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2009 – a year of notable strategic change for Southwest


2009 is set to be a challenging year for Southwest Airlines, as the current operating environment and economic climate provides an unprecedented test of Southwest’s strategy. Much of the competitive challenges stem from the reduction of Southwest’s fuel-hedging positions as the benefits of its hedging strategy disappears. This has forced the LCC to adapt its strategy. [2363 words]

Unlock the following content in this report:


  • Pushing into international markets with WestJet and Volaris codeshare agreements
  • To operate to key LaGuardia and Minneapolis hubs
  • To shrink for first time in 23 years in 1Q09
  • ...but looking to increase market dominance in current challenging environment
  • Fuel hedging position benefits disappearing
  • Targeting cost reductions and revenue improvements totalling USD2 billion in 2009
  • A risky strategy; but could result in further evolution of the Southwest model if successful

Graphs and data:

  • WestJet and Southwest key information
  • New York La Guardia Airport domestic capacity share (seats per week as % of total): Week commencing 05-Jan-08
  • Minneapolis St Paul International Airport domestic capacity share (seats per week as % of total): Week commencing 05-Jan-08
  • Southwest Airlines' capacity (ASK) growth (% change year-on-year): Jan-04 to Nov-08
  • Southwest B737 aircraft delivery schedule: 2009 to 2014
  • North American LCC capacity growth plans for 4Q08 and 2009: Dec-08
  • Southwest Fuel Hedging Programme: as at Sep-08
  • US carriers' losses/gains from 3Q08 fuel hedging
  • Select US carrier's cost per ASM (exc fuel) and growth (% change year-on-year) (US cents): 2Q04 to 3Q08
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