Beware the business school case study: the cautionary tale of Southwest Airlines

The venerable business case study method got its start in 1921 at the Harvard Business School. The method became standard at the school throughout the 1920’s and since then Harvard has a near-monopoly grip on the business, selling its cases to over 4,000 rival schools. 

Cases can be useful and informative, but recognize that they aren’t reality. The companies featured typically require that the case writer submit the case to them for approval. That introduces survivor bias—whoever is still around at the time of publication gets to dictate how the narrative is told. Another issue is that the companies selected and held up as exemplars are subject to the halo effect. This is the tendency to believe that because a company was successful, copying its practices will create success elsewhere. 

Unfortunately, the iron law of transient advantage is hard to escape. The 1995 Dell case doesn’t hold up so well. A 2002 case about Nokia centered on how the successful phone company was going to deal with the €8 billion in cash piling up in its accounts. And don’t even get me started on the 618 (!) cases that feature the General Electric Corporation. 

Which brings me to the decades of adulation long accorded to Southwest Airlines. 

The Shortest Distance to Just Another Airline

Southwest Airlines ran a Super Bowl ad this year. In it, passengers scramble through a jungle, climbing over each other in a chaotic race to grab seats. The tagline? “That was wild. Assigned seating is here.” The ad was intended (I think) to indulge in gentle mockery of the past. I found it jarring. Herb Kelleher, the airline’s colorful co-founder, would have been horrified, I think. I last met with him (over a Wild Turkey bourbon, of course) at the Strategic Management Society Meetings in 2004 and he was adamant—employees first, deep attention to details, and most importantly, fun! 

The many (348!) cases, book chapters, and textbook references to Southwest reference its tightly integrated strategy where every element reinforced every other, allowing it to be profitable in a notoriously tough business. 

Kelleher’s insight was that there was a particular kind of flyer whose other option was driving, so short flights that replaced a 4-5 hour drive were attractive. That meant you didn’t have to offer meals. One aircraft type (Boeing 737s) meant simplified maintenance, training, and scheduling. Open seating enabled 20-minute turnarounds instead of competitors’ 35 minutes. That extra utilization squeezed more flights from every plane. Bags fly free meant fewer delays at check-in and faster boarding. Employees came first and everybody pitched in.  Pilots helped clean cabins, gate agents jumped in wherever needed.

And even with all that, the company’s culture of having fun at work made the operational discipline feel human rather than mechanical.  One of my favorite examples is a flight attendant rapping the entire safety briefing to the tune of “Ice, Ice, Baby.” Or this one, safety with a sprinkling of humor. 

The takeaway

The big teaching point from the Southwest cases is that competitive advantage isn’t about any single policy. It’s about the fit between policies. Remove one piece and the whole system weakens.  Southwest has now removed all of them.

Assigned seating went into effect January 27th. “Bags fly free” ended in May 2025. The company is adding premium extra-legroom sections and tiered fare bundles. They’ve announced redeye flights and partnerships with Icelandair. They’ve conducted the first layoffs in their 53-year history. At least they are honest—their COO explained the bag fee reversal with refreshing candor: “We need more revenue to cover our costs.”

Activist investors at Elliott Management got what they wanted. But what exactly has Southwest become? As one former loyalist put it: “There’s simply no reason to fly Southwest anymore.”

Southwest’s leadership cited research showing “8 out of 10 customers prefer assigned seating.” They also acknowledged that after fare and schedule, bags fly free was cited as the #1 reason customers choose Southwest. The problem is that when you remove that differentiator, you’re now competing on fare and schedule against Delta, United, and American, carriers with better route networks, international reach, premium cabins, and decades more experience operating their models. Like all the other airlines, we are likely to now see pitched battles for overhead space, another blow to a business model built on fast airport turnarounds. 

The Super Bowl ad could be a case study in strategic confusion. Southwest is making fun of customers who were passionately loyal to what made Southwest different, while asking those same customers to believe the company’s “legendary hospitality” somehow exists independent of the operational system that enabled it.

Take lessons from case studies with caution

There’s a deeper lesson here. Case studies are snapshots. They capture what worked at a particular moment, under particular boundary conditions. What they don’t speak to is what to do when those conditions shift.

Southwest’s open seating made sense for the short-hop flights taken by their initial core customers.  When the alternative was expensive legacy carriers, those customers would have been driving were it not for Southwest.  By 2024, travelers had options that didn’t exist in 1971 or 1991 or even 2011. JetBlue offered assigned seats with personality. Spirit and Frontier offered unbundled ultra-low fares. Delta went upmarket with better service. The white space Southwest once occupied got crowded.

My friends Zeynep Ton and Frances Frei exchanged concerns for the culture of the airline. Frei, a professor at Harvard Business School, captured this concern: “I sure hope this isn’t a case of activist investors coming in and insisting on a set of decisions that they won’t be around to have to endure. Great organizations get built over time. It doesn’t take very long to ruin an organization.”

I’m not arguing Southwest should have frozen in amber forever. Markets change. Customer preferences evolve. Even the most elegant strategy eventually needs updating. But there’s a difference between thoughtful evolution and abandoning your model.

Herb Kelleher once said humility and discipline go together: “You can’t really be disciplined in what you do unless you are humble and open-minded.” He built an airline that knew exactly what it was, knew exactly who it served, and had the discipline to say no to opportunities that didn’t fit.

Southwest’s new leadership knows what investors want. Whether they know what Southwest is anymore—that’s less clear.

View the full article