Kevin Sites in the Hot Zone - Chapter 15: Coming HomeIn this final chapter of "A World of Conflict," Kevin Sites returns home to the U.S., only to confirm what he suspected -- that in the year that he was gone little had changed.
Kevin Sites in the Hot Zone - Chapter 14: Israel-Hezbollah WarThe war between Israel and Hezbollah shook the landscape in the Middle East.
Kevin Sites in the Hot Zone - Chapter 13: Sri LankaKevin Sites covered Sri Lanka as violence erupted between the government and Tamil Tiger rebels, pushing a nation with so much to lose back to the brink of all-out war. In rebel-held territory Sites interviewed Tiger fighters about their tactics and reported on the many effects of war still seen in the region.
Kevin Sites in the Hot Zone - Chapter 12: Nepal and KashmirKevin Sites covered Nepal during a time of sweeping political change that followed mass nationwide protests, forcing the autocratic King to cede power.
Kevin Sites in the Hot Zone - Chapter 11: Child BrideIn Afghanistan, Kevin Sites met a 12-year-old girl named Gulsoma, whose incredible story of resilience resonated with millions of people worldwide. She was only six years old when she was sold to a neighbor family in Kandahar as a child bride.
Kevin Sites in the Hot Zone - Chapter 10: AfghanistanReporting from Afghanistan in spring 2006, more than four years after the U.S.-led coalition ousted the Taliban, Kevin Sites found that war is not over in the country.
Kevin Sites in the Hot Zone - Chapter Nine: ChechnyaIn Chechnya during the winter of 2005-2006, Kevin Sites reported on a region still reeling from lingering conflict between Russia and Islamic separatists. The conflict engulfed Chechnya in the 1990s, and even now, half of the population is yet to return. Those that have eke out a living amid the rubble.
Kevin Sites in the Hot Zone - Chapter Eight: Iran
Kevin Sites in the Hot Zone - Chapter Seven: IsraelIn Israel, Kevin Sites interviewed Kinneret Boosany, a victim of a suicide bombing at a Tel Aviv cafe in 2002.
Also on Portfolio
Parsing Yahoo: We Find Rejection Very Attractive
It's a Hypercompetitive World After All
Manage Your Energy, Not Your Time
What's the airline-industry jargon for unconventional wisdom? Southwest Airlines.
By some estimates, the country's major carriers have consumed perhaps $100 billion in capital during the past decade, but Southwest Airlines continues to be profitable. It's been in the black for 33 consecutive years and, last week, for the 127th consecutive quarter, it paid a modest dividend. Its balance sheet, with about $3 billion in cash on hand and $600 million in available credit, is the envy of an otherwise fuel-price-ravaged industry.
Its competitors among the network carriers—American, United, Delta, Continental, Northwest and US Airways—are shrinking passenger capacity by more than 10 percent and grounding hundreds of aircraft starting in the fall. Southwest will add a handful of daily flights. It will take delivery of another dozen aircraft next year and still plans to grow by 2 to 3 percent. And Southwest now carries more passengers annually (101 million last year) than any other U.S. carrier, a nifty trick for an airline that didn't fly outside Texas at the dawn of deregulation in 1978.
Even the fickle financial markets, which have long discounted Southwest's relentless growth and steady profits, have finally taken note. As oil prices doubled in the past year, share prices of the six network carriers have slid, with the drop-offs ranging from 76 to 94 percent. Southwest's decline has been more modest, within a point of the Dow's 21 percent 52-week drop. As a result, Southwest's market capitalization yesterday (about $9.7 billion) is now more than the combined $5.7 billion market cap of its Big Six competitors.
What does Southwest know that no one else in airlines does? It keeps things simple and consistent, which drives costs down, maximizes productive assets, and helps manage customer expectations.
One Plane Fits All
Unlike the network carriers and their commuter surrogates, which operate all manner of regional jets, turboprops, and narrow-body and wide-body aircraft, Southwest flies just one plane type, the Boeing 737 series. That saves Southwest millions in maintenance costs—spare-parts inventories, mechanic training and other nuts-and-bolts airline issues. It also gives the airline unique flexibility to move its 527 aircraft throughout the route network without costly disruptions and reconfigurations.
Point-to-Point Flying
Network carriers rely on a hub-and-spoke system, which laboriously collects passengers from "spoke" cities, flies them to a central "hub" airport, and then redistributes them to other spokes. Not Southwest. Most of its flying is nonstop between two points. That minimizes the time that planes sit on the ground at crowded, delay-prone hubs and allows the average Southwest aircraft to be in the air for more than an hour longer each day than a similarly sized jet flown by a network carrier. Southwest's avoid-the-hubs strategy also pays dividends in on-time operations. According to FlightStats, Southwest's 78 percent on-time performance in June is eight percentage points higher than the industry average and higher than that of any of its major competitors.
Simple In-Flight Service
Business travelers haven't always loved Southwest's über-simple service, but it's looking better and better as competitors cut back. There is just one class of service, a decent coach cabin that is slightly more spacious than those of Southwest's competitors. There are no assigned seats. There have never been meals, just beverages and snacks. Keeping it basic allows Southwest to unload a flight, clean and restock the plane, and board another flight full of passengers in as little as 20 minutes compared with as much as 90 minutes on a network airline. Airline efficiency experts say that the savings allow each Southwest jet to fly an extra flight per day. Extra flights mean extra revenue.
No Frills, No Fees
As other carriers have rushed to remove perks and pile on fees and restrictions, Southwest has kept its customer proposition streamlined and transparent. The airline only sells one-way fares and only in a few price "buckets." That not only keeps costs down—complex fare structures are expensive to manage—it convinces fliers that they are getting value for money. Prices are all-inclusive too. Southwest doesn't have fuel surcharges, doesn't charge for standby travel or ticket changes, and continues to permit travelers to check two pieces of luggage free. And since every seat on every flight is virtually identical, travelers know exactly what they will get when they make a purchase.
Strong Management
The public face of Southwest Airlines for a generation, hard-drinking, chain-smoking, always-leave-'em laughing Herb Kelleher, finally stepped away from the carrier earlier this year. Kelleher's bonhomie masked the discipline that Southwest has had throughout its history. The airline has always avoided fads and eschewed anything that increased costs or complicated the basic travel proposition. When it has changed—last year it ended its infamous cattle-call boarding process to favor its most frequent fliers and highest-fare customers—it has done so without slowing down the movement of aircraft. Management ranks are lean, but well compensated and, most importantly, productive. I once calculated that the top executives of Southwest generated 10 times more revenue per dollar of compensation than did the C-suite types at some of the network carriers.
A Relatively Happy Workforce
Network carriers have railed for decades about the power of their employee unions. But guess who's the most unionized carrier in the nation? Southwest, of course. The airline says that 87 percent of its employees belong to a union. Southwest has never had a strike, and now that the network carriers have whacked away at salaries and benefits, Southwest staffers are generally the highest paid in the industry. But since Southwest has about 30 percent fewer employees per aircraft than its network competitors, it has the lowest non-fuel C.A.S.M. (cost per available seat mile) of any of the major carriers.
Aggressive Fuel Hedging
Rampaging fuel prices now represent around 40 percent of an airline's costs, but, as usual, Southwest Airlines has been ahead of the curve. Since 1999, the airline's aggressive fuel-hedging program has saved it an estimated $3.5 billion. In the first quarter, for example, it paid $1.98 a gallon for fuel, approximately a dollar less than its network competitors. And Southwest's future position is admirable: It is 70 percent hedged at $51 a barrel through the end of the year and 55 percent hedged at the same price next year.
In a world of $140-a-barrel oil, suggesting that any airline is a guaranteed winner is beyond hubris. But this much can be said: Southwest Airlines is sitting on a pile of cash and fuel hedges and has a proven and easily adaptable service model. And history shows that Southwest has comfortably survived every airline-industry downturn, then grown rapidly and profited hugely when the business cycle turns.
The Fine Print…
British Airways announced last week that it would buy L'Avion, the French carrier that flies all-business-class jets between Newark and Paris. B.A. says that it will integrate L'Avion with its own boutique carrier, OpenSkies, which launched last month. L'Avion was the last of the four independent all-business-class trans-Atlantic carriers that have launched since 2005. The others—Maxjet, Eos, and Silverjet—all folded in the past seven months.
In the 105 years since the Wright Brothers took to the air, dreamers, engineers and aviation buffs have designed every kind of airplane imaginable in a never-ending quest to fly higher, faster or further. Some were innovative, some were beautiful and some even made history. Others, well, let's just say they must have looked good on paper.
Here's a tribute to some of those that surely looked better on paper.
The Concorde gets all the love, but Russia's Tupolev TU-144 was the first supersonic transport and the only commercial plane to exceed Mach 2. The "Concordski" was fast but plagued by bad luck. Three crashes -- including a dramatic mid-air breakup during the 1973 Paris Air Show -- relegated it largely to a lifetime delivering mail. It was mothballed in 1985 but briefly brought back a few years later as a research plane.
The Comet was the premiere commercial jet airliner and a landmark in British aeronautics when it first flew in 1949. Today it's better known for its atrocious safety record. Of the 114 Comets built, 13 were involved in fatal accidents, most of them attributed to design flaws and metal fatigue.
:
The “Spruce Goose” was either a brilliant aircraft years ahead of its time or the biggest government boondoggle ever. By far the largest aircraft ever conceived -- its wingspan was 319 feet -- the Spruce Goose was intended to be a military transport plane. But it wasn't finished until well after World War II ended, rendering it both obsolete and irrelevant. It only flew once.
The Zubr was as useless as it was ugly. Not only was it incapable of flying with the landing gear retracted, the airframe was so highly stressed the plane could disintegrate without warning. If that wasn't enough, it couldn't take off with a payload much heavier than a few cartons of cigarettes. The Polish Air Force had a few in its fleet during World War II, but none of them saw combat.
Cool name, lousy plane. Dr. William Christmas didn't know the first thing about planes when he designed one for the U.S. Army Signal Corps, and it showed. He didn't think the plane needed wing struts, so of course they fell off during the plane's maiden flight in 1918.
With its carbon-composite construction, unique design and rearward-facing turboprop engines, the Starship was a groundbreaking aircraft. But it was slow, difficult to fly and a bear to maintain. It took to the air in 1989, but Beechcraft only sold a few of the 53 it built.
The Hiller VZ-1 hovercraft must have looked good on paper, because it sure didn't look good in the air. The idea was simple -- a fan provides lift and the pilot steers by shifting his weight. The Defense Department loved it until it saw the Pawnee in flight. It was good for just 16 mph and it tended to be uncontrollable. The project was killed in the late 1950s.
Defense Department projects are famous for cost overruns, and General Dynamic’s flying wing bomber was a doozy. The Flying Dorito was the most troubled of the stealth aircraft projects the Pentagon embraced during the 1980s, experiencing problems with its radar systems and use of composite materials. When the projected cost of each plane ballooned to $165 million, a Secretary of Defense named Dick Cheney killed it in 1991.
With its anemic engine, poor maneuverability and gunner blocking the pilot's view, the B.E. 2 was doomed from the start. German aces had no problem shooting them down during World War II, making it just about useless as a fighter. It had no problems against German Zeppelins, though, so the plane lived out its days attacking them instead.
The XB 15 was the largest plane ever built in the United States until the Spruce Goose came along. The heavy bomber was so massive it had passageways in the wings and bunks for the crew. But big planes need big engines and no one made one big enough to give the XB any kind of speed for its maiden flight in 1937. The plane maxed out at 200 mph, and the U.S. Army Air Corps killed the project. The only XB ever built saw duty as a cargo plane in the Caribbean during World War II.