Southwest Airlines Goes Beige

Don’t Let This Happen to You!

Jerry Garcia of the Grateful Dead is reported to have said:

“We didn’t want to be the best at what we did.

We wanted to be the only ones doing what we did.”

That strategy worked well for the Dead. No one can argue convincingly that they were the best rock band in the 1970s, but they were certainly the only ones doing what they did. And they were incredibly successful. You’d be elated if you had customers who are half as loyal as Grateful Dead fans.

The Grateful Dead give us a very valuable branding lesson. If you do what everyone else does, it’s difficult to stand out. But if you’re the only one who does what you do, it's easy for customers to see how you are different.

Southwest Airlines has always been the Grateful Dead of airlines

They have always done what no other airline does: They’ve never charged change fees. Their flight attendants cracked jokes during the pre-flight safety announcements. They never charged for checked bags. They are the only airline that has passengers board and select seats the way they do. Their stock symbol is LUV.

Southwest has always been one-of-a-kind.

I remember, in the early 90s when I was running the resort marketing for Hyatt Hotels, how indignant I would get when reader polls would come out in fancy travel magazines, and Southwest would win best airline. Hyatt Resorts could never win in the resort hotel category, because we were competing against interesting, independent boutique resorts on romantic islands. But Southwest? “They’re just a low-cost airline. How can they win… while we get left in the dust?”

And then it dawned on me. They win because they are different. They win because they have fewer direct competitors than any other airline. This has always been Southwest Airlines’ secret sauce.

Southwest stood out among the crowd. It was easy to notice them, and to remember them. Southwest was in Technicolor, while their competitors all blended together in muted colors (camouflage).

But now, sadly, Southwest Airlines has gone beige

Southwest now charges for checked luggage.By early next year, Southwest will start issuing seat assignments in the same way every other airline does.

Southwest is willingly giving up its competitive advantage.

This won’t be good for them.

The marketplace is crowded, and now Southwest will just blend in.

What a mistake.

In past years, Southwest was usually priced lower than other airlines. In fact,  there was something known as “The Southwest Effect:” When Southwest would enter a market, the average fare would drop. But over time, the Southwest effect has waned, because Southwest has earned the right to command higher prices.

Not only has Southwest been able to evolve from a low-cost airline to an airline that does not need to sell at prices lower than their competitors, in the meantime they have also achieved a significant market share. One out of every six U.S. domestic airline passengers flies on Southwest.

Their strategy has worked wonders. Southwest had a 47-year streak of never losing money… United’s longest similar streak was nine years, and American’s was five years.  

But Southwest is giving it all away. They are no longer displaying themselves in full, living color.

Southwest has gone beige.

I’m sure Southwest executives reviewed extensive financial analyses and can point to numbers that show these moves make sense. I’m sure Southwest will rake in a lot of money from baggage fees, and I wouldn’t be surprised to hear that their changes to their seating process will streamline operations and save money.

But will the brand be better off at the end of the day?

I doubt it.

As they become “just another airline,” they will become just another choice, just another commodity. They will be interchangeable with their competitors.

What’s the lesson for you?

Be like the old Southwest, and don’t make the mistakes of the new Southwest.

Be like the Grateful Dead, and be the only ones who do what you do.

Be different, don’t be beige.

Focus on the things you do for your customers, which your competitors don’t do.

Customers will notice your actions much more than they will notice your credentials.

And if they are entranced by your actions, by the unique things you do for them, they will be much less likely to focus on how much you cost.