Southwest Airlines plans new fees to aid revenue in 2013 - Southwest Airlines, known for its popular "pay for your own type rating" policy, said it will implement new retro fees next year as part of a plan to increase revenue by $5 million.
The company told investors on Friday that it will impose a retroactive fee on the 737 type ratings of its Airtran pilot group, increase fees for flights on AirTran, the carrier it bought last year. The company also said it would implement a no-pay fee for those Airtran pilots that are reluctant to pay for their own 737 type rating.
"This should add ancillary revenue and promote pilot behavior that allows us to be the successful airline we are," Southwest Chief Commercial Officer Bob Jordan said of the retroactive type rating fee during the investor meeting, which was webcast.
Southwest, which has a "pay for your own type rating" policy under which every pilot had to buy their 737 type prior to employment start date, said the fee changes were expected to contribute about $5 million to revenue next year.
"We figured a going rate of $7,500 for a 737 type rating, using Higher Power as the standard," said the SWA official. "Most of our legacy Southwest pilots used Higher Power and paid $7,500 out of pocket, so we think it's only fair the Airtran pilots put in their share for the 737 type rating which they previously earned for free under Airtran."
"We don't consider the Airtran pilots to be on the same level field as we are," said a SWAPA union leader. "That's why a B-scale exists and these Airtran pilots will work for separate lower wages until they all pay for what rightfully belongs to our company: the 737 type rating fees."
He continued, "We wanted the Airtran pilots to all be on probation for one year, but sometimes you don't get all that you ask." He concluded by stating that he believes forcing Airtran pilots to pay for their type ratings is fair, and reflects the long standing Southwest policy.
When questioned why, considering that SWA is one of the most profitable airlines in the United States, does it continue to insist and demand that pilots pay for their own type ratings, the SWAPA union leader responded, "I'm sorry, I have to run to gate 25 for my flight to Amarillo."
No further comment was received.
Of the $1.1 billion in revenue gains it expects next year, $4.5 million would come from the new retro pay for type rating fee and other moves related to improving operations, the Dallas-based carrier said.
The traditional discount leader, Southwest is now finding it must work harder to stay profitable in the face of labor and fuel cost pressures and rising competition.
Southwest has stressed a need to cut expenses to compete better with rivals that have restructured. Last year's Chapter 11 filing by AMR Corp's American Airlines leaves Southwest as the only major U.S. carrier that has not reorganized in bankruptcy.
Southwest's cost advantage compared with rivals "is not as great as it was in the year 2000 but is still very significant," Chief Executive Gary Kelly said."This is critical for our past success and of course critical for our future, to maintain our cost advantage," Kelly said.
Shares of Southwest were up 1.8 percent to $10.32 in Friday trading.
The company told investors on Friday that it will impose a retroactive fee on the 737 type ratings of its Airtran pilot group, increase fees for flights on AirTran, the carrier it bought last year. The company also said it would implement a no-pay fee for those Airtran pilots that are reluctant to pay for their own 737 type rating.
"This should add ancillary revenue and promote pilot behavior that allows us to be the successful airline we are," Southwest Chief Commercial Officer Bob Jordan said of the retroactive type rating fee during the investor meeting, which was webcast.
Southwest, which has a "pay for your own type rating" policy under which every pilot had to buy their 737 type prior to employment start date, said the fee changes were expected to contribute about $5 million to revenue next year.
"We figured a going rate of $7,500 for a 737 type rating, using Higher Power as the standard," said the SWA official. "Most of our legacy Southwest pilots used Higher Power and paid $7,500 out of pocket, so we think it's only fair the Airtran pilots put in their share for the 737 type rating which they previously earned for free under Airtran."
"We don't consider the Airtran pilots to be on the same level field as we are," said a SWAPA union leader. "That's why a B-scale exists and these Airtran pilots will work for separate lower wages until they all pay for what rightfully belongs to our company: the 737 type rating fees."
He continued, "We wanted the Airtran pilots to all be on probation for one year, but sometimes you don't get all that you ask." He concluded by stating that he believes forcing Airtran pilots to pay for their type ratings is fair, and reflects the long standing Southwest policy.
When questioned why, considering that SWA is one of the most profitable airlines in the United States, does it continue to insist and demand that pilots pay for their own type ratings, the SWAPA union leader responded, "I'm sorry, I have to run to gate 25 for my flight to Amarillo."
No further comment was received.
Of the $1.1 billion in revenue gains it expects next year, $4.5 million would come from the new retro pay for type rating fee and other moves related to improving operations, the Dallas-based carrier said.
The traditional discount leader, Southwest is now finding it must work harder to stay profitable in the face of labor and fuel cost pressures and rising competition.
Southwest has stressed a need to cut expenses to compete better with rivals that have restructured. Last year's Chapter 11 filing by AMR Corp's American Airlines leaves Southwest as the only major U.S. carrier that has not reorganized in bankruptcy.
Southwest's cost advantage compared with rivals "is not as great as it was in the year 2000 but is still very significant," Chief Executive Gary Kelly said."This is critical for our past success and of course critical for our future, to maintain our cost advantage," Kelly said.
Shares of Southwest were up 1.8 percent to $10.32 in Friday trading.
. And I just read the part about running to gate 25 for Amarillo. Funny stuff, although I never told anyone to write that! Funny though...... Yikes!
