Southwest Airlines: The marketing behind its outperformance

The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down. Warren Buffett, annual letter to Berkshire Hathaway shareholders, February 2008

Since its 1978 IPO, Southwest Airlines (LUV) has somehow managed to overcome Buffett’s words, buck the trend of its industry, and build a airline that makes money despite the downright awful economics of its business. That’s also produced stellar gains for investors in its stock, which is up 13,763% in that full time period (though it’s down about 25% over the past 10 years).

A big part of Southwest’s success is its company culture – the unique and often delightful customer experience (have you ever heard a Southwest flight attendant do their thing?) and its corporate marketing. Travelers have come to identify with Southwest and become loyal to the brand in a way that they never did to, for example, Delta or USAir. How did Southwest pull that off?

Some Southwest fan has just put together this terrific video collection of the airline’s TV ads over the past thirty or so years. Note how, from the lovey-dovey 70s clips to the self-effacing 80s ones to the latest ‘bags fly free’ domino campaign, Southwest manages to differentiate itself from its boring competition: