From the Dallas Morning News
http://www.dallasnews.com/sharedcontent/dallas/business/stories/081303dnbussouthwest.1275a.html
Airline claims most domestic market share for the first time
08:31 AM CDT on Wednesday, August 13, 2003
By ERIC TORBENSON / The Dallas Morning News
Southwest Airlines Co. boarded the most domestic passengers of any carrier in May, becoming the first low-cost, low-fare airline to top the list, according to U.S. Transportation Department statistics released Tuesday.
Dallas-based Southwest edged out Delta Air Lines Inc. and Fort Worth-based American Airlines Inc. for the honor.
Southwest boarded 6.5 million passengers on its flights, compared with 6.3 million for Delta and 6.2 million for American. Last May, Southwest ranked No. 3 in the same survey; it rose to No. 2 in April.
"It does bode well for us that we're a growing company in these turbulent times," said Southwest spokesman Ed Stewart. "If we gain market share as a byproduct, that's nice, but we're more focused on being profitable."
By most other measures – such as total revenue and number of aircraft – Southwest remains smaller than the other top carriers. Southwest doesn't fly internationally, so American has more total passengers and a lot more revenue – $18 billion last year compared with Southwest's $5.5 billion.
Consultants say the May passenger totals suggest Southwest could compete soon for the top spot in most measurements of airline size. Its larger rivals have cut their domestic schedules in the last two years while Southwest has added flights and destinations.
"Southwest has been gaining ground rather consistently, but I didn't think they would overtake others in passengers quite this quickly," said Dan Kasper, a managing director for LECG consultants in Cambridge, Mass. "They're going to continue gaining share from others, and eventually they're going to pass a few of them in total revenue."
Analysts such as Ray Neidl of Blaylock & Partners say Southwest's revenue growth could overtake some of the midsized carriers such as Houston-based Continental Airlines.
But it's unlikely that Southwest, with its low fares, no first class service and no international routes, could ever match the revenue-generating potential of the "Big Three" of American, United Airlines Inc. or Delta.
"They're not going to get to that league," Mr. Neidl said.
The new passenger numbers also illustrate how Southwest is benefiting from the bigger airlines' financial struggles.
American, for example, is offering substantially fewer seats now than it did a year ago on its domestic flights, allowing Southwest to overtake it in total passengers. Those cuts are part of American's strategy to reduce costs and stay out of bankruptcy.
At the same time, American has added seats on its higher-profit international routes, where it doesn't compete with Southwest or other low-fare carriers.
Plans to keep growing
Southwest's plans suggest the airline could be the No. 1 carrier in terms of passengers for some time. Company executives said last month that they had accelerated aircraft deliveries and intended to grow as much as 8 percent in coming years, up from its recent expansion pace of 4.5 percent.
Through most of its three-decade history, Southwest grew at almost 10 percent a year.
Southwest is keeping an eye on its fast-growing low-cost rivals such as AirTran Airways Inc. and JetBlue Airways Corp., Mr. Kasper said.
"They want to have the broadest network, and that's going to help them compete against other low-fare carriers," he said.
Another measure
Southwest's growth also shows up in a more commonly used measurement stick, revenue passenger miles, which counts each air mile flown by paying passengers.
Southwest ranked No. 4 among the major carriers in revenue passenger miles for the first six months of 2003. It accounted for just over 11 percent of all domestic revenue passenger miles, despite flying mostly short-haul flights.
Southwest didn't celebrate its ascension to No. 1 in passengers carried with a party or ceremony, Mr. Stewart said.
"Market share is not a corporate goal of ours," he said. "Profitability is."
Southwest shares dropped 11 cents to close at $16.84 Tuesday.
E-mail [email protected]
http://www.dallasnews.com/sharedcontent/dallas/business/stories/081303dnbussouthwest.1275a.html
Airline claims most domestic market share for the first time
08:31 AM CDT on Wednesday, August 13, 2003
By ERIC TORBENSON / The Dallas Morning News
Southwest Airlines Co. boarded the most domestic passengers of any carrier in May, becoming the first low-cost, low-fare airline to top the list, according to U.S. Transportation Department statistics released Tuesday.
Dallas-based Southwest edged out Delta Air Lines Inc. and Fort Worth-based American Airlines Inc. for the honor.
Southwest boarded 6.5 million passengers on its flights, compared with 6.3 million for Delta and 6.2 million for American. Last May, Southwest ranked No. 3 in the same survey; it rose to No. 2 in April.
"It does bode well for us that we're a growing company in these turbulent times," said Southwest spokesman Ed Stewart. "If we gain market share as a byproduct, that's nice, but we're more focused on being profitable."
By most other measures – such as total revenue and number of aircraft – Southwest remains smaller than the other top carriers. Southwest doesn't fly internationally, so American has more total passengers and a lot more revenue – $18 billion last year compared with Southwest's $5.5 billion.
Consultants say the May passenger totals suggest Southwest could compete soon for the top spot in most measurements of airline size. Its larger rivals have cut their domestic schedules in the last two years while Southwest has added flights and destinations.
"Southwest has been gaining ground rather consistently, but I didn't think they would overtake others in passengers quite this quickly," said Dan Kasper, a managing director for LECG consultants in Cambridge, Mass. "They're going to continue gaining share from others, and eventually they're going to pass a few of them in total revenue."
Analysts such as Ray Neidl of Blaylock & Partners say Southwest's revenue growth could overtake some of the midsized carriers such as Houston-based Continental Airlines.
But it's unlikely that Southwest, with its low fares, no first class service and no international routes, could ever match the revenue-generating potential of the "Big Three" of American, United Airlines Inc. or Delta.
"They're not going to get to that league," Mr. Neidl said.
The new passenger numbers also illustrate how Southwest is benefiting from the bigger airlines' financial struggles.
American, for example, is offering substantially fewer seats now than it did a year ago on its domestic flights, allowing Southwest to overtake it in total passengers. Those cuts are part of American's strategy to reduce costs and stay out of bankruptcy.
At the same time, American has added seats on its higher-profit international routes, where it doesn't compete with Southwest or other low-fare carriers.
Plans to keep growing
Southwest's plans suggest the airline could be the No. 1 carrier in terms of passengers for some time. Company executives said last month that they had accelerated aircraft deliveries and intended to grow as much as 8 percent in coming years, up from its recent expansion pace of 4.5 percent.
Through most of its three-decade history, Southwest grew at almost 10 percent a year.
Southwest is keeping an eye on its fast-growing low-cost rivals such as AirTran Airways Inc. and JetBlue Airways Corp., Mr. Kasper said.
"They want to have the broadest network, and that's going to help them compete against other low-fare carriers," he said.
Another measure
Southwest's growth also shows up in a more commonly used measurement stick, revenue passenger miles, which counts each air mile flown by paying passengers.
Southwest ranked No. 4 among the major carriers in revenue passenger miles for the first six months of 2003. It accounted for just over 11 percent of all domestic revenue passenger miles, despite flying mostly short-haul flights.
Southwest didn't celebrate its ascension to No. 1 in passengers carried with a party or ceremony, Mr. Stewart said.
"Market share is not a corporate goal of ours," he said. "Profitability is."
Southwest shares dropped 11 cents to close at $16.84 Tuesday.
E-mail [email protected]
