has been an unusual year for fuel prices and has been surprised at the direction of the market. According to Hipp, his fuel operation group's biggest contribution to the success of Southwest was a major transition from hydrant trucks to stationary hydrant carts beginning in 1996. Compared to fueling trucks, the hydrant carts are more cost effective when it comes to maintenance, more practical when it comes to saving time and safer because there are no fuel trucks requiring registered drivers and vehicle insurance, driving from one plane to another. The stationary cart also gives the baggage handlers the ability to operate unhindered by the presence of a fuel truck in the vicinity. Southwest has a homogenized fleet of 737s that always park in the same spot, thus utilizing the carts to a better advantage than other carriers can. In addition, almost two years ago, Southwest Airlines fuel operations was instrumental in getting manufacturers to improve the carts and find a way to automate the information from the cart and transmit that information back to the base station. "We went out to the manufacturers and said we are going to buy 100 carts. We said here are the things we have to have. So they got very creative. I don't want to say we changed the industry for carts but we definitely came up with a new design that is specific to Southwest, and it's very popular," states Hipp.

Southwest Airline's mechanic, Trey Fricks, is in the process of scrapping out an old electric lavatory vehicle.

Fuel consortiums have been a very popular methodology to build storage facilities, unfortunately many carriers are no longer in a financial position to be able to do this. Southwest has the ability to make the capital investment in the infrastructure of fuel storage facilities that are built and operated for the mutual benefit of everyone on the airport and has stepped up to be the banker for some of these facilities where it makes sense. "Our primary objective is to get it built and then secondarily how do we do it cost effectively," declares Hipp.

One of the new Southwest Airlines stationary fueling carts.

Out with Jet A, in with??
Glenn Hipp and Larry Laney, Director of Ground Support at Southwest, remember the days when fueling GSE was less complicated and less expensive; the days when Jet A not only fueled jets but just about everything else on the ramp. Those days are gone. "In 1999," Hipp claims, "The Environmental Protection Agency said you can't do that anymore, because jet fuel could have a very high sulfur content so you have to switch to diesel;it was problematic to the industry." Indeed, the EPA targeted airports for more aggressive emission control programs given the fact that the air pollution emissions were growing as airports continued to expand to meet the increasing travel demand. It was determined that GSE represents one of three (aircraft and ground access vehicles being the other two) groups of mobile emission sources that contribute a small but significant share of the hydrocarbon (HC), carbon monoxide (CO), oxides of nitrogen (Nox) and particulate matter (PM) emitted in metropolitan areas.

With no designated diesel trucks or diesel storage at the airport, switching from Jet A to diesel was much easier said than done according to Hipp and Laney and they had to work very hard to figure out how to make it work economically. "The airlines were left in a kind of predicament figuring out how we are going to get diesel fuel [on the ramp] and how we are going to accommodate these rules," says Hipp. "We scrambled to get everybody moved over to diesel as soon as we could, then almost simultaneously the switch started over to electric."

Allied Aviation inspects carts for Southwest; from left to right are Joe Lombard, Jim Cathey, and James Mcclellan.

The majority of conventionally powered GSE can be either converted to or replaced by GSE powered by alternative fuels such as LPG, CNG or electric. Southwest opted to go electric due to a number of factors. Besides getting a "big bang for their buck" by electing to go electric, Laney stated that rather than switch to the new generation gas engines that have catalytic converters, it made better sense to go with electric because the majority of the GSE that runs the most hours could be converted. Both Laney and Hipp continue to work to improve the electric technology. "There is a lot of engineering that goes into it," says Hipp. "You need a lot of power. You have to have these really expensive and large recharge stations to recharge the batteries." In trying to find a way to do this economically as well as environmentally, Laney is currently working with manufacturers of fast charging equipment and batteries such as ETEC (Electric Transportation Engineering Corporation), Aerovironment, Inc and Excide, to discuss improving the technology.

Spread the Love
When I walked through the doors at Southwest's Headquarters, I thought they were giving tours to a group of students because everyone was wearing jeans. I soon found out that this is Southwest's dress code for its employees everyday. Why? Because Herb Kellerher told them that if they kept service at a certain level for an extended period of time, they would be rewarded. As an organization that has won the Triple Crown (best on-time record, best baggage handling and fewest customer complaints) more than 30 times, boasts a low attrition rate, is environmentally proactive and reported its 31st year of consecutive profitability (a feat unmatched in the airline industry), Southwest Airlines has every reason to spread the love and continue the "affair" it's having with its customers and its employees.

Glenn Hipp says it best, "I am really proud to be a part of an industry that is changing so rapidly and I feel like we are really out in front of the group doing that."