0:06

A listener note. This episode originally aired in 2018.

0:13

It's February 1st, 1973, Lamar Mews.

0:16

The CEO of Southwest airlines sits down to breakfast at his Dallas home.

0:21

He unfolds a copy of the Dallas morning news headlines about the Vietnam war.

0:26

Dominate the front page news reads the first page, then opens the paper on page three.

0:32

There's a full page ad that stops him cold.

0:35

Just four lines.

0:37

Take up the whole page.

0:39

Brand chefs get acquainted sale, half price to Houston's hobby airport, $13 coach $17.

0:47

First class muse, nearly spits out his coffee.

0:53

Those bastards Braniff, A

0:56

Dallas based carrier has been suing.

0:58

Everyone. It can think of since 1967, just to keep Southwest airlines from competing with it inside Texas.

1:05

But since Southwest won, the last round, Braniff is now ready to fight its competitor using Southwest's best weapon against it.

1:14

Sheep fairs.

1:16

This is the first Bali in a price war that promises to be bruising.

1:23

One aimed at sinking Southwest brand of $13 coach price is half of Southwest's.

1:30

$26 fair from Dallas to Houston.

1:33

And to make things worse for muse Braniff is offering those rock bottom fares bond struggling.

1:39

Southwest's only profitable route.

1:42

Muse can hardly contain his rage.

1:45

He grabs the kitchen phone, Keller

1:50

herb, her God sakes, man, get the hell out of bed.

1:54

Get yourself to the airport and be on the first Southwest flight out of San Antonio to Dallas.

1:58

Why

1:58

those

1:58

bastards

1:58

of

2:02

Brennan? That's why they're trying to take us down.

2:06

Muse rushes to his office.

2:08

He knows the situation is dire.

2:10

Muse could get Keller Herta Sue Braniff they've long been locked in legal battle, or, or he could play chicken and match Braniff at $13.

2:22

Both airlines will bleed money, but Southwest is already highly leveraged.

2:28

It can't afford to sustain losses for as long as Braniff probably can.

2:33

And extended fair war could end with Southwest nosediving into bankruptcy.

2:38

Suddenly

2:38

as

2:38

he's

2:38

driving

2:38

to

2:38

meet

2:38

Keller,

2:38

he

2:38

remembers

2:38

that

2:38

he

2:38

has

2:38

a

2:38

meeting

2:38

with

2:38

a

2:38

realtor

2:38

this

2:38

same

2:47

morning. He's buying a new condo for his wife, muse calls up to cancel and tells the agent of his predicament.

2:53

The realtor offers him an idea when banks Want

2:58

to win over new from others, they just give stuff away.

3:01

You know, toasters, waffle orange, maybe y'all should try that.

3:07

Muse ends the call. And at first he writes off the realtor is out of touch, but then he rolls the idea around in his head waffle irons and toasters seem like strange things to hand out to people on a plane, but giving them something.

3:23

Yes, actually that makes sense.

3:27

Muse thinks to himself.

3:30

What would our mostly male, mostly business traveling customers like to get for free and almost instantly he has it booze, lots Watson, lots of booze.

3:46

Yeah. Southwest will be flying high.

3:48

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5:10

Wondery I'm David Brown, and this is business wars.

5:13

You're

5:34

Listening to the second episode of our Southwest versus American airlines series dog fight over Dallas.

5:40

In our last episode, Southwest airlines battled its rivals Braniff and Texas international in court for years just so it could finally win the right to fly.

5:50

Once a loft, the airline immediately ran into financial headwinds, overextending by buying too many planes too soon.

5:59

Its solution was revolutionary.

6:02

It came up with a way to turn planes around at the gate in just 10 minutes, faster by far than anyone else in the business.

6:11

This allowed Southwest to squeeze in more flights than its competitors and to keep its prices at rock bottom.

6:19

Thousands of customers arrive, sensing a rival that could eat into the lucrative legacy airline market.

6:26

Southwest's competitors are now trying to snuff out Southwest with a fare war.

6:32

When

6:32

herb

6:32

Keller

6:32

her

6:32

arrives

6:32

at

6:32

the

6:32

love

6:32

field

6:32

office,

6:32

muse

6:32

launches

6:32

into

6:32

a

6:32

rant

6:32

about

6:32

brand

6:32

of

6:32

software

6:32

of

6:32

$13

6:32

airfares,

6:32

half

6:32

of

6:32

what

6:32

Southwest

6:32

charges

6:32

and

6:32

worse

6:32

Braniff

6:32

has

6:32

targeted

6:32

a

6:32

route

6:32

that

6:32

generates

6:32

70%

6:32

of

6:32

Southwest's

6:50

revenue. Even though the offer is only good for two months, Keller her worries that consumers won't appreciate the longterm effect of what this price war could do.

7:03

We've been trying to give people more for less, not less for less new planes, more on time flights, nicer people.

7:10

What is Brandon been doing other than suing us?

7:14

If they think it's all about low prices, then they just don't get it.

7:18

And it might be too late for us once they do figure it out.

7:22

I've got something. I think they'll understand.

7:25

Keller her runs his hand through his hair and wonders sweating.

7:28

God's name. Muse has come up with his time.

7:31

Bill, just hang on. Until we see our admin, The

7:35

two get into Muse's car.

7:36

They make the short 15 minute drive for bluff field to the downtown Dallas offices of the bloom agency.

7:43

Southwest's advertising from there.

7:47

Muse pulls out a Manila envelope and unfolds a two page newspaper ad.

7:52

He's already sketched out.

7:53

He hands it to a couple of bloom executives.

7:57

Okay. Now look here on the right page right here.

7:59

We're going to list all the reasons you shouldn't fly Brennan, all the anti-competitive things they've done, like suing us nonstop three and a half years.

8:10

The agency executives look worried.

8:13

Amar, are you aiming for a libel suit?

8:15

What do you mean? This is the kind of aggressive advertising we've always done.

8:19

I don't remember you objecting.

8:21

When we flew a plane ride at one of our hostesses.

8:24

What Lamar is Talking

8:26

about here is Southwest's first TV ad in 1971, it featured a 7 37 flying just a couple of hundred feet off the ground, barreling down a runway toward an actress, portraying a hostess.

8:38

She's dressed in the airlines, trademark outfit of orange hot pants, a breast hugging sweater and go-go boots.

8:45

The planes sails over her.

8:48

Remember what it was like before there was somebody else up there who loved you.

8:51

There was no such thing as executive service to Dallas, Houston and San Antonio with first-class leg room break cocktails for everyone and its schedule.

9:04

You could depend on Muse

9:13

wants something as memorable as that racy ad, but one that's less about the nod and wink sex appeal that played on the double entendre of the company's Homebase love field.

9:24

Southwest calls itself, the love airline, but today muse is not in a loving mood.

9:32

In fact, he's ready to pick a fight with Brandon.

9:37

Look just matching Braniff. Isn't good enough.

9:38

Oh, well Maxim. All right, but we'll also give customers a reason to pay full price.

9:44

Air plan to be Braniff is to get your customers to pay full price damn straight.

9:50

We're going to give them a fifth of whiskey, maybe a fifth of vodka, their choice.

9:55

Why would anyone pay full fair?

9:58

Just to get a fifth of booze?

9:59

Because most of our passengers are businessman with expense accounts.

10:04

Their companies don't really care whether they reimburse their businessmen $13 and $26 and expenses, but it does matter to the passengers.

10:12

They get to walk away with a bottle of booze, Keller,

10:16

her muse and Southwest zone madman agree that this plan is just crazy enough to work.

10:23

Just two days after Branham's initial ad appears.

10:27

Southwest runs a two page response in Dallas and Houston papers.

10:32

It's Southwest's call to arms on the left-hand page in big, bold type.

10:38

It reads. No one is going to shoot Southwest airlines out of the sky for a lousy $13 uses signatures right under that the right side of the page reads.

10:50

If they'll fly you for $13 and that's what you really want, we'll fly you for $13 Or

10:58

read on The

11:01

finer print lists. The terms of the liquor giveaway muse prints up 50,000 flyers with a similar message.

11:09

Southwest staffers, including hostesses and pilots in their flight uniforms.

11:13

Volunteer to spend two days fanning out across downtown Dallas and Houston distributing the flyers to passers by muse, dispatches other staffers to load up love field with cases of Chivas, Regal, Jack Daniels, crown Royal and Smirnoff vodka.

11:29

And if any non-drinkers get onboard, he orders 1000 leather padded ice buckets from a Dallas-based discount Retailer.

11:40

A few weeks into the giveaway. A Southwest staffer gets a call from a friend whose husband is a frequent Southwest passenger.

11:46

And the friend has well, it's not a complaint.

11:51

Actually. How much of stuff are you Southwest people going to give away?

11:54

I just opened our hallway closet the other day, and a stack of whiskey bottles fell over on me, nearly Three

12:01

quarters of all passengers, choose to fly Southwest at twice the Braniff affair and clutching their fifth of booze as they get off the plane.

12:10

Still the work of fighting a fair war does take its toll.

12:16

One night in March Keller, Her returns home to San Antonio, his 12 year old daughter watches as Keller, her lumbers to the front door.

12:23

His shoulders are slumped.

12:25

What's the matter dad, you look really down.

12:28

Let's just, it's just, this war Is

12:32

such a tough fight.

12:34

Keller. His daughter Contemplates the statement for a few seconds.

12:37

Well, dad, you started it Finally

12:42

on April fool's day, 1973, Braniff blinks.

12:46

It ends its sale.

12:48

Southwest continues to offer $13 fares to San Antonio, but it ends its liquor giveaway in $13 weekday fairs to Houston, muse tallies, the numbers and reports.

13:01

Some remarkable findings to the board over breakfast in Dallas for the months Of

13:07

February and March. Southwest airlines gave away more Chivas Regal than was actually sold in all of Texas and Chivas hasn't even bothered to send us a thank You

13:18

note.

13:20

Our passenger count was up 66% in the last month of the $13 sale.

13:24

And in March Southwest airlines posted its first monthly profit, $18,173.

13:33

Okay? Okay. So it's not a ton of money, but for the first time since Keller her beg the board five years ago to fight its rivals in court.

13:41

Southwest airlines is in the black, but in his presentation to the board, muse leaves out one crucial piece of bad news.

13:51

There's a new trial underway.

13:54

This time, the cities of Dallas and Fort worth are suing Southwest.

13:59

The airline refuses to move to the new Dallas Fort worth airport.

14:04

That's just about to open on 18,000 acres of Texas Prairie Keller, her and muse and everyone else at Southwest thinks that DFW is remote.

14:14

Location is too far for their commuter airline passengers going from say Dallas to Houston.

14:20

Muse offers the same line to city leaders who call and ask him to reconsider.

14:24

No one wants To

14:26

drive 45 minutes and take a 55 minute flight to a place you can drive to in three hours, we'll go broke On

14:33

the trials. Opening day Keller, her picks up muse in his brand, new Mercedes he's a legal genius and a tireless worker, but Keller her is not a detail person.

14:45

And he's forgotten to find out one thing, Lamar,

14:50

where is the federal courthouse dammit her, but I don't know where it is.

14:54

We're in one of the most important business trials of the century.

14:57

How are we supposed to win?

14:58

If my own damn lawyer can't even find a freaking courthouse, Eventually

15:03

clumsily, they navigate their way to the building.

15:06

They don't know it when they arrive at the trial, but they have also just steered themselves and Southwest onto a collision course with yet another competitor, American airlines Listen

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17:59

June, 1973. Robert Bob Crandall, vice president for data services at American airlines, boards of plane from New York bound for Tulsa, Oklahoma.

18:08

That's where American airlines runs a data center.

18:11

American airlines is already the most computerized company in the industry.

18:16

It's been running IBM's semi-automatic business research environment or Sabre as it's known since 1962, the data collection system has given American an advantage.

18:28

No other airline has as complete a picture of how many people are flying on its planes in any given day.

18:35

Many airlines still use typewriter style terminals to inner reservations, or even take them by hand.

18:42

In this era of government regulation, airlines live in a protective cocoon.

18:48

There is little incentive for the airlines to capture market efficiencies and competitive advantages through technology.

18:54

So few carriers bothered to address this complex error prone system.

19:00

Crandall is one of the few who believes this is mission critical, and he's only been with American for three months, but the 38 year old six foot, two inch rail thin Rhode Islander with a foul mouth has already given Americans board of directors and earful.

19:18

He's told them that the company can make a lot more money by using data to more tightly schedule its flights.

19:26

Now he's on route to Tulsa to find a way to do just that.

19:32

As

19:32

Crandall

19:32

arrives

19:32

at

19:32

the

19:32

Tulsa

19:32

data

19:32

center,

19:32

max

19:32

hopper

19:32

greets

19:38

him. Hopper is a 37 year old Texan men, a pioneering Wiz with corporate data processing.

19:44

Hopper

19:44

leads

19:44

Crandall

19:44

down

19:44

a

19:44

long

19:44

hallway

19:44

and

19:44

into

19:44

an

19:51

elevator. They're going to the basement.

19:53

They

19:53

enter

19:53

a

19:53

room

19:53

packed

19:53

to

19:53

the

19:53

ceiling

19:53

with

19:57

boxes. Well, here we are about in these boxes.

20:00

We have a thousand cathode Ray tube monitors.

20:03

It's still in the original plastic bin right here for two years.

20:07

They've never been touched and we can use these things to computerize our reservations, to give us all kinds of new data.

20:14

We can, we can.

20:16

These displays with keyboards and our mainframes could really be something powerful.

20:20

I've been trying to tell everyone that we could computerize reservations.

20:25

We could collect better data and have tighter control over flat scheduling.

20:29

I don't get it.

20:31

Why aren't we using these?

20:33

Well? The problem is that the marketing department oversees reservations.

20:36

I don't care about streamline and things.

20:38

They'd have to pay to have these systems put into use and they refuse to do that.

20:43

So here they are on the basement.

20:46

Well, last God goddamn stupid.

20:48

I'm going to get these things out of here.

20:50

We're going to change everything.

20:54

It's just after midnight on January 13th, 1974, couple thousand feet above interstate 35 in Dallas American airlines flight 3, 4, 1 dips right in the darkened sky for decades.

21:09

All other air traffic on this approach path into Dallas has turned left at this point, heading for love field, but American flight, 3 41 from Memphis.

21:19

Isn't going to love field Maintaining

21:23

1 7 0 nods, American 3 41 clear land America 3, 4 1.

21:32

Thank you.

21:36

Plane touches down at 12:07 AM.

21:38

It is the first commercial passenger flight to arrive at the brand new Dallas Fort worth or DFW airport flights from Braniff and Texas international and Delta and United and TWA will follow soon behind.

21:52

But Southwest airlines pledges never to put its wheels down at the new airport just hours after American 3 41 touches down muse signs off on a press release announcing Southwest airlines.

22:08

First annual profit.

22:10

If those profits are going to continue, they need to keep flying from love field, which is only 15 minutes by car from downtown Dallas compared to 45 minutes to DFW at love.

22:24

Southwest has a heartbeat at DFW.

22:27

It'll be dead travel is everyone in the business and the politicians to have lined up to for Southwest to move a few months after that first American flight lands at DFW on a hot mid-afternoon day in June, 1974, max hopper is standing on a corner in Manhattan waiting again for Bob Crandall.

22:55

Hopper's

22:55

planning

22:55

to

22:55

accidentally

22:55

bump

22:55

into

22:55

Crandall

22:55

on

22:55

his

22:55

lunch

23:01

break. As he's leaving American airlines headquarters.

23:03

Hopper has been planning this for days.

23:06

Finally, he spies Crandall slim frame from across the street and makes a quick dash over to him.

23:15

Hey, Hey Bob, how are you? So funny, I'd run into you.

23:18

You know, I've just heard that the American society of travel agents is trying to develop a computerized reservation system.

23:25

It would take all of the flight data from the airlines.

23:28

You know, like the information we have about our airline inside a saber and put it into one system.

23:34

The agents would be able to book flights through this system without even making a phone call to any airline and they'd own.

23:41

This system. American is built at scheduled to take advantage of the current way.

23:46

Travel agents, typically book flights, a technological change like this could hurt them as it is now.

23:54

American gets preferential treatment from travel agents.

23:58

Dammit. If they own the system, they could get preference to some other carrier like those bastards at United am I guy, if we don't have a say in the system they develop, who knows what might happen?

24:08

These people could cut out American airlines altogether Hopper

24:13

and Crandall. Stand on that noisy corner for a moment in silence.

24:16

Hopper knows what this means.

24:19

And now Crandall does too.

24:22

They are on the cusp of a new battle.

24:25

One that many of their competitors don't even know about.

24:29

If they can make Sabre the core of the new computerized reservation system travel agents use American will gain unprecedented insight into its competitors.

24:40

Flights insight that can tip the competitive balance in its favor.

24:45

American has the weapon of destruction at its disposal.

24:50

It

24:50

just

24:50

has

24:50

to

24:50

deploy

24:50

it

24:50

in

24:50

the

24:50

next

24:50

episode

24:50

of

24:50

Southwest

24:50

versus

24:50

American

24:50

airlines,

24:50

American

24:50

gins

24:50

up

24:50

Sabre

24:50

opening

24:50

a

24:50

new

24:50

frontier

24:50

in

24:50

the

24:50

war

24:50

with

24:50

Southwest

24:50

and

24:50

no

24:50

amount

24:50

of

25:07

Chivas. Regal, stop that from wondering, this is episode two of Southwest versus American for business wars.

25:18

If you like our show, please give us a five star rating and a review and be sure to tell your friends, subscribe on apple podcasts, Amazon music, the Wondery app, or wherever you're listening right now.

25:28

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25:40

Another way you can support the show is by filling out a small survey at wondery.com/survey and tell us which business stories you'd like to hear a quick note about recreation's you've been hearing in most cases, we can't know exactly what was said though.

25:53

Scenes are dramatizations, but they're based on historical research.

25:56

I'm your host, David Brown, Joe winter wrote this story.

26:00

Karen Lowe is our senior producer and editor produced by Emily Frost.

26:04

Kate young is our associate producer.

26:05

Our producer is Dave Shelley sound designed by Kyle Randall.

26:09

Our executive producers are Jenny Lauer, Beckman and Marshall Lewis created by on Lopez.

26:14

We're wondering Business

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0:06

A listener note, this episode originally

0:08

aired in two thousand eighteen. It's

0:13

February first nineteen seventy three.

0:16

Lamar Muse, the CEO of Southwest

0:18

Airlines, sits down to breakfast in

0:20

his Dallas home. He unfolds

0:22

a copy of the Dallas Morning News. Headlines

0:25

about the Vietnam War dominate the

0:27

front page. News reads

0:29

the first page, then opens the paper. On

0:32

page three, there's a full page ad

0:34

that stops in cold. Just

0:37

four lines take up the whole

0:39

page. Baniff get

0:41

a queened sale, half price

0:44

to Houston's hobby airport, thirteen

0:46

dollars coach, seventeen dollars

0:49

first class, Mews

0:51

nearly spits out as coffee. Those

0:54

bastards. Branniff,

0:56

a Dallas based carrier, has been suing

0:58

everyone at can think of since nineteen

1:01

sixty seven just to keep Southwest

1:03

Airlines from competing with it inside

1:05

Texas. But since Southwest

1:07

won the last round, Baniff is

1:10

now ready to fight its competitor using

1:12

Southwest's best weapon against

1:14

it. Sheet, fares.

1:18

This is the first Bali

1:20

in a price war that promises

1:22

to be bruising. One

1:24

aimed at sinking Southwest Granny's

1:27

thirteen dollar coach price is

1:30

half of Southwest's twenty six

1:32

dollar fare from Dallas to Houston. And

1:34

to make things worse for mews. Baniff

1:37

is offering those rock bottom fares

1:39

on struggling southwest's only

1:41

profitable route. Muse

1:44

can hardly contain his rage.

1:46

He grabs the kitchen phone. Keller,

1:50

her, Her. God's

1:53

sakes, man. Get the hell out of bed. Get

1:55

yourself to the airport and be on the first

1:57

Southwest flight out of San Antonio to

1:59

Dallas. Why?

2:01

Those bastards are Baniff. That's

2:03

why they're trying to take us down.

2:07

Muse rushes to his office. He

2:09

knows the situation is dire.

2:12

Muse could get Kelleher to sue

2:14

Baniff. They've long been locked

2:16

in legal battle, or or

2:19

he could play chicken and match Brenna.

2:22

At thirteen dollars, both airlines

2:24

will bleed Wondery. Southwest

2:27

is already highly leveraged. It

2:29

can't afford to sustain losses for

2:31

as long as Brannett probably can.

2:34

An extended fair war could

2:36

end with Southwest nose diving

2:38

into bankruptcy. Suddenly,

2:41

as he's driving meet tell her. He

2:44

remembers that he has a meeting with

2:46

a realtor this day morning. He's

2:48

buying a new condo for his wife. Muse

2:51

calls up to cancel and tells the agent

2:53

of his predicament, the realtor

2:55

offers him an idea. When banks

2:58

wanna win over new customers from others,

3:00

they just give stuff away way. You know,

3:02

toasters, waffle Maybe

3:05

y'all should try that. Muse

3:07

ends the call and at first, he writes

3:09

off the realtor is out of touch. But

3:12

then he rolls the idea around

3:14

in his head. Waffle irons

3:17

and toasters seem like strange things

3:19

to hand out to people on a plane but

3:22

giving them something? Yes.

3:26

Actually, that makes sense.

3:29

Muse thinks to himself What

3:32

would our mostly male, mostly

3:34

business traveling customers like

3:36

to get for free? And

3:38

almost instantly, he has it.

3:41

Booz. Lots and

3:44

lots of booze. Yeah.

3:47

Southwest still be flying high all right,

3:49

but only part of that will be because of the

3:51

altitude. We

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Dell. From

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1, I'm David Brown, and this

5:12

is Business You're

5:33

listening to the second episode of our Southwest

5:36

versus American Airlines series,

5:38

Dogfight Over Dallas. In

5:41

our last episode, Southwest Airlines battled

5:44

its rivals Baniff in Texas International

5:46

in court for years, just

5:48

so it could finally win the right to

5:50

fly. Once aloft,

5:53

the airline immediately ran into financial

5:55

headwinds over extending itself by

5:57

buying too many planes 2 soon.

6:00

Its solution was revolutionary.

6:04

It came up with a way to turn planes

6:06

around at the gate in just

6:08

ten minutes. Faster by

6:10

far than anyone else in the business. This

6:13

allowed Southwest to squeeze in more flights

6:15

than its competitors. And 2 keep its

6:17

prices at rock bottom. Thousands

6:20

of customers arrive. Sensing

6:23

arrival that could eat into the lucrative

6:25

legacy airline market Southwest's

6:28

competitors are now trying to

6:30

snuff out Southwest with a

6:32

fair war. When

6:35

Herb Kelleher arrives at the Love Field Office,

6:38

News launches into a rant about

6:40

Brannett's offer of thirteen dollar airfares,

6:43

half of what Southwest charges and

6:45

worse, Branniff has targeted

6:47

a route that generates seventy percent

6:50

of Southwest's revenue. Even

6:52

though the offer is only good for two months,

6:55

Kelleher worries that consumers won't

6:57

appreciate the long term effect of

6:59

what this price war could do.

7:03

We've been trying to give people more for less, not less for less new planes, more on time flights, nicer been trying to give people more for less,

7:06

not less for less, new

7:08

planes, more on time flights, nicer

7:10

people. What has Brannett been

7:12

doing other than suing us? If

7:15

they think it's all about low prices, then

7:17

they just don't get it. And it might

7:19

be too late for us once they do figure

7:22

it out. I've got something. I think they'll I think they'll

7:24

understand. Keller Herr

7:26

runs his hand through his hair and wonders

7:28

what in god's name, Muse has come up with

7:30

this time. Bill, just

7:32

hang on until we see our admin. The

7:35

two get into Muse' car. They

7:38

make the short fifteen minute drive for Blufffield

7:40

to the downtown Dallas offices of the

7:42

Bloom agency. Southwest's advertising from Southwest

7:45

advertising firm. There,

7:47

Muse pulls out a Manila envelope and

7:50

unfolds a two page newspaper ad. He's already sketched

7:52

he's already sketched out. He

7:54

hands it to a couple of Bloom Executives.

7:57

Okay. Now look here. On the right page,

7:59

right here, we're gonna list all the reasons

8:02

you shouldn't fly Brenna. All the

8:04

anti competitive things they've done like

8:06

suing us, nonstop for three and

8:08

a half years. The agency executives

8:12

look worried. Lamar, are

8:14

you aiming for a liable suit? What do

8:16

you mean? This is the kind of aggressive advertising

8:19

we've always done. I don't remember

8:21

you objecting when we flew a plane ride

8:23

at one of our hostesses. What

8:25

Lamar is talking about here is Southwest

8:28

first TV ad in nineteen seventy

8:30

one. It featured a seven thirty

8:32

seven flying just a couple of hundred

8:34

feet off the ground, barreling down

8:36

a runway toward an actress. Portraying

8:38

a hostess. She's dressed in

8:40

the airline's trademark outfit of orange

8:42

hot pants, a breast tugging sweater,

8:45

and Gogo Boots. The plane

8:47

sailed over her. Remember what it

8:49

was like before there was somebody else up there

8:51

who loved you? There was no

8:53

such thing as executive class service

8:55

to Dallas Houston and San Antonio

8:59

with first class leg room, great

9:01

cocktails for 1, and

9:03

a schedule you could depend on.

9:11

Remember? Muse

9:14

wants something as memorable as that

9:16

racy ad. But one that's

9:18

less about the nod and wink sex

9:20

appeal that played on the double entendre of

9:23

the company's home base love field. Southwest

9:26

calls itself the love airline, but

9:29

today Muse is

9:31

not in a loving mood. In

9:33

fact, he's ready to pick

9:35

a fight with Baniff. Look,

9:37

just matching Branniff isn't good enough. Oh,

9:40

we'll match them all. Right? But we'll also

9:42

give customers a reason to pay

9:44

full price. Your plan to be

9:46

Baniff is to get your customers to

9:48

pay full price. Damn

9:50

straight. We're gonna give them a fifth

9:52

of whiskey, maybe fifth of vodka,

9:55

their choice. Why would

9:57

anyone pay full fare just to get

9:59

a fifth of booze? Because most of

10:01

our passengers are businessmen, with

10:03

expense accounts. Their companies

10:05

don't really care whether they reimburse their

10:07

businessmen thirteen dollars and twenty

10:09

six dollars in expenses, but it does

10:11

matter to the passengers. They get to

10:13

walk away with a bottle of booze. Kellogg,

10:16

Muse, and Southwest zone mad men

10:19

agree that this plan is

10:21

just crazy enough to work.

10:25

Just two days after Brannett's initial ad

10:27

appears, Southwest runs

10:29

a two page response in Dallas

10:31

in Houston papers. It's

10:33

southwest's call to arms.

10:36

On the left hand page, in big bold

10:38

type, it reads, No one

10:40

is going to shoot Southwest Airlines

10:42

out of the sky for a lousy thirteen

10:44

dollars. Use his signatures

10:47

right under that. The right

10:49

side of the page reads, if they'll

10:52

fly you for thirteen dollars and that's

10:54

what you really want, we'll fly

10:56

you for thirteen dollars. Or

10:59

read on. The finer print

11:01

finer print lists the terms of the

11:03

liquor giveaway. Muse

11:06

prints up fifty thousand flyers

11:08

with a similar message. Southwest

11:10

staffers including hostesses and pilots

11:12

in their flight uniforms volunteered

11:15

to spend two days banning out across

11:17

downtown Dallas and Houston, distributing

11:20

the flyers to passersby. Muse

11:22

dispatches other staffers to load up love

11:25

fields which cases of Chivas Regal,

11:27

Jack Daniels, Crown Royal, and Smurredov

11:29

vodka. And if any

11:31

non drinkers get on board, he orders

11:34

one thousand leather padded ice buckets

11:36

from a Dallas based discount retailer.

11:40

A few weeks into the giveaway, a Southwest

11:42

staffer gets a call from a friend whose husband

11:45

is a frequent Southwest passenger. And

11:47

the friend has Well,

11:50

it's not a complaint, actually. How

11:52

much of this stuff are you Southwest people gonna

11:54

give away? I just opened our hallway

11:56

closet the other day and a stack of whiskey bottles

11:59

spillover on me. NEARLY

12:01

three quarters OF ALL PASSENGERS CHOOSE

12:03

TO FLY SOUTHWEST AT TWICE

12:05

THE BRANFFAIR AND

12:07

CLUNCHING THEIR FIFTH OF BOOZ AS THEY GET

12:09

OFF THE PLANE Still,

12:12

the work of fighting a fair war does

12:14

take its toll. One

12:16

night in March, Kelleher returns home

12:18

to San Antonio. His twelve

12:21

year old daughter watches as Kelleher lumbers

12:23

to the front door. His shoulders

12:25

are slumped. What's the matter to add?

12:27

You look really down. Let's just it's

12:30

just this fair war. It's

12:32

such a tough fight. Keller

12:34

her daughter contemplates the statement for

12:36

a few seconds. Well, dad,

12:39

you started it. Finally,

12:42

on April fool's day nineteen seventy three,

12:45

Baniff Blinks. It

12:48

ends its sale. Southwest

12:50

continues to offer thirteen dollar fares to

12:52

Santa antonio, but it ends

12:54

its liquor giveaway and thirteen dollar

12:56

weekday fares to Houston. Muse

12:59

tallies the numbers, and reports

13:02

some remarkable findings to the board

13:04

over breakfast in Dallas. For

13:07

the months of February and March, Southwest

13:09

Airlines gave away more

13:11

Shibus Regal than was actually sold

13:13

in all of Texas. And

13:15

Shibus hasn't even bothered to send us a

13:17

thank you note. Our passenger count was up 66% in the last month of the $13

13:20

passenger count was up sixty six

13:22

percent in the last month of the thirteen dollars

13:24

sale. And in March, Southwest Airlines

13:27

posted its first monthly profit. Eighteen

13:29

thousand one hundred and seventy three

13:32

dollars. Okay. Okay. So

13:34

it's not a ton of but

13:36

For the first time since Kelaher begged

13:38

the board five years ago to fight its rivals

13:41

in court, Southwest Airlines

13:44

is in the black. But

13:46

in his presentation to the board, Muse

13:49

leaves out one crucial piece

13:51

of bad news. There's

13:53

a new trial underway. This

13:55

time, the cities of Dallas and

13:58

Fort Worth are suing Southwest.

14:01

The airline refuses to move to the

14:03

new Dallas Fort Worth airport that's just

14:05

about to open on eighteen thousand acres

14:08

of Texas Prairie. Kelleher

14:10

and Muse and everyone else at Southwest

14:13

thinks that DFW's remote location

14:15

is too far for their commuter airline

14:17

passengers going from, say, Dallas

14:20

to Houston. Muse offers

14:22

the same line to city leaders who call and

14:24

ask him to reconsider. No one

14:26

wants to drive forty five minutes and take a

14:28

fifty five minute flight to a place you can drive

14:30

to in three hours, we'll go broke.

14:33

On the trial's opening day, Keller

14:35

Her picks up Muse in his brand new Mercedes.

14:39

He's a legal genius and a tireless

14:41

worker. But Keller

14:43

is not a detailed person, and

14:46

he's forgotten to find out one

14:48

thing. Lamar Where

14:51

exactly is the federal courthouse? Damn

14:53

it Herb. I don't know where it is. We're in one of

14:55

the most important business trials of the century.

14:58

How are we supposed to win among AM

15:00

lawyer can't even find a freaking courthouse.

15:03

Eventually, clumsily, they

15:05

navigate their way to the building. They

15:07

don't know it when they arrive at the trial,

15:09

but they have also just steered themselves

15:13

and Southwest 2

15:15

a collision course with yet

15:17

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15:20

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com slash wars. In

17:59

June of nineteen seventy three, Robert

18:01

Bob Crackle, Vice President for Data

18:03

Services at American Airlines, board's

18:06

a plane from New York bound for Tulsa,

18:08

Oklahoma. That's where American

18:10

Airlines runs data center. American

18:13

Airlines is already the most computerized company

18:16

in the industry. It's been running

18:18

IBM's semiautomatic business

18:20

research environment or Sabre,

18:22

as it's known since nineteen sixty two.

18:25

The data collection system is given American

18:28

an advantage. No

18:30

other airline has as complete a picture

18:32

of how many people are flying on its planes

18:34

in any given day. Many

18:37

airlines still use typewriter style

18:39

terminals to enter reservations or

18:41

even take them by hand. In

18:44

this era of government regulations, Airlines

18:47

live in a protective cocoon. There

18:49

is little incentive for the airlines to capture

18:51

market efficiencies and competitive advantages

18:54

through technology. So

18:56

few carriers bother to address this

18:59

complex error prone system.

19:02

Crandell is one of the few who

19:04

believes this is mission critical.

19:07

And he's only been with American for three

19:09

months. But the thirty eight year

19:11

old six foot two inch rail thin

19:14

road islander with a foul mouth has

19:16

already given Americans board of directors

19:18

an earful. He's told

19:20

them that the company can make a lot more

19:22

money by using data

19:25

to more tightly schedule its flights.

19:28

Now, he's en route to Tulsa

19:30

to find a way to do just that. As Crandall arrives at the Tulsa data center, max hopper greets

19:34

Crandell arrives at the Tulsa data center,

19:37

Max Hopper greets him. Hopper

19:40

is a thirty seven year old Texan. And

19:42

a pioneering whiz with corporate

19:44

data processing. Hopper

19:48

leads crandled down a long hallway

19:50

and into an elevator. They're going to the They're

19:52

going to the basement. They

19:55

enter a room packed to the ceiling

19:57

with binges. Well, here we are about in these here

19:59

we are, Bob. In these boxes, we have a

20:01

thousand cathode ray tube monitors.

20:04

They're still in the original plastic. Been

20:06

right here for two years. Never been

20:08

touched. And and we can

20:10

use these things to computerize our reservations

20:13

2 give us all kinds of new data.

20:15

We can. We can. These

20:17

displays with keyboards in our mainframes could

20:20

really be something powerful. I've been

20:22

trying to tell everyone that. We

20:24

could computerize reservations. We could

20:26

collect better data and have tighter control

20:28

over flight scheduling. I

20:30

don't get it. Why aren't we using

20:32

these? Well, the problem is that the marketing

20:35

department oversees reservations. They

20:37

don't care about streamlining things. They'd have to pay to have these systems put into use and they refuse to do have

20:39

to pay to have these systems put into

20:41

use, and they refused to

20:43

do that. So here

20:45

they are on the basement, Well, that's just

20:47

goddamn stupid. I'm gonna get these

20:49

things out of here. We're gonna change everything.

20:54

It's just after midnight on January

20:56

thirteenth nineteen seventy four. couple

21:00

thousand feet above Interstate thirty

21:02

five in Dallas American Airlines

21:04

flight 341 dips right

21:06

in the darkened sky. For

21:09

decades, all other air traffic

21:11

on this approach path into Dallas has

21:13

turned left at this point

21:15

heading for love field. But American

21:18

341 from Memphis. Isn't

21:21

going to love fields. Maintaining

21:23

170 nods American 1

21:28

Runway 179

21:30

Clearland. Clearland America

21:32

341. Thank you. Plain

21:36

touches down at twelve o seven AM.

21:39

It is the first commercial passenger

21:41

flight to arrive at the brand new Dallas Fort

21:43

Worth or DFW Airport.

21:47

Flights from Branniff in Texas International

21:49

and Delta and United and Tido WA

21:51

will follow soon behind. But

21:54

Southwest Airlines, binges

21:56

never to put its wheels down at the new

21:58

air port. Just

22:01

hours after American 341

22:03

touches down, Muse signs

22:05

off on a press release announcing

22:07

Southwest Airlines first annual

22:10

profit. If those

22:12

profits are gonna continue, they

22:14

need to keep flying from Love Field which

22:16

is only fifteen minutes by car from

22:19

downtown Dallas compared

22:21

to forty five minutes to DFW. At

22:24

love, Southwest has a heartbeat.

22:27

At DFW, it'll be

22:29

dead. Problem is

22:32

1 in the business and the politicians too

22:35

have lined up to force Southwest to

22:37

move. A

22:41

few months after that first American

22:43

flight lands at DFW on a

22:45

hot mid afternoon day in June nineteen

22:48

seventy four. Max Hopper

22:50

is standing on a corner in Manhattan waiting

22:53

again for Bob Crandell.

22:57

Hopper's planning to accidentally bump

23:00

into Crandell on his lunch break as he's leaving

23:02

American Airlines headquarters. Hopper's

23:05

been planning this for days. Finally,

23:08

he spies crandled slim frame

23:10

from across the street and makes

23:13

a quick dash over to him. Hey,

23:15

hey, Bob. How are you? So funny I'd

23:17

run into you. You know, I've

23:19

just heard that the American Society of

23:22

travel agents is trying to develop a computerized

23:24

reservation system. It would take

23:26

all of the flight data from the airlines. You

23:28

know, like the information we have about our

23:31

airline inside a saber and

23:33

put it into one system. Agents

23:35

would be able to book flights through this system

23:37

without even making a phone call to any

23:39

airline. And they'd

23:41

own this system. American

23:43

has built its schedule to take advantage of

23:45

the current way travel agents typically

23:47

book flights. A technological change

23:50

like this could hurt them.

23:53

As it is now, American gets

23:55

preferential treatment from travel agents.

23:58

Damage. If they own the system, they

24:00

could give preference to some other carrier like

24:02

those bastards at United. And

24:04

my god, if we don't have a say in the system,

24:06

they'd Evelope who knows what might happen. These

24:09

people could cut out American Airlines

24:11

altogether. Hopper

24:13

and Crandell stand on that noisy corner

24:15

for a moment in silence. Hopper

24:18

knows what this means. And now

24:21

Crandell does too. They

24:23

are on the cusp of a new battle,

24:26

one that many of their competitors don't

24:29

even know about. If

24:31

they can make Sabre, the core of

24:33

the new computerized reservation system

24:35

travel agents use, American

24:37

will gain un precedented insight

24:39

into its competitor's flights, insight

24:42

that can tip the competitive balance

24:45

in its favor. American

24:48

has the weapon of destruction at

24:50

its disposal. It

24:53

just has to deploy it. In

24:56

the next episode of Southwest versus

24:59

American Airlines, American binges

25:01

up Sabre, opening a new

25:03

frontier in the war with Southwest. And

25:07

no amount of shivos regal, and

25:09

stop that. From

25:14

1, this is episode two of Southwest

25:17

versus American for Business Wars. If

25:19

you like our show, please give us a five star rating

25:21

in a review sure to tell your friends.

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Subscribe on Apple Podcasts, Amazon

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and offers from our sponsors in the episode

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way you can support the shows by filling out a small

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survey and tell us which business stories

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you'd like to hear. A quick note about recreations

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you've been hearing. In most cases, we can't

25:52

know exactly what was said. Those scenes are dramatizations,

25:55

but they're based on historical research. I'm

25:57

your host David Brown, Joe Wondery wrote

25:59

this story. Karen Lowe is our senior producer

26:02

and editor produced by Emily Frost.

26:04

Kate Young is our associate producer. Our

26:06

producer is Dave Shilling, sound designed

26:08

by Kyle Randall. Our executive producers

26:11

are Jenny Lower Beckman and Marshall Lewis,

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created by Ernon Lopez, or

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wondering. Business wars is supported by Microsoft

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Wars is supported by Microsoft teams. Microsoft teams is helping priority bicycles reinvent the way they

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Microsoft Teams is helping priority

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bicycles reinvent the way they work.

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When the pandemic hit, the bike shop had

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to close their New York City showroom. They a way to reopen by doing virtual visits on

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They found a way to reopen by doing

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virtual visits on teams. Now the team can meet with two or three times the number of customers they could before and people from all over the world can visit their

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Now, the team can meet with two

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or three times the number of customers they

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could before. And people from all

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over the world can visit their showroom. Learn

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more about their story and others at

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Microsoft dot com slash

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teams.