Unfortunately, answering your question requires the proverbial crystal ball. The final answer to your question will be determined to a large degree by luck.
However, there are a few things to consider about SWA:
1) Even after their fuel hedges go away, they still have the lowest system costs in the industry (CASM excluding fuel). AirTran, however, is very close to surpassing them on this measure. CASM excluding fuel does include SWA's "high" labor costs. SWA's well-developed route system, utilization rates, and employee productivity allow them to have low costs.
2) There are still many opportunities for SWA to grow in the domestic market.
3) SWA still has areas in which it can improve efficiency before it turns to to its employees for concessions. For example, from what I understand, SWA taxies it's aircraft on two engines. Money can be saved by turning to a single engine taxi procedure. I'm sure the SWA employees here can pipe in with other areas for improvement.
4) SWA is a major reason why domestic fares are currently being held down. As it's fuel hedges go away, expect domestic fares to begin to rise to counteract the removal of the hedges. As SWA's fuel costs rise, SWA's revenue will also likely rise.
5) Expect a possible buyout of or attempt to weaken/incapacitate AirTran in the coming years. I have heard from several sources that Gary Kelly considers AirTran to be SWA's greatest threat. If AirTran's is removed or made irrelevant as a competitor, this could have a major impact on the LCC side of the industry.
6) SWA will likely be the launch customer for the 737 follow-on aircraft. Boeing recently announced the initiation of its effort to produce this aircraft ( http://www.flightglobal.com/Articles/2006/02/07/Navigation/177/204506/THE+737+STORY+Smoke+and+mirrors+obscure+737+and+Airbus+A320+replacement.html ) nand estimates an initial delivery date in the 2012-15 timeframe. Herb Kelleher recently made a speech to Boeing that if Boeing could produce a 737 version of the 787 that SWA would buy several hundred of them. If SWA is able to become the initial operator of this aircraft and is able to secure the first batches of production, this could effectively give them an advantage similar to the fuel hedges for a period of time since the new aircraft will burn much less fuel than the 737NG.
GOOD LUCK!!
However, there are a few things to consider about SWA:
1) Even after their fuel hedges go away, they still have the lowest system costs in the industry (CASM excluding fuel). AirTran, however, is very close to surpassing them on this measure. CASM excluding fuel does include SWA's "high" labor costs. SWA's well-developed route system, utilization rates, and employee productivity allow them to have low costs.
2) There are still many opportunities for SWA to grow in the domestic market.
3) SWA still has areas in which it can improve efficiency before it turns to to its employees for concessions. For example, from what I understand, SWA taxies it's aircraft on two engines. Money can be saved by turning to a single engine taxi procedure. I'm sure the SWA employees here can pipe in with other areas for improvement.
4) SWA is a major reason why domestic fares are currently being held down. As it's fuel hedges go away, expect domestic fares to begin to rise to counteract the removal of the hedges. As SWA's fuel costs rise, SWA's revenue will also likely rise.
5) Expect a possible buyout of or attempt to weaken/incapacitate AirTran in the coming years. I have heard from several sources that Gary Kelly considers AirTran to be SWA's greatest threat. If AirTran's is removed or made irrelevant as a competitor, this could have a major impact on the LCC side of the industry.
6) SWA will likely be the launch customer for the 737 follow-on aircraft. Boeing recently announced the initiation of its effort to produce this aircraft ( http://www.flightglobal.com/Articles/2006/02/07/Navigation/177/204506/THE+737+STORY+Smoke+and+mirrors+obscure+737+and+Airbus+A320+replacement.html ) nand estimates an initial delivery date in the 2012-15 timeframe. Herb Kelleher recently made a speech to Boeing that if Boeing could produce a 737 version of the 787 that SWA would buy several hundred of them. If SWA is able to become the initial operator of this aircraft and is able to secure the first batches of production, this could effectively give them an advantage similar to the fuel hedges for a period of time since the new aircraft will burn much less fuel than the 737NG.
GOOD LUCK!!
