Southwest Airlines Chairman, President and CEO Gary Kelly said there has been a "very dramatic shift" in domestic US market share over the last year, with "1% moving from the rest of the industry to Southwest."
In a speech to the Wings Club in New York available via webcast, Kelly said that while 2009 has been "very, very challenging on multiple fronts," forcing SWA to shrink capacity on an annual basis for the first time, the LCC is reaping the benefits of a transformation process that began in 2007. He explained, "We were a no-frills, low-tech, all-domestic, point-to-point operator, [but new technology and initiatives to attract business passengers] are enabling us to evolve to something more than that."
He said this year saw SWA implement "the largest number of new technology" initiatives of any year in its 38-year history. "The big story of 2008 and 2009" was employing schedule optimization programs that have allowed it to trim unprofitable routes and increase profitable flying, he said, noting that even though capacity will shrink by 5% for full-year 2009, the carrier added four new destinations (ATWOnline, May 21).
The new additions include Boston and New York LaGuardia, two airports that SWA previously made a point of avoiding but that now are critical to establishing a complete network, Kelly said. He added that the LCC has had "easily the best market penetration" at BOS, where flights started in August, of any new market in which it ever has launched service.
He said that a revamped website is allowing SWA to charge "higher average fares" and has led to a "higher book-to-look ratio," meaning an increasing percentage of visitors to the site are purchasing tickets. It also is using the site to generate ancillary revenue via car rental, hotel and cruise bookings. "We think we have an opportunity to grow that business," Kelly said.
He assured the audience that while SWA's capacity will be "roughly flat" in 2010 following this year's contraction, "we still see ourselves as a growth company." He did not rule out acquisitions. "We'll be on the prowl looking for opportunities to grow in any form that it takes," he said.
Source: Air Transport World
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