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- IATA Code
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- Corporate Address
- Southwest Airlines
P.O. Box 36647 - 1CR
Dallas, Texas 75235-1647
- Main hub
- Chicago Midway Airport
- United States
- Business model
- Low Cost Carrier
- Domestic | International
- Association Membership
- Codeshare Partners
Southwest Airlines is an American low-cost carrier headquartered in Dallas, Texas. The archetype low-cost airline that inspired the low-cost movement around the world, Southwest is among largest airline in the world as measured by passengers carried. Southwest is one of the world's most consistently profitable airlines, adhering closely to its low-cost tradition but differentiating itself through well-regarded customer service and free baggage checks. Southwest remains one of the most influential airlines in the world, with an enormous fleet of Boeing 737NG aircraft which operate over 3500 services each day to over 70 destinations across the United States.
On 27-Sep-2010, Southwest Airlines announced plans to purchase AirTran Airways in a USD1.4 billion share purchase. The AirTran business is being rebranded under the Southwest Airlines brand. The deal significantly strengthens Southwest's presence in eastern and mid-west US markets and the Caribbean.
Location of Southwest Airlines main hub (Chicago Midway Airport)
Southwest Airlines share price
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Southwest Airlines fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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A corporate leader of any organisation requires an unusual, sometimes extraordinary range of skills. Inevitably not every CEO has these; nor does having the skills necessarily always triumph over external forces. Timing is not everything but it is important. With time, those external forces change the skill sets needed, for example when an industry is undergoing major upheaval.
Arguably, given the complexity of the airline business, a leader in this industry has greater demands placed on him (rarely her; there are very few women CEOs). And today the world must seem a particularly hostile place for legacy airline managements and their workforces, under siege from all directions. Meanwhile the Gulf carriers and many new short-haul low-cost models are changing the demands made on competitors, as protectionism slips away and hiding places become scarce.
This CAPA report examines some of the features involved in making a great airline CEO – or not.
JetBlue continued the trend of most US carriers turning strong financial performances during 3Q2013 as its profits grew 57% year-on-year to USD71 million driven by a demand environment the carrier deemed as healthy.
The carrier is still battling some cost inflation as FY2013 unit costs excluding fuel and profit sharing are projected to rise between 2.5% and 4.5%. JetBlue stresses it is taking measures to battle the unit cost inflation, noting its sharklet programme for its Airbus A320 fleet to lower fuel burn and fleet changes that include the deferral of 24 100-seat Embraer 190s to support a fleet of 60 of the smaller jets.
Even as JetBlue is taking steps to whittle away at unit cost pressure it has experienced for the last year, the carrier is fielding questions about how it intends to proceed with margin expansion and if it will hit its return on invested capital targets.
Similar to US carriers Delta and US Airways, Southwest Airlines recorded a strong financial performance in 3Q2013, driven partly by its ability to raise fares as well as some relief in unit cost pressure. The carrier remains optimistic about 4Q2013 even as it faces some headwinds stemming from the US Government shutdown and the sliding of busy travel days for the US Thanksgiving holiday from Nov-2013 to Dec-2013.
Southwest reaches a milestone in Nov-2013 when its de-hubbing of Atlanta takes full effect. By Apr-2014 Southwest and AirTran will deploy 160 daily flights from the largest US airport in terms of passenger enplanements. At that time Atlanta will be roughly the same size in terms of departures as Houston Hobby or Phoenix – two of Southwest’s top markets. But it will pale in comparison to Chicago Midway, which currently has roughly 253 daily departures.
Southwest’s management has concluded that Atlanta was a “challenge” for AirTran prior to the carrier's acquisition by Southwest and the de-hubbing should produce improvements in bolstering traffic in the local market from the airport. Carrier executives are also stressing the company’s shrinking footprint in Atlanta should not be interpreted as the airport’s value diminishing in the combined Southwest-AirTran network.
Seattle is emerging as a confronting new battleground for partners Alaska Air Group and Delta Air Lines as Alaska Airlines appears to be quickly answering Delta’s latest moves in key US domestic markets by fortifying its leading position on those routes – Las Vegas, Los Angeles and San Francisco.
Alaska appears poised to add frequencies on those routes beginning in Mar-2014 and continuing through Jun-2014. The move follows Delta’s declaration of launching new service from Seattle to San Francisco in Mar-2014 and adding frequencies in Los Angeles and Las Vegas during 1H2014.
The build-up in those markets by both carriers is occurring even as Alaska remains a key strategic partner for Delta in Seattle, and as Delta adds more international service from the airport buoyed by feed from Alaska’s vast domestic network. The heightened competition between the two carriers alongside their powerful partnership reflects the reality that loyalty only goes so far when revenue maximisation is the ultimate end game for any carrier, and Alaska’s efforts to maintain its passenger concentration in key west coast markets shows that it is willing to strike back at any carrier’s encroachment – even if its originates from an important revenue sharing partner.
American Airlines, US Airways and the US Department of Justice (DoJ) have approximately two months to sharpen their arguments supporting and opposing the merger of the two carriers after the DoJ dropped its bombshell in Aug-2013 with a lawsuit to block the merger entirely. In this it was supported by several state administrations, including that of American's home base in Texas.
The airlines have succeeded in their quest for an early trial date in Nov-2013, against DoJ’s request to delay until Feb-2014. Now that a firm date has been established speculation is rising that a potential settlement between the parties may be reached prior to their day in court.
But if those theories fail to materialise, then each side faces the formidable tasks of convincing a judge that their respective arguments are correct. It is a high-stakes gamble for each of the entities, and while popular industry opinion is heavily weighted towards the opinion that the DoJ’s argument is illogical, the final judgment is tough to predict. Meanwhile, the outside world continues to turn and the would-be merger airlines must continue as if it were business as usual.
US airlines continued to make solid financial gains during 1H2013, growing margins to 2% compared to 1.6% the year prior. While those results would make executives in any other industry squirm, the increase reflects some progress the industry has taken to change business fundamentals to produce consistent profits.
Now the challenge will be to sustain and grow profits through an entire business cycle that does not include the benefits of Chapter 11 reorganisation and the positive effects of industry shrinkage through consolidation. With fuel prices remaining just as volatile as during the last five years and no end in sight for the taxation facing the industry, perhaps a shift in thinking is necessary to make the transition from simply surviving to thriving. History suggests that simply making profits may not be the best environment for sharpening that edge.
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