Southwest Airlines annual report

Southwest has improved their financial position incredibly over the last five years. Buoyed by higher prices and lower fuel prices they have increased their operating income from an average of $15 per flight to $39 per flight.

By retiring their older planes they have managed to bump the average number of seats per trip up by 11 in four years. As of today they only have 18 jets (out of 713) that have fewer than 143 seats.



Southwest was profitable when their operating income was only $15 per seat. Is there room for competition? It certainly seems so. Should we permit Interjet or even VivaAerobus and Volaris to operate in the USA?

I recall reading during oil price spikes earlier in the century, that Southwest had hedged by purchasing oil or jet fuel futures at lower prices. More recently i recall reading they'd kept on doing this, and were hit when oil prices dropped.

I've no real clue whether any of it is so.

Quote: Pacomartin

Southwest was profitable when their operating income was only $15 per seat. Is there room for competition? It certainly seems so. Should we permit Interjet or even VivaAerobus and Volaris to operate in the USA?

I favor fully open skies all over the world. Let any airline fly between any two points, regardless of country of origin, so long as they comply with local laws and regulations.

But if the world's largest airline throws a tantrum when a competitor uses 5th freedom rights to ferry passengers from Europe, imagine the tearing of garments and plucking of hair if, say, Air France were allowed to carry paying passengers between, oh, LA and Vegas.

I wonder who'd want to.

I can see, say, Interjet flying MEX-IAH-SAT and back, or maybe MEX-DFW-IAH and back. A Mexican airline might go for places with smaller demand if they could make stops along the way and carry domestic fares along. No idea what such routes might be, but I imagine they exist. Ditto some US airlines. But operating several planes exclusively in another country would seem like a bad idea, unless said country were lacking badly in air transportation.

Seats, load factor, fuel futures versus airlline operations.

I think South West survives by the dedication of its employees.... in flight entertainment involving teeny weeny yellow polka dot life vests, landing delay trivia contests, get the cattle on, get the cattle off, turn the plane around and get flying again... works.

Ryan air works by bullying pilots into always landing on fumes. South West works without having to cut safety corners. That is the difference.

Quote: Pacomartin

Southwest has improved their financial position incredibly over the last five years. Buoyed by higher prices and lower fuel prices they have increased their operating income from an average of $15 per flight to $39 per flight.

By retiring their older planes they have managed to bump the average number of seats per trip up by 11 in four years. As of today they only have 18 jets (out of 713) that have fewer than 143 seats.

2015	2014	2013	2012	2011	Per trip
994	978	966	941	939	miles
1.27	1.26	1.31	1.36	1.32	Number of trips (millions)
145.94	143.16	139.83	135.29	134.65	Seats per trip
$30.55	$47.91	$53.33	$56.03	$54.30	fuel
$124.30	$111.89	$101.39	$91.14	$87.60	Revenue minus fuel
$85.58	$82.74	$79.02	$75.94	$72.58	Other costs
$38.72	$29.15	$22.37	$15.21	$15.01	operating income

Southwest was profitable when their operating income was only $15 per seat. Is there room for competition? It certainly seems so. Should we permit Interjet or even VivaAerobus and Volaris to operate in the USA?

While there is always room for competition, it will be tough sledding for anyone new to try to enter the market. It took SWA a long time to grow into what they are today. Unless a competitor has the capital to jump in as a fully mature airline, capable of providing relatively high quality service for a low fare (which I don't think anyone has), or is willing to endure the same slow growth (and downward price pressure from a mature SWA defending their positions), they will not be successful. JetBlue, Spirit, Frontier... Amateurs!

I just recalled that Southwest recently concluded a deal with its pilots. Some aviation blogs thought it too generous, which would push up costs something fierce. it was a complicated mess, involving whether or not the 737 MAX was a new type or not.

Quote: Ayecarumba

It took SWA a long time to grow into what they are today.

And many dead airlines as well.... But wasn't SW hampered by laws/rules limiting the length of flights originating from its home at Dallas' Love Field?

Quote:

JetBlue, Spirit, Frontier... Amateurs!

Jet Blue seems intent on going full service. Business class, bag fees, next they'll be reducing pitch...

Southwest has become my go-to airline. (I really only fly DTW>LAS. Six times per year).

Southwest, Spirit, and Delta have nonstops from DTW to LAS. Delta used to be my airline of choice. But their prices are getting ridiculous, whereas SW's have remained reasonable. I did get screwed over in July when Southwest had their computer meltdown and my flight got canceled. But I basically got 2 and a half free flights out of it, so it's hard for me to complain.

I find Southwest's planes have way more legroom. My knees don't even touch the seat in front of me in most SW planes. I'm a tall guy, so that makes a big difference for me.

Quote: Nareed

And many dead airlines as well.... But wasn't SW hampered by laws/rules limiting the length of flights originating from its home at Dallas' Love Field?

Yes, their interstate flights could only have destinations of states bordering Texas.

Quote: DRich

Yes, their interstate flights could only have destinations of states bordering Texas.

That's like limiting them to planes with only one wing.

Could they fly from a border state to a non-border state?