Hey Herc,
Here is some of the official announcement........
Southwest aims for business traveler
By
Laura Mandaro, MarketWatch
Last Update: 3:24 PM ET Jun 27, 2007
SAN FRANCISCO (MarketWatch) -- Southwest Airlines Co. on Wednesday gave a peek into its plans to make the discount carrier more enticing to business travelers, one of several tactics to accelerate profits undercut by rising fuel costs.
The Dallas-based airline said it plans to enhance its Rapid Rewards frequent flyer program and revamp its fare and seating structure -- two areas that have come under criticism from customers. It will unveil those changes in the fourth quarter.
"The number one complaint that [Southwest] President Colleen Barrett has gotten from customers is the boarding and seating process," said Southwest CEO Gary Kelly in a conference call with journalists, adding the boarding process probably turned away some business customers.
Southwest differs from most airlines by foregoing assigned seating, instead lumping passengers into boarding groups based on their check-in times. The airline's signature seating arrangement drew raves for years from customers, as it dovetailed with the carrier's frequent short flights and its no-fee flight changes. But the structure has encountered resistance with some travelers willing to pay more for the ability to choose an aisle or window seat, for instance.
By the end of this year, Southwest will have made changes to its technology to allow for assigned seating, Kelly said.
In addition, the carrier has encountered some roadblocks in winning new business customers when it enters a market dominated by large competitors "because it's hard to get customers weaned off other frequent-flyer programs," Kelly told journalists. About 40% of its total traffic comes from business travelers, he estimated.
A greater focus on business travelers is one of the methods Kelly said the airline will deploy to increase profits, which have been hurt by a 20% rise in unit costs over four years, largely due to rising jet fuel costs.
Southwest also plans to cut its capacity growth in the fourth quarter, trimming an increase in available seat miles to 6% from an earlier plan of 8%.
It is eliminating 39 roundtrip flights from its existing flight schedule, including two daily round-trip flights between Baltimore and Los Angeles, one daily round-trip flight between Baltimore and Oakland, and a Philadelphia-Los Angeles direct flight.
The company said it will try to add over $1 billion in revenue by 2010 from these initiatives, with profits standing to gain about $10 million in the fourth quarter, he said.
"We are trying to adjust to much higher energy costs," he said.
