Southwest Airlines 2003 Annual Report Download - page 12

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Southwest Airlines Co. 2003 Annual Report
service in many markets, particularly in Baltimore/Washington
and Chicago Midway. We celebrated our tenth anniversary in
Baltimore/Washington in 2003, now our third largest market in
terms of daily departures. We have 161 daily nonstop flights from
Baltimore/Washington, including coast-to-coast service to Los
Angeles, San Jose, and San Diego. Chicago Midway is now our fifth
largest city in terms of daily departures with 134.
In addition to recently expanding airport facilities at
Baltimore/Washington and Chicago Midway, we have major expansion
projects at Fort Lauderdale, Houston Hobby, Las Vegas, Long Island/Islip,
Oakland, Orange County, Orlando, Phoenix, and Tampa Bay.
With the worst of times hopefully behind us, we are prepared
for accelerated growth. As a result of significant penetration by
Southwest and other low-fare carriers and the ability for Customers
to easily shop for low fares on the Internet, more Americans than
ever realize that they do not have to pay high fares. Given the weak
financial condition of the industry, we are uniquely positioned to
meet the increased demand for low fares. After all, profitably offering
low fares is what we do best!
As a result of our improved longterm outlook and numerous
opportunities to grow, we have stepped up our growth rate and
currently expect to increase capacity almost eight percent in 2004
and over ten percent in 2005. In total, we have just under 400 Boeing
737 aircraft on either firm order, option, or purchase rights with The
Boeing Company from 2004 through 2012, which results in an
annualized growth rate during this period of roughly eight percent.
We are well positioned to grow our traditional low-fare,
point-to-point market niche and are excited to bring the Freedom
to Fly to Philadelphia in May 2004. From Philadelphia, we will
initially begin service to Chicago Midway, Las Vegas, Orlando,
Phoenix, Providence, and Tampa Bay.
Airport Automation
Our People have done a wonderful job of responding to the
multitude of complex security changes since the September 11,
2001, terrorist attacks. In fact, our Chairman was recently appointed
to the Private Sector Senior Advisory Committee, a subcommittee
of the Homeland Security Advisory Council. Although these new
requirements initially presented challenges and longer checkin
times and lines for our Customers, the checkin times are back to
normal for our Customers and, in many ways, the airport experience
has been improved.
To facilitate the many new security requirements, we have
streamlined our airport operations with automation. We implemented
computer-generated baggage tags to electronically capture bags
checked by Customers. We then introduced computer-generated
Automated Boarding Passes from multiple points at the airport. This
allows us to identify the Customer by name for boarding purposes and
allows the Customer a more convenient checkin at airports through
standing in fewer lines. We also implemented self-service boarding
pass kiosks, or RAPID CHECK-IN, to allow our Customers plenty of
options to acquire boarding passes and alleviate checkin lines at ticket
and gate counters. As a result of this technology, we recently installed
gate reconciliation devices at our airports to speed the boarding
process. In 2004, Customers will be able to check bags using our
RAPID CHECK-IN kiosks and will be able to obtain their
transfer boarding passes at the time of checkin. We will also
offer Customer checkin and boarding passes on southwest.com.
All-Jet Fleet
At the end of 2003, Southwest operated an all-coach,
all-Boeing 737 fleet. All of our future orders, options, and purchase
rights with The Boeing Company for 2004 through 2012 are for
B737-700s. The average age of our young fleet is less than ten years.
As the -700 model is our future, we are in the process of retiring our
-200 fleet over the next two years with 18 and five retirements
scheduled in 2004 and 2005, respectively.
Since 2001, we have been renewing the interior and exterior of
our fleet, including leather-covered seats. Beginning in October
2004, all of our -700s are expected to be delivered with Blended
Winglets, and we are in the process of retrofitting our existing -700s
with winglets through early 2005. The addition of these wing
enhancements will extend the range of the aircraft, save fuel, lower
engine maintenance costs, and reduce takeoff noise.
1999 2000 2001 2002
11:20
11:15
11:10
11:05
11:00
Aircraft Utilization (hours and minutes per day)
11:10
11:18
11:10 11:12
2003
11:09
Fleet Size (at yearend)
1999 2000 2001 2002
400
300
200
100
312 344 355 375
2003
388
Boeing 737-700 Firm Orders and Options
Firm Orders 47 28
34
22 25 6
–
–––
–
–
6 12 9 25
2020 177
177
217
397
128
52
47 34 54 51
Options
Purchase Rights
Type Total
Total
2009-
2012
2004 2005 2006 2007 2008