In an industry that is increasingly turning to low-cost carriers, the world’s largest, Dallas-based Southwest Airlines, continues to be one of the most unusual, especially in terms of airfreight.
What started as a low-cost passenger carrier with a US$10 night fare between Houston and Dallas in 1971 now has a fleet of 661 active 737s, flying 3,500 frequencies each day. Despite flying exclusively 737s – never considered an optimum aircraft for belly cargo – Southwest has thrived as an airfreight carrier, earning high marks from forwarders and shippers. This year, Southwest continued to dominate in the under-400,000-tonne-per-year category at Air Cargo World’s own Air Cargo Excellence Awards, earning its sixth consecutive ACE Diamond Award for smaller carriers. So, what makes Southwest so special?
Mike Hess, vice president, strategic planning with logistics firm Associated Global Systems (AGS), a long-time customer of Southwest, spoke highly of the carrier’s service, pricing and incentives. But he said the main reason Southwest remains a top-drawer carrier is its people. Southwest uses “LUV” as its IATA code, from the days when it was based at Love Field in Dallas, but Hess said it’s more than just marketing. “It’s amazing how well they operate and how well they work with customers,” he said. “Each employee is empowered to give the best service every day.”
In addition to the fact that AGS’s cargo routinely arrives on time and undamaged via Southwest, Hess said his company retains Southwest’s services because of the leadership he sees in the cargo department, including Wally Devereaux the carrier’s senior director of cargo and charters, and vice president of cargo and charters, Matt Buckley.
Devereaux said Southwest’s success carrying cargo came about quite organically, following no other carrier’s lead, but rather inventing its own way of doing business. “From an air cargo standpoint, we modeled ourselves on our own,” he said. Currently Southwest provides domestic cargo service in the lower 48 states, interlining with WestJet, a Canadian low-cost carrier, and Hawaiian Airlines. “We have a really unique point-to-point network – we transfer all of our cargo just like luggage, from aircraft to aircraft. It allows us to have a lot of capacity for our customers, and maximizes the flight schedule.”
MAXIMIZING CAPACITY
Devereaux contends that the airline’s high-frequency network allows them to be creative while maximizing capacity. Whereas most carriers fly cargo into a hub, unload it to a terminal, re-manifest it, and take it back out to the flight line, Southwest whisks it directly to a connecting aircraft, and only when the cargo has reached its final destination is it unloaded to the cargo terminal. Because the carrier uses 737s, there are some significant limitations to the type of cargo it lifts. For example, it doesn’t carry mail, live animals, oversize cargo or hazardous materials. Still, Southwest’s freight division generated US$46 million in revenue during the fourth quarter of 2014 – less than 1 percent of total revenues, but up 12.2 percent year-over-year. Southwest first dabbled in cargo in its early days, when its only routes were within Texas. The carrier placed small packages in what was then called a “RUSH” box, which stands for “Receives Urgent and Special Handling.” Devereaux said the boxes were small and could be handed to an agent over the counter. The door-to-door service was a new way to get important items throughout the state of Texas to their destination, fast. In addition to promising delivery in five hours, Southwest offered an early form of cargo security – an armed guard on duty to keep “stagecoach robberies” a thing of the past. Even more innovative for the time, Southwest offered 24-hour service. It still has the RUSH boxes, but today they can weigh up to 200 pounds.
In the late ’80s and early ’90s, Southwest entered the cargo market in earnest, creating its Southwest Cargo arm, which has grown rapidly ever since. Devereaux said probably the most unique cargo the airline carried in its red bellies was five years ago, when it moved three six-foot alligators named Little Beefer, Simon and Theodore for the Phoenix Herpetological Society from Phoenix to Tampa. The alligators were rescued by the Department of Fish and Game from owners who kept them illegally, and needed to be transported to their new home at an alligator sanctuary in Florida.
Southwest has also moved thousands of diagnostic specimens from doctor’s offices and hospitals around the country, ranging from blood to pharmaceutical products to organs for transplant. “That’s the beauty of our network,” Devereaux said. “We can get a heart right there. Our staff is prepared to handle something like that. Then we make sure it’s recovered as soon as possible.” This is nothing new, though, as Southwest Cargo began carrying blood and other medical needs back in the RUSH days.
POINT OF PRIDE
The Southwest staff is a point of pride for the airline. Devereaux said his handlers load all of the cargo exactly like they do passenger luggage. For the most part, the ground crews are Southwest employees; therefore they take ownership in their roles. The ramp staff is also made up of Southwest employees, which is unique in the U.S. domestic market he said. Devereaux said Southwest does work with numerous forwarders and courier services, which he said makes up the vast majority of its customers.
Following its acquisition of Airtran several years ago, Southwest is expanding its passenger service into the international market with frequencies to Mexico City, Cancun, Aruba, Montego Bay and Cabo San Lucas.
However they’ve not put cargo on those flights – yet. “We’re replacing our back-office system, so we’ll be able to book freight and put cargo on those international flights,” Devereaux said. “It will also allow us to be a much more viable partner for our interline flights.”
So what about buying or leasing a freighter? “We looked at it maybe eight years ago, and it did not make sense for our business,” Devereaux added. “We do very well carrying freight in the bellies.”