What began as a conversation between attorney Herb Kelleher and his client Rollin King, with a drawing on the back of a cocktail napkin, has become one of the worlds most successful business testimonials.

Both men saw the need for an intrastate airline in Texas. Current airlines only offered service to the smaller metropolitan areas as an extension of a long flight from elsewhere in the country. These flights were scheduled at the convenience of the airline, not the customer. They were frequently late and were high priced; making them unwanted by businesspersons traveling within the state of Texas. What these two men proposed was a "local" airline that would serve the three major metropolises of Texas: Dallas, Houston, and San Antonio. Their goal was to offer a low fare, reliable service to meet the needs of the state's business traveler. Even though it seemed to be a good plan, who could have imagined the road that lay ahead.

However, Florida is a new market with already established competition. Entering into a new market is costly, and you can be assured that the current competition will do everything they can to slow or stop this expansion. Many of these airlines are already tied into the available tourist opportunities (i.e. "The Official Carrier of Walt Disney World"). The competition will be intense. Can Southwest afford the initial expansion costs and effectively compete at the same time, or will this be a venture that offers growth without profits?

By avoiding the expense of enter the Florida market, it could be possible for Southwest to lower fares in existing operations. They could also decide to increase their profit margins. By doing this, they would be able to keep their fleet of aircraft modern and well maintained. This would reinforce their record of safety and customer satisfaction. If they chose to do so, they could pass on the extra profits to their stockholders in the form of increased dividends or potential capital appreciation. Doing so would send a strong signal of financial strength and stability to its current and potential investors.

Another advantage of just maintaining their current area of operations is less risk. Should they expand, they run the risk of not producing enough revenue to cover the costs of this expansion. They would have to use profits from other sectors to allow them to continue to operate in Florida. This type of action would pose a serious risk to Southwest's financial stability in itself. However, just maintaining their current level of business should keep them a profitable company well into the future.

They operated for nearly two years without recognizing any profits. Only one of the three legs of service seemed to be doing OK. Muse decided to try to fill every seat on the less successful flights by lowering the fares to $13.00. The Texas based giants, Barriff and Texas International, matched the price and the Texas air-war began. Through the use of innovative marketing techniques, and the "Ten Minute Turnaround" (an idea of fully unloading and reloading an airplane within ten minutes) allowed Southwest to build a loyal customer base that led to their first year of profits in 1973. Since then, they have never looked back.

In order to keep its operating costs low; Southwest has flown in or out of a smaller airports in the major cities (i.e. Love Field vs. Dallas/Ft. Worth International or Midway Airport vs. Chicago's O'Hare International). Will this be possible in Florida? If not, Southwest would be forced to pass on the increased expense to the customer and not be able to provide the expected 'low-fare'. Again, this scenario would also be unfavorable in the long run.

Although Kelleher had absorbed most of the cost of the legal obstacles, Southwest's bank account had been drained from

Some common words found in the essay are:
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Approximate Word count = 1935
Approximate Pages = 8 (250 words per page double spaced)