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.