It's a different industry now
Southwest's ex-boss sees rough time ahead
Southwest's ex-boss sees rough time ahead

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By Steve Lackmeyer
Published: April 22, 2008

The last time Howard D. Putnam visited Oklahoma City, he was accompanied by two flight attendants resembling cheerleaders and was promising to revolutionize air travel by launching two daily Southwest Airlines flights from Will Rogers World Airport to Dallas Love Field at a cost of $37 for a one-way fare.

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And that charge included free peanuts and soft drinks.

The former Southwest Airlines CEO who later steered Braniff Airlines out of an early 1980s bankruptcy reflected on a very different industry as he returned to Oklahoma City last week to address a gathering of Spirit Bank executives at Moore's new Warren Theater.

He recently visited with The Oklahoman:

Q: Do you remember when you expanded Southwest Airlines service into Oklahoma City?

A: There was a young public relations person ... I asked him, ‘How many people do we need to visit in Oklahoma City about getting support for Southwest Airlines?

He said, ‘Four – (Oklahoman publisher) Edward L. Gaylord, (oilman) Dean McGee, Gov. George Nigh and (banker) Charles Vose Sr.' And they were the four people I went to see. I brought along two flight attendants when I went to see Mr. Vose. And those original flight attendant uniforms were like the Dallas Cowboys cheerleader uniforms. I marched them into Mr. Vose's office, his eyes got this big, and he said, ‘Is your stock traded on an exchange?' I said, ‘Yes sir, the New York Stock Exchange.' He asked, ‘What's the name?” I said "LUV.” He spun around in his chair, he had a machine of some kind, he's working away, he turns around and says, ‘OK, I just bought 10,000 shares of Southwest Airlines.'

Q: The airline business has changed since then, hasn't it?

A: I'm glad I'm talking about it and not in it now.

Q: It's tougher?

A: When crude oil got to $20 a barrel when we were taking Braniff through bankruptcy, it was said you can't make money at $20 a barrel. Now they have $114 a barrel. It's a serious problem for those folks. I read the other day that United said if they were to fly a 747 from Chicago to China they would need $500 per person on the flight just to pay for fuel.

Q: What happens from here?

A: You'll have more bankruptcies, more consolidations, more mergers, more trying to cut costs. Some of these mergers, I don't think they are very good ideas. They're purely financial transactions. But they're out of things to do. There are only so many things to fix.

Q: So what about these potential mergers between Delta and Northwest and United and Continental?

A: It will happen. Will it be good for you or me? I don't know. I've never seen a merger yet where the fares went down and service got better.

Q: Was deregulation a bad thing for the airlines?

A: I'm still in favor of deregulation. If you believe in the free enterprise system, you have to believe in deregulation. I've only seen one industry where deregulation doesn't do any good, and that's the electric utilities.

Q: But what about instances like Aloha Airlines, which recently went out of business when an upstart came in and charged very low prices?

A: That little airline that supposedly caused all that is going to be in a lot of litigation. I think some lawsuits are already filed. I don't see any of that happening here. People are more of the mentality of ‘Let's try to survive and keep industry going instead of putting each other out of business.'

Q: So you are following the industry very closely?

A: Yes, very closely. I have a son who is a captain for one of the airlines.

Q: What do you think about the recent effort to force the auctioning off of gates at the New York airports?

A: The FAA is under a tremendous amount of pressure to free up airspace and get more flights to go in and out. So they're trying to be creative ... but the airlines have a different opinion. They'll work it out.

Q: Is Oklahoma City still at a disadvantage because it's not a hub, or does it matter any more?

A: No. I was asked today, ‘How can we get more air service?' I said, ‘If I were you, I'd try to keep what you've got.' As the airlines fight this fuel problem, you're going to need to support your carriers as much as you can. Now is not the time to try to recruit more airlines.


 


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