Business & startups
The Legal Loophole That Created Modern Airlines
18 min
Discover how a single clever argument about 'public convenience' dismantled a century of regulation and birthed the low-cost carrier.
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Show notes
Southwest bypassed federal price floors by operating exclusively within the Texas Triangle to avoid interstate regulations.
The ten-minute turnaround allowed three planes to perform the work of four by maximizing time in the air.
Incumbent airlines used four years of legal injunctions to try and drain Southwest of its starting capital.
Southwest converted drivers into flyers by dropping the Dallas to San Antonio fare from twenty-eight to thirteen dollars.
Before deregulation, airlines competed through luxury amenities like fashion shows and thick steaks instead of ticket prices.
The airline once offered free bottles of premium liquor to passengers who paid full-fare during a price war.
In this episode
- 1Intro1 min
- 2The Cocktail Napkin Myth3 min
- 3The Luxury Cartel3 min
- 4The Four-Year Grounding4 min
- 5The Southwest Effect3 min
- 6The Wright Amendment and Deregulation4 min
- 7Outro1 min
Sources
- When Rollin King and Herb Kelleher sketched the Southwest Airlines route map on a cocktail napkin at the St. Anthony Club in San Antonio in 1966, the three-city triangle between Dallas, Houston, and San Antonio was chosen because Texas law let intrastate carriers avoid federal price regulation — the loophole let Southwest charge half what competitors did
- How Southwest Airlines turned love into a business model
- Intrastate airline
- Airline Deregulation: When Everything Changed
- How Southwest Airlines Beat the Wright Amendment
- The Secret of Southwest's Success: Free Whisky, Hot Pants and Low, Low Fares - Business History | iHeart
- The Wright Amendment Cometh - Southwest 50 Years. One Heart.
- Is Wright Wrong? – Texas Monthly
- Wright Amendment
- THE WRIGHT AMENDMENT -- THE CONSTITUTIONALITY AND PROPRIETY OF THE RESTRICTIONS ON DALLAS LOVE FIELD
- Texas International Airlines, Inc., Petitioner, v. Civil Aeronautics Board, Respondent, Southwest Airlinescompany, Intervenor.braniff Airways, Inc., Petitioner, v. Civil Aeronautics Board, Respondent, Southwest Airlinescompany, Intervenor, 473 F.2d 1150 (D.C. Cir. 1972) :: Justia
- Herb & Rollin: The Birth of Southwest Airlines®. - Southwest 50 Years. One Heart.
- https://scholar.smu.edu/cgi/viewcontent.cgi?article=2153&context=jalc
- Texas Aeronautics Com'n v. Braniff Airways, Inc. :: 1970 :: Supreme Court of Texas Decisions :: Texas Case Law :: Texas Law :: U.S. Law :: Justia
- Courting Success: Early Southwest Legal Battles - Southwest 50 Years. One Heart.
- Airline Maverick -Entrepreneurial Heroes- Printout - TIME
- A Dream On A Cocktail Napkin: The Birth Of Southwest Airlines
- The Skies of Texas
- Southwest Airlines
- Herb & Rollin: The Birth of Southwest Airlines | SWA Newsroom
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