Southwest has been around for 45 years. I haven't looked at their P&L for those years, but I doubt that their key to longterm success is due primarily to hedging at the turn of the century. Hedging fuel costs is simply a part of doing business in the transportation field, whether it's shipping, airlines, trains, or trucking.
Also, many posters have said that Southwest is non-union. This is incorrect. Their pilots are part of a union, just not the ALPA.
The airline industry has dramatically changed since the days of PanAm and Braniff. Ticket prices have been brutally cut, yet the "premier" airlines have been poor stewards of their image and reputation, and relied a lot upon heavy regulations in the industry that protected their turf. Unions have done some damage, but poor management has been the biggest culprit.
I agree in part that poor management has been the problem at many airlines, but the another real problem is that the airline industry has high fixed costs in a perfectly competitive environment. Before the airlines were deregulated in the 80s, ticket prices were high, everyone made money. The 90s ushered in low oil prices with strong US economic growth (good for cyclical businesses).
After deregulation oil stayed cheap until the mid 2000s. For whatever reason, South West hedged far more oil than industry practice and when oil went up dramatically in the mid 2000s the airline benefited dramatically. I have looked at their 10Ks, Qs, (P&Ls) and have studied the topic in some level of depth.
South West has a great culture, which could be unrelated to their profitability, but no one knows that for sure. Their profitability has far more to do with fuel hedging than any other single factor. My argument which cannot be proved, but I hope is considered is that the culture has more to do with the employees being compensated well, and the airline seeming stable than the reverse.
Also, many posters have said that Southwest is non-union. This is incorrect. Their pilots are part of a union, just not the ALPA.
The airline industry has dramatically changed since the days of PanAm and Braniff. Ticket prices have been brutally cut, yet the "premier" airlines have been poor stewards of their image and reputation, and relied a lot upon heavy regulations in the industry that protected their turf. Unions have done some damage, but poor management has been the biggest culprit.