Southwest Airlines 2011 Annual Report Download - page 18

purchase of a Business Select fare and are a benefit of being an A-List frequent flyer – see “Implementation of
Southwest’s All-New Rapid Rewards Frequent Flyer Program” above). Southwest’s PAWS offering allows
Customers to bring small cats and dogs into the aircraft cabin for a $75 one-way fare. Southwest also charges an
additional $50 per one-way trip for unaccompanied minor travel to address the administrative costs and the extra
care necessary to safely transport these Customers. The Company also expects to benefit from new ancillary
revenue opportunities created by its All-New Rapid Rewards frequent flyer program.
AirTran currently charges fees for checked baggage, carriage of pets, liquor sales, advance seat
assignments, call center services, priority seat selection, special services such as the transportation of
unaccompanied minors, and extension or transfer of A+ Miles Rewards (in addition to fees for the purchase of
A+ Miles Rewards). The Company has stated that it intends, upon full integration of AirTran, to have a
consistent product offering without first or second bag fees or change fees.
Inflight Internet Connectivity
Southwest currently offers inflight satellite (broadband) WiFi service on over 165 of its aircraft and
continues to work on installing this service on the remainder of its 737-700 aircraft. The Company’s arrangement
with its WiFi provider enables the Company to control the pricing of the service, which is currently $5.00 per
flight for any device or flight length.
AirTran currently offers Gogo Inflight Internet connectivity on every flight. Gogo establishes the charges
for such Inflight Internet connectivity.
Proactive Customer Communications
The Company’s Automated Outbound Messaging (“AOM”) service enables it to (i) proactively deliver
customized automated voice, text, and e-mail messages to Southwest Customers when there has been a
significant change (or potential disruption) to their flight, such as a cancellation, gate change, or flight delay; and
(ii) give Southwest Customers the option to connect to a Customer Representative or rebook online in the case of
cancelled flights. Southwest Customers who book their travel on southwest.com have the option to receive these
notifications via telephone (landline or mobile), SMS texting, or email. In addition to providing flight
information to Southwest Customers using their preferred contact method, if applicable, the Company directs
Southwest Customers to rebook their flights online via southwest.com/rebook. The AOM strategy is designed to
increase proactive Customer outreach and accommodations, reduce inbound calls, improve contact center
management, save costs, and provide a better overall experience.
Cost Containment
Over the last several years, the Company has undertaken a number of cost-containment projects to preserve
Southwest’s low-cost advantage and low-fare brand. These have included the network optimization and fleet
modernization strategies discussed above. In addition, these have included fuel conservation mechanisms such as
the following:
• installation of blended winglets, which reduce draft and increase fuel efficiency and which have been
installed on 487 Southwest aircraft;
• engine washes, which conserve fuel;
• use of electric ground power for aircraft air and power at the gate;
• deployment of auto-throttle and vertical navigation to maintain optimum cruising speeds, which
contributes to fuel savings and reduced carbon emissions; and
• reduced aircraft engine idle speed while on the ground, which increases engine life and reduces fuel
burn and carbon emissions.
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