SWA operating expenses higher than competition

[EMBATP]

airtran

a comment was posted earlier that if atl is screwed up it impacts the entire airtran system...while there is some truth to this, we have a lot of point to point stuff that bypasses atl, and a lot of connections can be made without going thru atl by going thru cak,bos,bwi,dfw,mdw...etc

 

[PlaneDrvr]

SWA has raised prices three times in the last year, and is looking at a fourth. Since 2000 the labor costs as a % percent of gross reciepts has gone from 36% to 42%. No intent to flame just a posting stats.

I could be wrong, and if I am someone will surely correct me, but I believe SWA has at least 4 or 5 fare increases last year (2006). Each time as they stated in their press release, to adjust for rising cost, especially increases in fuel cost.

Just for 'what's it worth' now continue to rant away.

DA

 

[humuakalaka]

This thread started as a statement that airtran's costs are lower. Until someone finds some proof that their casm is indeed lower (especially adjusted for stage length) then most of this thread is spitting in the wind. Lots of airlines claim that their costs will be lower at some point in the future, but most have not followed through due to various reasons.

Firstthird, here you go: AirTran's non-fuel CASM is lower than SWA's.

If you look at the latest quarterly reports available for both AirTran and SWA, you will see that SWA still has the overall lead in CASM when fuel is included. SWA's total CASM for the three months ended Sep 30, 2006 was 8.75 cents per ASM and fuel made up 2.37 cents of that total. That means SWA's non-fuel CASM was 6.38 cents per ASM for 3Q 06.

On the other hand, AirTran's total CASM for the same period was 9.89 cents per ASM. Fuel made up 3.84 cents of that total. That means AirTran's non-fuel CASM was 6.05 cents per ASM.

Thus, SWA had lower overall CASM while AirTran had lower non-fuel CASM. I might add that AirTran did this while maintaining a two-aircraft fleet and a hub system. Both of those factors are considered critical things to avoid in SWA's low-cost formula. However, AirTran does not pay it's employees as well as SWA and AirTran lays much more of a burden on it's folks when it comes to medical insurance.

 

[puddlejumper101]

Firstthird, here you go: AirTran's non-fuel CASM is lower than SWA's.

If you look at the latest quarterly reports available for both AirTran and SWA, you will see that SWA still has the overall lead in CASM when fuel is included. SWA's total CASM for the three months ended Sep 30, 2006 was 8.75 cents per ASM and fuel made up 2.37 cents of that total. That means SWA's non-fuel CASM was 6.38 cents per ASM for 3Q 06.

On the other hand, AirTran's total CASM for the same period was 9.89 cents per ASM. Fuel made up 3.84 cents of that total. That means AirTran's non-fuel CASM was 6.05 cents per ASM.

Thus, SWA had lower overall CASM while AirTran had lower non-fuel CASM. I might add that AirTran did this while maintaining a two-aircraft fleet and a hub system. Both of those factors are considered critical things to avoid in SWA's low-cost formula. However, AirTran does not pay it's employees as well as SWA and AirTran lays much more of a burden on it's folks when it comes to medical insurance.

That says it all really. Starbucks charges a ridiculous amount for their latte's and mochas but they invest tons of that back on their employees. The CEO of Starbucks has been criticized by his shareholders for giving up profit to maintain loyalty and give his people decent pay and benefits. Starbucks coffee can be duplicated millions of time by millions of people...but what keeps people coming back is the brand...the convenience...and the exposure.
SWA is much the same...could you imagine the money SWA would be making if it had the cost structure Airtran had when it comes to labor? Yet...the differences in benefits and pay between both are pretty significant. SWA is willing to sacrifice earnings to keep their culture and people satisfied as best they could. How long they can do this is yet to be determined...but to think DAL, AA, UAL or any other carrier can match or beat their CASM or ASM while maintaining loyalty and peace with their labors is absurd. That's the trump card in this whole analysis and if any other carrier can bring their costs down to SWA levels without having a complete cataclysmic internal catastrophy then kudos to that carrier. It might happen...maybe one or two carriers can achieve this but for how long and under what terms is what I wonder about.

 

[chase]

This was through 2005:

Table 1: US airline unit costs on domestic US markets, 2005​

[FONT=Arial,Arial]

2005 $ cents per ASK​

​

[/FONT]​

Network Airlines​

​

​

JetBlue​

​

​

AirTran​

​

​

Southwest​

​

​

[FONT=Arial,Arial]

ACMI + Fuel​

​

​

[/FONT]​

[FONT=Arial,Arial]

3.69​

​

​

[/FONT]​

[FONT=Arial,Arial]

3.19​

​

​

[/FONT]​

[FONT=Arial,Arial]

3.41​

​

​

[/FONT]​

[FONT=Arial,Arial]

2.62​

​

​

[/FONT]​

[FONT=Arial,Arial]

Labour​

[/FONT]​

[FONT=Arial,Arial]

0.76​

[/FONT]​

[FONT=Arial,Arial]

0.66​

[/FONT]​

[FONT=Arial,Arial]

0.60​

[/FONT]​

[FONT=Arial,Arial]

0.76​

[/FONT]​

[FONT=Arial,Arial]

Fuel​

[/FONT]​

[FONT=Arial,Arial]

1.80​

[/FONT]​

[FONT=Arial,Arial]

1.48​

[/FONT]​

[FONT=Arial,Arial]

1.56​

[/FONT]​

[FONT=Arial,Arial]

1.00​

[/FONT]​

[FONT=Arial,Arial]

Aircraft Ownership​

[/FONT]​

[FONT=Arial,Arial]

0.54​

[/FONT]​

[FONT=Arial,Arial]

0.59​

[/FONT]​

[FONT=Arial,Arial]

0.82​

[/FONT]​

[FONT=Arial,Arial]

0.45​

[/FONT]​

[FONT=Arial,Arial]

Maintenance​

[/FONT]​

[FONT=Arial,Arial]

0.60​

[/FONT]​

[FONT=Arial,Arial]

0.46​

[/FONT]​

[FONT=Arial,Arial]

0.43​

[/FONT]​

[FONT=Arial,Arial]

0.42​

[/FONT]​

[FONT=Arial,Arial]

Infrastructure​

​

​

[/FONT]​

[FONT=Arial,Arial]

1.40​

​

​

[/FONT]​

[FONT=Arial,Arial]

1.09​

​

​

[/FONT]​

[FONT=Arial,Arial]

0.82​

​

​

[/FONT]​

[FONT=Arial,Arial]

1.02​

​

​

[/FONT]​

[FONT=Arial,Arial]

Landing Fees​

[/FONT]​

[FONT=Arial,Arial]

0.17​

[/FONT]​

[FONT=Arial,Arial]

0.20​

[/FONT]​

[FONT=Arial,Arial]

0.10​

[/FONT]​

[FONT=Arial,Arial]

0.10​

[/FONT]​

[FONT=Arial,Arial]

Other​

[/FONT]​

[FONT=Arial,Arial]

1.23​

[/FONT]​

[FONT=Arial,Arial]

0.89​

[/FONT]​

[FONT=Arial,Arial]

0.72​

[/FONT]​

[FONT=Arial,Arial]

0.91​

[/FONT]​

[FONT=Arial,Arial]

Product, Distribution​

​

​

[/FONT]​

[FONT=Arial,Arial]

1.79​

​

​

[/FONT]​

[FONT=Arial,Arial]

1.27​

​

​

[/FONT]​

[FONT=Arial,Arial]

1.03​

​

​

[/FONT]​

[FONT=Arial,Arial]

0.72​

​

​

[/FONT]​

[FONT=Arial,Arial]

Distribution​

[/FONT]​

[FONT=Arial,Arial]

1.17​

[/FONT]​

[FONT=Arial,Arial]

0.94​

[/FONT]​

[FONT=Arial,Arial]

0.63​

[/FONT]​

[FONT=Arial,Arial]

0.51​

[/FONT]​

[FONT=Arial,Arial]

Other​

[/FONT]​

[FONT=Arial,Arial]

0.62​

[/FONT]​

[FONT=Arial,Arial]

0.33​

[/FONT]​

[FONT=Arial,Arial]

0.41​

[/FONT]​

[FONT=Arial,Arial]

0.20​

[/FONT]​

[FONT=Arial,Arial]

All non-Fuel​

​

​

[/FONT]​

[FONT=Arial,Arial]

5.09​

​

​

[/FONT]​

[FONT=Arial,Arial]

4.07​

​

​

[/FONT]​

[FONT=Arial,Arial]

3.71​

​

​

[/FONT]​

[FONT=Arial,Arial]

3.36​

​

​

[/FONT]​

Total Operating Expenses​

​

​

[FONT=Arial,Arial]

Adjusted​

[/FONT]​

6.89​

​

​

5.55​

​

​

5.27​

​

​

4.36​

​

​

[FONT=Arial,Arial]

Unadjusted​

[/FONT]​

[FONT=Arial,Arial]

6.83​

[/FONT]​

[FONT=Arial,Arial]

4.43​

[/FONT]​

[FONT=Arial,Arial]

5.96​

[/FONT]​

[FONT=Arial,Arial]

5.07​

[/FONT]​

In looking at the following slides, according to data from 4Q06, adjusted stage length by AirTran shows slightly below SWA's. AirTran is slightly under 7, SWA's is slightly over 7 cents.
http://www.nbta.org/NR/rdonlyres/11217DB9-AB28-47EA-9995-A723153240DB/0/FF07BaggaleyPhilip.pdf​

​

​

[FONT=Times New Roman,Times New Roman]​

[/FONT]

 

[YourPilotFriend]

We'll have a better picture of the situation come Thursday. The company is going to have to explain why earnings are soft this quarter, we'll see what they say.

 

[walkthasky]

I could be wrong, and if I am someone will surely correct me, but I believe SWA has at least 4 or 5 fare increases last year (2006). Each time as they stated in their press release, to adjust for rising cost, especially increases in fuel cost.

Just for 'what's it worth' now continue to rant away.

DA

Those increases were separate increases to separate markets. So, all in all, the system wasnt raised 4 or 5 times as a whole.

And i love how everyone thinks we fly 10 legs a day. i flew more in the commuters a day. Just flew a 3 day that had 9 legs total and payed equivalent to 28 hours, yeah its so flawed, HA!!

 

[captain dad]

THe one thing I like about SWA

The leadership at SWA I think realizes that you don't screw with the people that are directly responsible for making the whole thing work. They have kept wages realatively high for the pilots because they know if you have pissed off pilots you aren't going to make money.

The rest of the airline like 6 to 8 legs a day, 20 minute turns, and being the "city bus" of the skys you can keep. It is proof that what works gets to servive.

The guy who decided to do massive fuel hedging was either lucky or one smart SOB. Let's see if they can keep going without it and not go after the crews for more money. Good luck.

 

[Skyboy722]

The rest of the airline like 6 to 8 legs a day,

What will it take to get people to realize that this just isn't true?

And the guy responsible for the fuel hedging? Gary Kelly. I'd put my bet on smart.

 

[flint4xx]

The rest of the airline like 6 to 8 legs a day, 20 minute turns, and being the "city bus" of the skys you can keep. It is proof that what works gets to servive.

Get your facts straight. In 6 years I have NEVER flown six legs or more in a day. I might fly 10 on an entire three day trip on average.

 

[captain dad]

Not what I have been told by some of your new hires. However, I will rephrase..."The rest of the airline like up to six legs a day, etc...", I hope that makes you feel better.

I wish you guys all the success. It just doesn't give me a warm fuzzy feeling. I'm not getting into a "my job is better than yours" type arguement. I am just saying I don't want to work hard if I don't have to. My gig pays less but averages two legs a day and, compared to what some of your pilots have told me, the Quality of life on and off the road is better.

Things will always change. Hopefully, we can all end up where we are happy. Good luck.

 

[The Victors]

It's actually quite funny (but not really) to have Airtran people praising their company for having lower before fuel CASM. The captains make what swa FO's make and the FO's make what swa's FAs make in pay. If you guys EVER get the balls to stand up for yourselves and get a proper contract, THEN lets compair CASM's.

 

[Kharma Police]

It's actually quite funny (but not really) to have Airtran people praising their company for having lower before fuel CASM. The captains make what swa FO's make and the FO's make what swa's FAs make in pay. If you guys EVER get the balls to stand up for yourselves and get a proper contract, THEN lets compair CASM's.

Get some balls and tell your company to pay for your 737 type.

 

[fugghedabowdit]

In the words of Herb K.,

"what the he11 do they think we're gonna do, sit on our a$$es?"

 

[The Victors]

Get some balls and tell your company to pay for your 737 type.

Who said that I work for swa, but a swa pilot CAN pay for his/her type and could also lend you money for your type and still take home probably 30-50 grand more than a airtran pilot. If I worked for airtran, that would make me think twice.

 

[Kharma Police]

Who said that I work for swa, but a swa pilot CAN pay for his/her type and could also lend you money for your type and still take home probably 30-50 grand more than a airtran pilot. If I worked for airtran, that would make me think twice.

Tell us which company you work for? The airline where you had the "balls" to get a great industry leading contract.

 

[The Victors]

You're missing my point. I'll try and explain it to you again. Before you praise yourself for having lower before fuel CASM than swa (btw, what is it, .0005 lower?) you must first be somewhat close or equal to swa in pay, benefits, retirement, upgrade, etc. It actually goes against airtrany that their CASM is only slightly below swa while paying their people lously wages. Imagine what swa's CASM would be if they lowered themselves to airtran levels, but swa mgmt has to much respect for their employees to do that.

 

[Benhuntn]

737 TYPE $6,500 ON MASTER CARD
2ND YR PAY $120,000

Now I am wondering if it was worth it?
Captain Dad you have me almost convinced.

By the way I flew 6 legs once. 2 were diverts for wx. I hated it until the 20th when my paycheck came.

 

[canyonblue]

I'm not getting into a "my job is better than yours" type arguement.

That would be very smart, especially since you don't say where you are employed. (wonder why these people never do? )

 

[thruthemurk]

It's actually quite funny (but not really) to have Airtran people praising their company for having lower before fuel CASM. The captains make what swa FO's make and the FO's make what swa's FAs make in pay. If you guys EVER get the balls to stand up for yourselves and get a proper contract, THEN lets compair CASM's.

What's funny is that a SW pilot is ragging someone else about pay. Let's not forget you guys flew for less than everyone else for THIRTY YEARS. Now for 3-4 years the legacy's have all taken enormous cuts that left them below you and suddenly you are negotiating tough guys??

give me a break.

 

[mdf]

What's funny is that a SW pilot is ragging someone else about pay. Let's not forget you guys flew for less than everyone else for THIRTY YEARS. Now for 3-4 years the legacy's have all taken enormous cuts that left them below you and suddenly you are negotiating tough guys??

give me a break.

Point well taken, but I don't think it's very flattering to brag about how low your costs are with the pay situation where it is. Lots of people do that on this board from all companies, and I don't understand it. It's like yippee I'm getting bent over ain't it great! and if your lucky you can join us! I know AT is trying to improve the situation, and that's really where the focus should be.

 

[canyonblue]

Point well taken, but I don't think it's very flattering to brag about how low your costs are with the pay situation where it is. Lots of people do that on this board from all companies, and I don't understand it. It's like yippee I'm getting bent over ain't it great! and if your lucky you can join us! I know AT is trying to improve the situation, and that's really where the focus should be.

Well said mdf! As Dean Wormer once said, "Fat, drunk, and stupid is no way to go through life, son."

 

[Tejas-Jet]

The guy who decided to do massive fuel hedging was either lucky or one smart SOB. Let's see if they can keep going without it and not go after the crews for more money. Good luck.

Actually the guy who decided to do the fuel hedging really is one smart SOB. He is now the CEO of SWA.

And, just an FYI...fuel hedging is an ongoing process...at SWA anyway. The recent drop in fuel prices a few months ago prompted SWA to hedge even more fuel for the future...got into it just before the fuel prices rose again. From what I have heard, no other airline hedged as those prices dropped....ever wonder why? Oh yeah, now I remember...you've got to have the money up front to hedge....I almost forgot that.

And here most of you probably thought that the Fuel Management at SWA office was laying off people.

 

[captain dad]

Actually the guy who decided to do the fuel hedging really is one smart SOB. He is now the CEO of SWA.

And, just an FYI...fuel hedging is an ongoing process...at SWA anyway. The recent drop in fuel prices a few months ago prompted SWA to hedge even more fuel for the future...got into it just before the fuel prices rose again. From what I have heard, no other airline hedged as those prices dropped....ever wonder why? Oh yeah, now I remember...you've got to have the money up front to hedge....I almost forgot that.

And here most of you probably thought that the Fuel Management at SWA office was laying off people.

Actually, I love that all the 121 carriers are jammed full and the air traffic at airports is getting worse, and fuel prices are going up, and pax approval levels are at an all time low. I'll let you figure out why.

P.S. I love your frequent flyer program but I hate flying on you. Jammed in the back of the cattle car in a seat that is still warm from the, I've got $49 to go one way, sloth before me. GROSS!

Also your humor is weak and patronizing. Please stop. It's demeaning.

 

[whalepilot747]

You know this garbage of who's airline is better than who's, my dad can beat up your dad, and my johnson is bigger than yours is rubbish. The fact is, no matter who is "on top" now will probably not be in 10 years. This whole industry is one great big circle. Now the legacy carriers are struggling, god help the pilots and I wish them the best. 10 years from now, or sooner, it will be the opposite. After 16 years in the biz, that one fact has proven itself over and over again.

Fortunately, for now I have a good job that pays well. I feel very lucky and fortunate to have such a job after having 9 previous ones. It will be nice to one day actually make it 4th year pay. So with that being said, my goal is to have a job until 60 or 65 or 85 whatever the age may be by then, put my kid through college and retire comfortably. We are pilots, we do not control what management does. We merely drive the bus where they tell us to go. Thats all. Simplistic? Yes but true. I am happy for once that my mgt knows what they are doing and does it very well. That's a hard thing to come by in this industry.......

Venting complete...................

Oh, and stop politicizing the jumpseat. Man I just want a ride to work.......

 

[Big Slick]

But my johnson is bigger....

 

[captain dad]

Who's talking about the jumpseat. I'm talking about being a pax. One thing that airlines don't care about. Ever had to sit next to a 400 pounder while being told stupid jokes over the PA? Think about it.

 

[whalepilot747]

But my johnson is bigger....

That's what not she told me.........


Captain Dad, take some laxatives man and lighten up.........

 

[OK3]

Captain Dad,

Are you saying that other airlines do not have 400 pound pax? The good thing about SWA is that if you see that guy/gal on the plane, don't sit next to them. Pretty simple. On OAL you may be stuck because you have that assigned seat thing. It seems that people think all assigned seats are better by nature.

Anyone who flys more than once a year knows how to check in on-line and get an A boarding card. There is no reason to stand in line if you have an A card. Just board at the end of the A's and pick any aisle seat you want. Pretty simple it seems to me. But you know that don't you? You just wanted to bash SWA.

 

[captain dad]

Thanks for assuming I am an idiot. Our schedules change so fast that the company (NJA) buys tickets (not jump seat) less than a few hours prior to departure. I have the link to check in on my phone but still get stuck in the last group about 80% of the time. It rarely matters because all the flights are usually packed. I must attract the jumbos or its the last seat open.

I am not singling you out. Riding on any of the airlines is the worst part of my job. You really don't realize how bad it is until you have to do it a lot. It was different when I worked for the airlines. I couldn't do anything about it so I sat quietly and bit my lip. Then again we had first class and usually sat there.

I'll make you a deal. I'll take the laxatives if you wake up and smell the coffee. Most of your pax just want to get it over with they don't really enjoy the SWA experience. Sorry that's JetBlue. I am not bitter or even upset. I am mostly just very uncomfortable. Can sitting in a slammed full 737 cause constipation?