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Can Southwest Afford Not To Grow?  
User currently offlinePHXtoDCAtoMSP From United States of America, joined Feb 2008, 299 posts, RR: 0
Posted (4 years 3 months 2 weeks 5 days 8 hours ago) and read 6500 times:

I decided to puruse the latest airline presentations from recent aviation conferences and was shocked to see what could only be described as a glaring CASM gap between Southwest and the Legacies.

-For Q4 2009, Southwest said that CASM ex-fuel was up 8.6% YoY. Their guidance for Q1 2010 was for CASM ex-fuel to increase more than Q4 CASM. Q1 looks to be darn near close if not actually a double digit increase in non-fuel unit costs

For the Legacies:

-Delta is forecasting 2010 Consolidated CASM ex-fuel to be slightly lower than 2009, with Mainline CASM ex-fuel flat from 2009 to 2010

-Continental said 2009 CASM ex-fuel was 1.5% higher than 2008. No guidance seemed to be given for 2010

-United said that CASM ex-fuel has increased less than 1% from 2007 to 2009. For 2010, they are claiming their CASM ex-fuel performance will beat everyone, which would imply they will do even better than DL's lower YoY CASM

-US Airways said 2009 CASM ex-fuel was down 0.3% YoY. Didn't see 2010 guidance.

Now the obvious response will be "WN has been decreasing capacity so that is why CASM is up". But I don't buy that seeing as how every airline above reduced capacity and some much more than WN did. DL reduced a ton of capacity in 2009 and Q1 2010 but if I remember correctly their CASM stayed relatively flat the whole time.

One other retort will be that their network is changing, which is true, and that their RASM performance has been outperforming. I will say that is true, and their RASM has been better than most, but IIRC it has not been performing 8-10 points better than the Legacies (which is what would be needed to offset the CASM increase).

Seems to me that Southwest has been so reliant on growth to keep costs low that they will start becoming much less competitive on costs (especially without the hedge advantage) if they can't grow. Growth keeps labor costs low by keeping seniority low and keeps maintenance costs low due to warranty periods and such of new airplanes. Just seems to me that with their labor contracts and their new network plans, if they don't start growing significantly again, they will have costs creeping up near the legacies and will be unable to offer as low of fares as they do today.

Thoughts?

20 replies: All unread, jump to last
 
User currently offlineMPDPilot From United States of America, joined Jul 2006, 991 posts, RR: 0
Reply 1, posted (4 years 3 months 2 weeks 5 days 7 hours ago) and read 6409 times:

That is an interesting observation. I have heard that it is a major part of LCC operations is their growth. The reason being just like you said to keep costs down. And if I had to hazard a guess they would have to continue that growth. But we will see what others think.

On a related note: how much more can they grow? Yes they have started moving into places like BOS and LGA but how many more of those types of cities can they add?



One mile of highway gets you one mile, one mile of runway gets you anywhere.
User currently offlineMrSkyGuy From United States of America, joined Aug 2008, 1214 posts, RR: 3
Reply 2, posted (4 years 3 months 2 weeks 5 days 7 hours ago) and read 6373 times:

Quoting PHXtoDCAtoMSP (Thread starter):
Seems to me that Southwest has been so reliant on growth to keep costs low that they will start becoming much less competitive on costs (especially without the hedge advantage) if they can't grow. Growth keeps labor costs low by keeping seniority low and keeps maintenance costs low due to warranty periods and such of new airplanes. Just seems to me that with their labor contracts and their new network plans, if they don't start growing significantly again, they will have costs creeping up near the legacies and will be unable to offer as low of fares as they do today.

Now that is a textbook way of presenting a solid foundation for a good discussion. You have an interesting observation there. On the surface, SWA has plenty of room to grow destination-wise, but a huge part of investing in a new city for SWA isn't dropping in a plane or two with crews and logistics to support.. it's throwing massive chunks of resources to begin the process of market domination. Growth for SWA is very costly because growth for SWA isn't the 1-plane, 1-route, add-a-destination-to-the-list operation.. it's a calculated and expensive allocation of multiple aircraft and logistics to support.



"The strength of the turbulence is directly proportional to the temperature of your coffee." -- Gunter's 2nd Law of Air
User currently offlineEA CO AS From United States of America, joined Nov 2001, 13517 posts, RR: 62
Reply 3, posted (4 years 3 months 2 weeks 5 days 6 hours ago) and read 6323 times:
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Quoting PHXtoDCAtoMSP (Thread starter):
Southwest has been so reliant on growth to keep costs low that they will start becoming much less competitive on costs (especially without the hedge advantage) if they can't grow.

  

This is absolutely dead-on. WN's constant expansion has enabled them to add ASMs to spread their fixed costs over, resulting in low overall CASM numbers. As the level of expansion - or simply adding more ASMs - declines (or reverses) their CASM figures increase. Also driving increases in CASM are their labor costs, which are now the highest in the industry.

WN does have an ace in the hole, which is the productivity of their employees, measured in FTEs per aircraft. However this level of productivity will have to remain static or improve in order to offset higher fuel and labor costs going forward.

Or WN could just implement a fee for a first checked bag and crank in another $300M-500M in profit annually...   



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlineSuperDash From United States of America, joined Sep 2003, 574 posts, RR: 0
Reply 4, posted (4 years 3 months 2 weeks 5 days 6 hours ago) and read 6244 times:

Well, I wouldn't go that far. Most carriers if not all carriers saw an increase in their CASM over the past year (unless they did something crazy like file for bankruptcy or buy another airline). We need to remember that Southwest didn't dramatically reduce capacity until 2nd half of 2009. Most network carries started big cuts in Q4 2008. Therefore, the numbers you see today from the network carriers reflect very small growth numbers or very small capacity reduction numbers – and CASM numbers that are stable or maybe even improving (ex Fuel of course). SWA will not get to those comparisons for a while. Now the flip side of CASM is RASM. SWA indicated that RASM was up 22% in March. They also filled an amazing 81% of their seats. So while, their CASM is up, it looks to me that they have significantly reduced unproductive flying and pushed RASM up much more than their CASM increase. My guess is that Southwest will continue to disappoint the network carriers and turn yet another profit (MASM-Margin per available seat mile).

By the way, I flew SWA this weekend and both flights were completely full. And Delta Air Lines....Sorry, you lost my business because you wanted to charge me something like 6,237.80 for checked bags (slight exaggeration). But the moral of the story is, SWA's free bag policy won my business. Yes, they have moved market share. Oh yeah, and they are doing that pesky hedging thing again too. So as fuel prices go up, watch SWA's CASM with fuel and compare that to the other network carriers.

To the OP's question, every airline benefits from good growth. But it does have to be good growth.


User currently offlineBoiler905 From United States of America, joined Apr 2010, 47 posts, RR: 0
Reply 5, posted (4 years 3 months 2 weeks 4 days 9 hours ago) and read 4899 times:

Quoting PHXtoDCAtoMSP (Thread starter):
Seems to me that Southwest has been so reliant on growth to keep costs low that they will start becoming much less competitive on costs (especially without the hedge advantage) if they can't grow. Growth keeps labor costs low by keeping seniority low and keeps maintenance costs low due to warranty periods and such of new airplanes. Just seems to me that with their labor contracts and their new network plans, if they don't start growing significantly again, they will have costs creeping up near the legacies and will be unable to offer as low of fares as they do today.

Did you notice in that same report that they had fuel hedging contracts in 2009 that they lost money on? I would argue that Southwest has been reliant on its fuel hedging to keep down costs, not so much the growth.

2009 also gave WN their first fiscal quarter without turning a profit in like... 10 years I think it was???

Let's not jump the gun here.

Plus, WN's CEO Kelley announced Southwest's future intent to grow into Hawaii, Canada, and Mexico.

Bottom line______ If WN can continue successful fuel hedging programs in the future, they'll continue their growth in market share, profits, and customer satisfaction.

I liked your analysis of the situation, way to collect all of those figures for us.



Boiler Up
User currently offlinelightsaber From United States of America, joined Jan 2005, 12897 posts, RR: 100
Reply 6, posted (4 years 3 months 2 weeks 4 days 7 hours ago) and read 4401 times:
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I do not think any company is healthy for long without growth. Growth provides promotion opportunities (motivation) and as the OP noted, a way to spread out the overhead costs (that always seem to grow).

Quoting MPDPilot (Reply 1):
On a related note: how much more can they grow? Yes they have started moving into places like BOS and LGA but how many more of those types of cities can they add?

Quite a few. ATL is near the top of the list of un-tapped markets. CLT? MIA?

But as Boiler905 notes above, they'll also connect to Hawaii, Canada, and Mexico. That alone will turn LAX, OAK (SFO?), and ??? back into growth markets.

I see WN doing far more hubbing in the future. I do think they'll keep their strategy of launching new bases with a large number of flights. But I think the 20% connecting traffic figure is going to grow quickly. They certainly will stick to a majority of 'point to point,' but I see connecting traffic growing in importance over the next decade. It is through the hubbing that new airports like ECP will feed the system.

And... in 2014 WN *finally* can do a (constrained) expansion of DAL. I personally think they must gain a large number of additional customers before considering taking on AA at DFW.

So WN will grow at some large airports, but by more hubbing, many more smaller airports will become viable.

Quoting Boiler905 (Reply 5):

Bottom line______ If WN can continue successful fuel hedging programs in the future, they'll continue their growth in market share, profits, and customer satisfaction.

I take a different line on WN's fuel hedging. They always hedge. It is a cost they bear for the stability to price their product on (almost) known costs. Their fuel hedging works partially as they are (almost) always hedging.

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineDocLightning From United States of America, joined Nov 2005, 19410 posts, RR: 58
Reply 7, posted (4 years 3 months 2 weeks 4 days 6 hours ago) and read 4343 times:

Quoting PHXtoDCAtoMSP (Thread starter):
Seems to me that Southwest has been so reliant on growth to keep costs low that they will start becoming much less competitive on costs (especially without the hedge advantage) if they can't grow. Growth keeps labor costs low by keeping seniority low and keeps maintenance costs low due to warranty periods and such of new airplanes. Just seems to me that with their labor contracts and their new network plans, if they don't start growing significantly again, they will have costs creeping up near the legacies and will be unable to offer as low of fares as they do today.

The bizarre thing about WN is that I honestly think that the brass feel that running a good business is more important than a simple monetary calculation. At no other carrier can I imagine that such a philosophy reigns. WN hasn't marketed itself as "Low Fare" in a while (although they certainly do nothing to dispel the image). Where they excel is in the quality of their product. It's informal and it's bare-bones, but it's friendly, it's efficient, it's happy, and it's sometimes even a little bit fun. One of the reasons that they keep their fares off the travel sites is because they *know* that people will go to southwest.com because they'd rather fly WN than a major.

But they really do need to get their CASM under control and I'm not quite sure how they're going to do that.


User currently offlinelightsaber From United States of America, joined Jan 2005, 12897 posts, RR: 100
Reply 8, posted (4 years 3 months 2 weeks 3 days 22 hours ago) and read 4144 times:
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Quoting DocLightning (Reply 7):

But they really do need to get their CASM under control and I'm not quite sure how they're going to do that.

Excellent post. (Not just the quote I selected to reply to.)

Yes, they must figure out how to ratchet down their costs. With or without growth.

Hence why I think their next major aircraft purchase will be a larger aircraft (738RE with features changed to speed turn times and the 739ER's aft bulkhead to allow another row of seats).

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineTeamAmerica From United States of America, joined Sep 2006, 1761 posts, RR: 23
Reply 9, posted (4 years 3 months 2 weeks 3 days 21 hours ago) and read 4018 times:

Quoting Boiler905 (Reply 5):
Did you notice in that same report that they had fuel hedging contracts in 2009 that they lost money on? I would argue that Southwest has been reliant on its fuel hedging to keep down costs, not so much the growth.

  Southwest was genius in hedging oil in the $50's/bbl as it spiked, and enjoyed a huge cost advantage over a couple of years. Then they found themselves holding hedges in the $70's as oil dipped under $40/bbl...and suddenly they weren't geniuses anymore. Reality is rap-rap-rapping at their office doors.

Quoting lightsaber (Reply 6):
in 2014 WN *finally* can do a (constrained) expansion of DAL. I personally think they must gain a large number of additional customers before considering taking on AA at DFW

Not so sure about this. Will WN enjoy a material cost advantage over AA by 2014? I think not, and they'd be insane to take on DFW. I also expect that WN will add non-stops from DAL in lieu of connections, but the overall number of flights will not likely increase much.

Notable right now is that AA's advance-purchase fares out of DFW are often lower than WN's from DAL. I comparison shop frequently (which requires a bit of effort because WN doesn't post on Travelocity etc.). Southwest wins easily amongst those who can't plan ahead, but with any advance notice picking the AA non-stops is generally a no-brainer.



Failure is not an option; it's an outcome.
User currently offlinepilotpip From United States of America, joined Sep 2003, 3148 posts, RR: 11
Reply 10, posted (4 years 3 months 2 weeks 3 days 20 hours ago) and read 3888 times:

Quoting TeamAmerica (Reply 9):

Southwest was genius in hedging oil in the $50's/bbl as it spiked, and enjoyed a huge cost advantage over a couple of years. Then they found themselves holding hedges in the $70's as oil dipped under $40/bbl...and suddenly they weren't geniuses anymore. Reality is rap-rap-rapping at their office doors.

And the reality is $90/bbl oil. Once again a short term loss seems to look good in the long term.

Delta and a couple others had hedges in the $120/bbl range.

Once again, hedging is only a small portion of the many reasons Southwest has made, and will continue to make money while the legacies don't.



DMI
User currently offline2175301 From United States of America, joined May 2007, 1036 posts, RR: 0
Reply 11, posted (4 years 3 months 2 weeks 2 days 15 hours ago) and read 3565 times:

Actually, I think the initial observation and focus on CASM is substantially wrong.

There are two important parts to running any business: Controlling cost - and Controlling Revenue.

You can very successfully run a high cost business if you have a high revenue business.

If you just focus on low cost - and then drive away customers - you will die on the revenue end.

Thus, it is not realistically possible to talk about Southwest's business strategy concerning CASM without also discussing RASM. Yes, their CASM is high - but so too is their RASM.

I see no problem.

I predict that they will be profitable for a long time.

In my personal opinion - one of the things that has destroyed many a business (and many airlines) was allowing the beanconters to take over and drive for the lowest production cost by cutting quality and service.

Now will Southwest expand: Yes. Is their future really dependent on it. I don't think so.


User currently offlineEMBQA From United States of America, joined Oct 2003, 9364 posts, RR: 11
Reply 12, posted (4 years 3 months 2 weeks 2 days 14 hours ago) and read 3513 times:

Quoting PHXtoDCAtoMSP (Thread starter):

Unless I've missed something Southwest has been one of the most aggressive, fastest growing, most cities added airline I can think of over the last 30 years.



"It's not the size of the dog in the fight, but the size of the fight in the dog"
User currently offlineweb500sjc From United States of America, joined Sep 2009, 727 posts, RR: 0
Reply 13, posted (4 years 3 months 2 weeks 2 days 14 hours ago) and read 3387 times:

How will WN grow into Hawaii with there current aircraft, wouldn't they only be able to go to west coast destinations where they will have to esentially begin hubs witch is contrary to there buisness model, either that or get a different aircraft type witch again is against there model.

Esentially wwould WN start makeing LAX or OAK a hub for a hypothetical Hawaii flight.



Boiler Up!
User currently offlineScottB From United States of America, joined Jul 2000, 6712 posts, RR: 32
Reply 14, posted (4 years 3 months 2 weeks 2 days 5 hours ago) and read 3146 times:

Quoting PHXtoDCAtoMSP (Thread starter):
One other retort will be that their network is changing, which is true, and that their RASM performance has been outperforming. I will say that is true, and their RASM has been better than most, but IIRC it has not been performing 8-10 points better than the Legacies (which is what would be needed to offset the CASM increase).

Actually, in all cases, they performed at or better than 8-10 points over the legacies. In 2009, Southwest's passenger RASM was down 1.1% year-over-year. But in 2009, Delta's domestic passenger RASM was down 14% over 2008, while US Airways saw a system passenger RASM decline of 12.4%. Continental's domestic passenger RASM fell 12.6% from 2008 to 2009, United's domestic mainline passenger RASM was down 12.0% over the same period (while their regional passenger RASM fell 11.1%), and AA's mainline passenger RASM fell 11.1%. For what it's worth, I'm not trying to be selective; I tried to include regional operations where possible (as these often outperformed mainline in 2009) and compared domestic to domestic where possible.

Quoting PHXtoDCAtoMSP (Thread starter):
Now the obvious response will be "WN has been decreasing capacity so that is why CASM is up". But I don't buy that seeing as how every airline above reduced capacity and some much more than WN did. DL reduced a ton of capacity in 2009 and Q1 2010 but if I remember correctly their CASM stayed relatively flat the whole time.

Either that or the response is that the legacy carriers have finally been doing a better job of reining in their bloated cost structures. But the fact remains that WN's CASM excluding fuel remained 10% lower than United's mainline CASM excluding fuel, nearly 25% lower than American's, about 15% lower than Delta's (which includes regional operations IIRC), about 17% lower than US Airways' (for mainline), and 8% lower than Continental's. Not to mention that on many routes, the legacy carriers have chosen to compete with WN using higher-cost regional aircraft. And consider also that Southwest manages to maintain its CASM advantage in spite of a significantly shorter average stage length.

Quoting EA CO AS (Reply 3):
Or WN could just implement a fee for a first checked bag and crank in another $300M-500M in profit annually...

I remain amused by other airline employees who are convinced that WN must implement charges for checked baggage. Methinks they doth protest too much. WN management has stated that they believe they've seen a 1% shift in domestic market share; and, in fact, BTS numbers bear that out. From the 12 months ending 3Q2008 to the 12 months ending 4Q2008, WN's share of the market by revenue (of the 17 largest carriers) increased from 7.88% to 8.85%. In an industry with well over $100 billion in annual revenue, a 1% shift in share is worth over $1 billion in revenue. Or consider it this way: it took Southwest 37 years to get to 8% market share and only one year to get to almost 9%. By domestic boardings, WN went from 15.6% passenger market share to 16.4% passenger market share.

The upshot is that Southwest increased market share while beating the legacies handily in year-over-year unit revenue comparisons. I remain convinced that they really are seeing passengers booking away from competitors who charge for all manner of things not just limited to checked bags. And I think Southwest management is laughing all the way to the bank.

Quoting TeamAmerica (Reply 9):
Not so sure about this. Will WN enjoy a material cost advantage over AA by 2014? I think not, and they'd be insane to take on DFW. I also expect that WN will add non-stops from DAL in lieu of connections, but the overall number of flights will not likely increase much.

Notable right now is that AA's advance-purchase fares out of DFW are often lower than WN's from DAL. I comparison shop frequently (which requires a bit of effort because WN doesn't post on Travelocity etc.). Southwest wins easily amongst those who can't plan ahead, but with any advance notice picking the AA non-stops is generally a no-brainer.

Yes, they probably will continue to maintain their cost advantage over AA unless AA decides to use the bankruptcy courts to slash its labor costs. And I don't see any reason for them to set up shop at DFW when they're going to have what's likely to be a far more customer-friendly facility at DAL in 2014. It's not surprising that WN gets a revenue premium in several competitive non-stop routes from DAL, since they're not flying RJ's or turboprops to places like MAF, AMA, LBB, HOU or LIT, and their policies and product are better for the 90% of the passengers not sitting in first class.


User currently offlineLoneStarMike From United States of America, joined Jul 2000, 3811 posts, RR: 34
Reply 15, posted (4 years 3 months 2 weeks 2 days 3 hours ago) and read 3077 times:

Quoting ScottB (Reply 14):
Yes, they probably will continue to maintain their cost advantage over AA unless AA decides to use the bankruptcy courts to slash its labor costs. And I don't see any reason for them to set up shop at DFW when they're going to have what's likely to be a far more customer-friendly facility at DAL in 2014

  

There's also another reason you won't likely see WN at DFW for at least the next 15 years and it has to do with a clause about gates that was part of the June 15, 2006 joint agreement between the Cities of Dallas and Fort Worth, DFW, AA & WN

http://dallas-lovefield.com/pdf/Wright_Amend_Agreement061506.pdf

Note Item #10

Quote:
If Southwest Airlines or its affiliate code share partner (except for published/scheduled code share service from DFW to Midway Airport as of June 14, 2006) chooses to operate from another airport within an 80-mile radius from Love Field in addition to its operations at Love Field, then for every such gate which Southwest operates at another airport within this radius, Southwest will voluntarily relinquish control of an equivalent number of gates at Love Field, up to 8 gates and such gates shall be made available to other carriers. If other carriers are not interested in these gates, then they can be made available to Southwest Airlines for its use on a common use basis. This requirement to relinquish gates shall expire in 2025.

It would be foolish for WN to spend all this money renovating Love Field only to have to give up gates because they also want to serve DFW or another airport within an 80-mile radius of Love Field before 2025.

LoneStarMike


User currently offlineTeamAmerica From United States of America, joined Sep 2006, 1761 posts, RR: 23
Reply 16, posted (4 years 3 months 2 weeks 2 days ago) and read 2938 times:

Quoting pilotpip (Reply 10):
And the reality is $90/bbl oil. Once again a short term loss seems to look good in the long term.

You seem to believe that Southwest still has oil hedged in the $70's....not so. Once bitten, twice shy, Southwest has adopted a more limited fuel hedge strategy similar to other airlnes.

See: Reuters



Failure is not an option; it's an outcome.
User currently offlineTeamAmerica From United States of America, joined Sep 2006, 1761 posts, RR: 23
Reply 17, posted (4 years 3 months 2 weeks 2 days ago) and read 2928 times:

Quoting ScottB (Reply 14):
Yes, they probably will continue to maintain their cost advantage over AA unless AA decides to use the bankruptcy courts to slash its labor costs. And I don't see any reason for them to set up shop at DFW when they're going to have what's likely to be a far more customer-friendly facility at DAL in 2014. It's not surprising that WN gets a revenue premium in several competitive non-stop routes from DAL, since they're not flying RJ's or turboprops to places like MAF, AMA, LBB, HOU or LIT, and their policies and product are better for the 90% of the passengers not sitting in first class

I agree completely that WN will stay at DAL. I'm not so sure about maintaining a revenue premium, though. Southwest firmly established themselves as the low-price carrier and they enjoy a loyal customer base who go direct to their website and buy tickets - done. If they begin to learn over time that there are lower fares out there, that changes. AA appears content with their yields and understandably wants no part of a price war with WN, thus they have not made a point of advertising cheaper seats.

I think the danger to WN lies with the LCC's capable of undercutting them and having no motive not to advertise it. As F9, FL or B6 adds DFW service...it's ON 



Failure is not an option; it's an outcome.
User currently offlineMasseyBrown From United States of America, joined Dec 2002, 5368 posts, RR: 7
Reply 18, posted (4 years 3 months 2 weeks 1 day 22 hours ago) and read 2833 times:

Quoting lightsaber (Reply 6):
I take a different line on WN's fuel hedging. They always hedge. It is a cost they bear for the stability to price their product on (almost) known costs.

Exactly. The intent of hedging is to take uncertainty out of costs; it's not a crap shoot. You expect to win a little or lose a little within a predictable range. WN's hedging gains of a few years ago were exceptional and probably unrepeatable, which is why at the time they were called a hugely successful hedge fund that lost money flying airplanes.

Their CASM advantage over the legacies has been visibly shrinking for a few years now.



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineCubsrule From United States of America, joined May 2004, 22726 posts, RR: 20
Reply 19, posted (4 years 3 months 2 weeks 1 day 21 hours ago) and read 2689 times:

Quoting ScottB (Reply 14):
Actually, in all cases, they performed at or better than 8-10 points over the legacies. In 2009, Southwest's passenger RASM was down 1.1% year-over-year. But in 2009, Delta's domestic passenger RASM was down 14% over 2008, while US Airways saw a system passenger RASM decline of 12.4%.

Is that better revenue performance or better capacity management (or both)? With much more room to improve load factors than most legacies, WN's RASM numbers depend on both revenue and onboard loads much more so than most legacies'. What did WN, US, and DL's systemwide load factors look like YoY?



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineLoneStarMike From United States of America, joined Jul 2000, 3811 posts, RR: 34
Reply 20, posted (4 years 3 months 2 weeks 1 day 18 hours ago) and read 2581 times:

Quoting Cubsrule (Reply 19):
Is that better revenue performance or better capacity management (or both)?

Gary Kelly was on CNBC yesterday. Terry Maxon at the Dallas morning news blogged about it today Link (includes video.)

Quote:
• Over half of Southwest Airlines' improved unit revenues can probably be credited to reworking Southwest's schedule, including cutting capacity in markets.

• Its "Bags Fly Free" policy and ad campaign is a primary reason that Southwest's revenues are on a pace to increase $1 billion annually.

LoneStarMike


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