PBJ, on Jan 30 2006, 11:20 AM, said:
That's correct, SouthWest is a pretty amazing case study on how to do things right in the airline industry. One of the reasons flights are so expensive is due to fuel costs. How does SouthWest do it? They have extremely good business credit, and can sign long term fixed pricing deals on fuel. Airlines like NWA, and others that have filed for Bankruptcy don't have that luxury, they have to pay market rates. That alone costs the non-fixed price airlines to lose MILLIONS immediately from the bottom line. FWIW, There was a story about this on NPR a while back, so I'm not just spewing things out of my rear.
EDIT: I also believe that the EU subsidizes part of the airline industry, I'll have to do some looking
Southwest shorted the market at the right time with regards to fuel. They're still buying oil at 40$ while everyone else is nearly double that, that is the way they've been so successful. Those contracts expire within the next 2 years, and then they'll have to play on the same field as everyone else.
Conversely, they have used the money for good things, like capital expeditures, they have nice airplanes, don't do the traditional spoke and hub, and pay their employees well.
Take a look at American Airlines, super-old fleet, union and employees and management all on different pages, use the spoke and hub methodology, are expensive to fly internationally.