Thinking Outside The Box

I was in Dallas over the weekend for a meeting of the American College of Legal Medicine. Despite being in the Lone Star State (stereotypically associated with hot and dry), Dallas received an icy wallop yesterday and just about all flights at DFW Int’l were cancelled. Luckily, I had flown Southwest Airlines, and they operate out of the smaller, older, Love Field. And for some odd reason, Love stayed open. And flights, while delayed, were still coming and going. I didn’t get home til after 0100 today, but I made it, and I didn’t have to sleep in an airport lounge.

In honor of Southwest’s exemplary performance, this post is dedicated. And fittingly, it’s about Southwest.

SWA

SWA

When large companies tangle with each other, lawyers inevitably get involved. And things drag out in court. And the lawyers make a lot of money. And it becomes a war-of-attrition, with the larger corporation with the deeper pockets often prevailing it seems.

But it doesn’t have to be this way. And once, it wasn’t.

Prior to 1978, fares in the domestic airline industry were dictated by the Civil Aeronautics Board, under the commerce clause of the U.S. Constitution, which allows the feds to regulate interstate business transactions. And airlines are almost always interstate, right? They fly from City A in State X to City B in State Y, and the feds were well within their right to regulate same.

But what about a really big state, like Texas? Mightn’t an airline have operated wholly within its borders and not have triggered federal oversight?

When Southwest Airlines was formed by Rollin King and Herb Kelleher, they found that loophole. Operating at first entirely within Texas – Dallas, San Antonio, and Houston – they markedly undercut the fares of their competitors, and there wasn’t anything that the feds, or the competitors, could do, since no ‘interstate commerce’ was involved.

This allowed Southwest to get a toehold in the market, so that when airline deregulation finally occurred in 1978, the company was poised to expand well beyond the home state’s borders.

Southwest carved itself a niche, relying on their zany approach to the business. Stewardesses wearing orange hotpants and go-go boots. Low no-frills fares. And fun ad campaigns; since they are based out of Love Field, many of Southwest’s slogans did, and still do, incorporate mild double-entendres with the word ‘love’: “Love Is Our Field.” “Somebody Up There Loves You.” “You’ll Love Our Low Fares.” “All-Day Love” (for multiple daily flights).

But on 22 October 1990, they tried a new slogan minus love: “Just Plane Smart.” And that’s when the lawyers almost got involved, because Stevens Aviation, based in Greenville SC, had been using “Plane Smart” as their slogan well before Southwest decided to appropriate it. And Stevens let Southwest know this.

However, the chairman of Stevens, Kurt Herwald, aware that he was on sound legal footing but dealing with a much larger entity, and wanting to avoid a Pyrrhic victory after years of litigation, and realizing that Southwest was a bit funky anyway, decided to rein in the lawyers. He instead challenged Southwest CEO Kelleher to an arm-wresting match for the rights to “Plane Smart,” with the loser relinquishing the slogan and donating $15,000 to charity.

Needless to say, in typical Southwest style, Kelleher jumped at this opportunity.

The days leading up to the match were a marketer’s dream. Both companies heavily promoted the match. Kelleher rec’d boxes of Wheaties and cans of spinach from supporters. Herwald was mailed at least one bottle of anabolic steroids from Mexico.

On 20 March 1992, at the Sportatrium in Dallas, the men met for the best-of-three showdown. Limos and cheerleaders were there. Satin boxer robes and shorts with logos were everywhere. The theme from ‘Rocky’ was played. Kelleher, at the last minute, claimed to have ‘injured’ his arm and asked for a stand-in: J.R. Jones, the 1986 Texas state arm-wrestling champion. The score quickly became Southwest 1, Stevens 0.

Not to be outdone, for the second round, Herwald pulled a fast one and substituted a last-minute burly replacement against the now-“healed” Kelleher. Score Southwest 1, Stevens 1.

In round three, the only one in which Kelleher and Herwald actually met, after 35 seconds of intense straining, Herwald pinned Kelleher. Stevens Aviation had prevailed and could keep its slogan!

But realizing that the (almost universally) positive publicity was worth a fortune, Herwald said that Southwest could keep the slogan, his way of thanking Southwest for thinking outside the box and saving years and hundreds of thousands of dollars for both companies.

No one remembers the slogan today. But in the three years after the match, the gross income of Stevens Aviation increased four-fold. Southwest estimated that it gained $6M in publicity, with its stock price doubling in less than 18 months. And Ronald McDonald House charities gained $15,000 from the ‘loser.’

Truly a win-win for everyone. Except the lawyers.

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[Copyright 2013 @ The Alienist’s Compendium]

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