TAKING STOCK : Lessons from a US Airline I will never forget the US based Southwest Airlines flight in which I flew into Las Vegas over 12 years ago. It was fun. I, distracted with the humorous announcements of the flight attendant, forgot to be afraid. I remember the airhostess saying, “enjoy yourselves, we are going to rock and roll our way to Las Vegas” (this when the ride became bumpy). You may also hear the following aboard a Southwest flight — “And as the song goes, there might be fifty ways to leave your lover; but there are only six ways to leave this aircraft. The location of each exit is marked with red and white disco lights along the floor of the aisle. (made ya look!)” “In event of a water evacuation, your bottom … your seat bottom, that is, can be used as a flotation device by removing the cushion, holding onto the straps underneath it, and choosing your favorite stroke.” “Please check to make sure your seat belts are securely fastened, seat backs tray tables are in their full upright and most uncomfortable position.” “Finally, although we never anticipate a change in cabin pressure, should one occur, four oxygen masks will magically appear overhead. Immediately stop screaming, please deposit a quarter, and unlike president Clinton, you must inhale!” Southwest took off on June 18, 1971 after its founder Herb Kelleher’s five years of legal battles with those who never wished to see it fly. But fly it did and what a way it flew — leaving its competitors in the dust. And yet, were it not for deregulation of air travel, Southwest might never have been born — it certainly would not have expanded the way it did. In October 1978, the US Congress pas-sed the Airline Deregulation Act, eliminating government control over routes and fares. In 1984 the Civil Aeronautics Board, which had controlled US airlines, was abolished. A sea change in air travel occurred as a result of fierce competition brought on by deregulation. Pan Am, Midway, Eastern, America West, Continental, and TWA were among the 120 airlines which went bankrupt. With mayhem all around it from 1990 to 1995, Southwest experienced a 133 per cent traffic growth. Airlines, highly competitive and capital intensive, generally provide a poor return to its shareholders. Not Southwest, Peter Lynch, America’s best known investor applauded it as, “the only US airline to have made money every year since 1973. For return on capital, Southwest has yet to be outdone.” Was this profitability because of high fares? Southwest is renowned for its low fares on every seat, flight, and route. It is the driving force behind the steady decline of ticket prices. In many instances Southwest fares are lower than the cost of bus or rail tickets for the same distance. Patrick Murphy, former deputy assistant secretary for aviation and international affairs, US Department of Transportation, said in 1988 that Southwest Airlines alone was driving fares down so that 15 per cent of all US commercial air travelers were benefiting. Robert Levering and Milton Moskowitz put the company in their top ten in The 100 Best Companies to Work for in America. Between 1978 and 2000, while many airlines were going out of business, Southwest expanded its market-share from under 0.5 per cent to 11.5 per cent. It started in 1971 with four planes, and on July 29, 2003 had 381 Boeings 737 jets. Contrast this with NAC’s performance. If Nepal allows any of the world’s airline to fly in, without regard to bilateral treaties, tourism will boom. If foreign investment is permitted on domestic routes, Southwest might come to Nepal — the airline also has a perfect safety record, it has never had an accident. (The writer can be contacted at: everest@mos.com.np)