I read in the Chicago Tribune last week some quotes from Mr. Boyd. Essentially, Southwest now has some of the highest payscales in the industry, since most other carriers have either a) gone into bankruptcy, b) gotten concessions from employees, or c) are new enough that employees aren't in the top ends of payscales.
In addition, Southwest will have less fuel hedged at higher prices.
For Southwest to remain profitable, it must continue expansion. Why did Southwest take 4 empty gates at PHL
? To keep them away from B6
Why did it start service to PIT
? Because it needed PHL
to really drive growth at PHL
Why did Southwest enter into the deal with ATA? Because it feared AirTran setting up a strong hub at MDW
Basically, Mr. Boyd feels that Southwest is now acting in a defensive mode, trying to protect itself from all competitors.
He said earlier that Southwest could get handed its hat at DEN
, since Frontier has already driven down fares. Guess what? Frontier and United have already cut fares at DEN
. That certainly hurts Southwest's margins on DEN