Lessons of Southwest Air

NEW YORK (TheStreet) -- What is most amazing about the recent Southwest Airlines (LUV) accident at LaGuardia airport in New York, and the earlier Asiana accident in San Francisco, is how rare such incidents are and how few casualties they cause in 2013.

Any airplane accident is a big deal, and now that the ubiquity of cell-phone cameras means we get to see them, or (as in the case of Southwest's LaGuardia accident) ride along inside them, they're an even bigger deal.

So what is the bottom line? For investors, it's that flying is a marginal business. Shortly after its LaGuardia accident, Southwest missed the runway on its quarterly earnings, again, reporting flat revenue and lower profits despite successfully hedging its fuel costs.

Personally, Southwest has long been my favorite way to fly. Before it came into the Atlanta market, I drove to Birmingham, Ala., for its lower fares. It eschews the "romance of the air" nonsense. Southwest knows it's a bus getting you where you need to go. The most romantic thing about Southwest is its ticker symbol, LUV.

It also a sense of humor about things. Here's an actual Southwest gate announcement I heard in Las Vegas last week. "Flight from Kansas City is arriving at Gate B7. If you ever wondered what people from Kansas City look like, here they are."

Southwest flies just one type of plane, the 737, so it keeps maintenance costs low. It flies point-to-point, not hub-and-spoke, and so planes are in the air longer. Once my mom and I had the same wait for our planes in Orange County, but her Southwest gate sent out three flights in the time it took Delta ( DAL) to send out my one.

Mom turned 90 last week. I flew Southwest to California to be with her, practically on the spur of the moment. I wouldn't have done that with any other airline.

My mom has flown a lot, and she's a big Southwest fan. Instead of assigning seats, it assigns boarding numbers. With her age and infirmities, mom always gets the front-row aisle seat. She says Southwest's people treat her with respect, rather than like a child, as other airlines do.

Southwest doesn't fly first class. The closest it comes to that is a "business select" service that gets you on the plane first, and maybe gives you a free drink.

These are some reasons it's taking much longer to integrate AirTran, acquired in 2011, into the Southwest system than expected. The airline took a $26 million charge for AirTran costs in the second quarter, more than double the charge of a year ago.

That's despite the fact that AirTran flies 737s, the same plane Southwest uses, although it also flew the smaller Boeing 717s, and was the largest operator of those planes. AirTran also used four hubs, while Southwest used none, and full integration is taking a year longer than expected.

I flew Delta from Atlanta to LaGuardia often during the 1990s, and the contrast is enormous. Atlanta has a huge terminal that now has seven concourses and its own subway system, along with five runways running in parallel, one of which was placed on top of a freeway.

LaGuardia, by contrast, has multiple terminals and runways that cross to catch variable prevailing winds. Some runways extend into Flushing Bay. I saw a rainstorm close the whole place down for hours last year. Winds can change at a moment's notice, in any direction, even down. It's amazing the place functions.

In this week's Southwest accident, a 737 from Nashville came down nose-first and crushed its own landing gear, finally skidding to a stop. There were 16 injuries, mostly minor, and no deaths. It also closed LaGuardia for hours that evening.

The bottom line is that airplanes are to our time what buses and passenger trains were to the first half of the 20th century. They're relatively safe, prosaic, and not romantic at all. Southwest has recognized this, and become quite large in the process, but I wouldn't put money to work in their stock, or any airline stock, because the margins are too thin and fuel costs too variable.

The risk, romance and pleasure are mostly gone from air travel, and so are the profits.

At the time of publication, the author had no investments in companies mentioned in this article.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Dana Blankenhorn has been a business journalist since 1978, and a tech reporter since 1982. His specialty has been getting to the future ahead of the crowd, then leaving before success arrived. That meant covering the Internet in 1985, e-commerce in 1994, the Internet of Things in 2005, open source in 2005 and, since 2010, renewable energy. He has written for every medium from newspapers and magazines to Web sites, from books to blogs. He still seeks tomorrow from his Craftsman home in Atlanta.

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