Southwest Airlines 1999 Annual Report Download - page 9

industry. On an equivalent aircraft trip-length, our cost per available seat mile is the lowest
in the industry and, in some cases, half of our competitors. Logically, this gives us an
enormous competitive advantage to profitably offer the lowest fares.
The key to our low costs is our high productivity. We consistently demonstrate the
highest asset utilization of any U.S. airline. Because we schedule point-to-point for local
passengers, not connections, we minimize the amount of time the aircraft is at the gate,
less than 25 minutes. This results in higher aircraft and airport utilization and, therefore,
fewer aircraft and airport facilities than we would need otherwise. And it allows our
Employees to be more productive.
One aircraft type, the Boeing 737, is operated by Southwest. This significantly
simplifies our operation, in terms of scheduling, staffing, training, and maintenance. And it
certainly contributes to lower costs. As the launch Customer for Boeing on the -300, -500,
and, most recently, -700 models, we achieve attractive aircraft acquisition costs. This,
coupled with our young, well-maintained fleet, allows us to produce low overall costs of
ownership.
Our reputation as THE Low Fare Airline, with legendary Customer Service and
significant flight frequencies, enables us to lower our distribution costs versus our airline
competitors. Almost 70 percent of our seats are sold directly by Southwest versus an
industry average of 10 to 15 percent. Almost 80 percent of our seats are sold Ticketless,
which eliminates significant paper and back-office processing. Ticketless Travel is also the
foundation of sales through our web site at www.southwest.com, which has seen another
year of spectacular growth. Transaction costs over the Internet are cheaper than any other
means of distribution and significantly contribute to our ability to keep costs low.
Our desire for low costs does not sacrifice safety or quality. We operate one of the
youngest fleets in the world, despite the fact that old aircraft are significantly cheaper than
new. Also we have one of the most extensive and thorough maintenance programs in the
world, with an outstanding 28-year safety record to attest. Although our Employees receive
competitive compensation packages, our Employee costs are low because we have the
most productive and innovative People in the airline industry.
Aircraft Utilization (hours and minutes per day) Average Daily Departures
11:03 11:07 11:12 11:09 11:10
0:00
3:00
6:00
9:00
12:00
95
96
97
98
99
1,970 2,136
2,268 2,334 2,550
0
500
1,000
1,500
2,000
2,500
3,000
95
96
97
98
99