Southwest Airlines 2007 Annual Report Download - page 10

 Wewerealsopleasedtointroducechangestoouraward-winningRapidRewardsfrequentyerprograminNovember
2007,debutingthenewA-ListTMandFreedomAwards.
TMA-Listersareautomaticallycheckedinfortheirightsandare
most likely to be in the A boarding group. The new Freedom Award allows our frequent flyers to exchange two
StandardAwardsforoneunrestrictedFreedomAward,whichcanbeusedatanytime,exceptforcertainblackout
dates,onanyflightaslongasseatsareavailable.Wearecontinuingtoworkonothersignificantimprovementstothe
RapidRewardsloyaltyprogram.
 We have future revenue initiatives and Customer experience enhancements in development, including new
onboardCustomerofferings(suchasinflightwirelessInternetconnectivity),enablinginternationalcodeshares,
implementing further improvementsto ourrevenue managementprocesses,andmaking southwest.com a more
robusttravelportal.Almost75percentofourrevenuesarebookedthroughsouthwest.com,whichisamongthe
most-visitedtravelwebsitesintheworld.
 In2007,welaunchedanewadvertisingcampaignandbeganafull-courtpresstowoomorebusinesstravelers.We
increasedourcorporatesaleseffortsbyprovidingoursalesforcemoretoolstoaggressivelypursuecorporatebusiness
andbyrampingupourparticipationinGlobalDistributionSystems.Weareparticularlypleasedwiththeexpansionofour
agreementwithTravelport’sGalileotoincludeWorldspan,anotherofTravelport’sglobaldistributionsystems.Weare
extremelyexcitedaboutallofourplansandstrategicinitiatives,andwebelievethatourBrandwillhaveanevengreater
appealto thebusinesstraveler.Afterall,SouthwestAirlines was builtforthebusiness traveler. Ourhighfrequency,
point-to-point service allows for more direct nonstop routings, minimizing connections, delays, and total trip time.
Approximately 78 percent of Southwest’s Customers y nonstop. We’re geared for their nonstop lives, and we have
introducedproductenhancementsthatwillimprovetheirproductivity.
Growing the Business: Our Tactical Network Expansion
Fromourhumblebeginnings,wehavegrowntobecomeanationalcarrierthatnowboardsmoreCustomersthanany
otherairlineintheworld.Ourlow-costbusinessmodelhasallowedustoprotablyprovideaffordabletraveltohundreds
ofmillionsofpeopleforthepast35consecutiveyears.Signicantlyhigherfuelpricesandincreasedeconomicuncertainty
causedustotakeahighlysurgicallookatour expansiveroutemapin 2007.Weweremore aggressivethaneverin
pruninglessefcientightsinthefallandstrategicallyshiftingcapacitytorouteswithhigherCustomerdemand.
 WereturnedtoSanFranciscoInternationalAirport(SFO),our64thdestination,inAugust2007(afterceasingservice
therein2001).WeareencouragedbytheCustomerresponsetoourreturn,andattheendof2007,SFOloadfactorskept
pacewithoursystemwideloadfactorperformance.ByMarch2008,wewillbeat35dailydeparturesfromSFO.
OurreturntoSanFranciscoanchoredourCaliforniapresence;wenowhavea70percentmarketshareposition
intra-CaliforniaandservenineairportsintheGoldenState.WiththeadditionofSFO,wenowoffermorethan100daily
nonstopdeparturesbetweentheBayAreaairports(SFO,Oakland,andSanJose)andtheBasin(Burbank,LosAngeles,
Ontario,andOrangeCounty).
 Ourhometownairport,DallasLoveField,wasalsoashiningstarin2007.Infall2006,PresidentGeorgeW.Bushsigned
alawtorepealtheWrightAmendment,andthatmoveallowedSouthwesttoimmediatelybeginofferingone-stop(same
plane)andconnectingservicebetweenDallasLoveFieldanddestinationsbeyondtheoldperimeteroftheWright/Shelby/
Bondamendments(Alabama,Arkansas,Kansas,Louisiana,Oklahoma,Mississippi,Missouri,andNewMexico).Webegan
sellingticketsimmediatelybutweren’tabletofullyoptimizeourDallasscheduleuntilMarch2007,atwhichpointweadded
tennewightsfromDallasLoveFieldthatwereone-stoporquickconnections.Werealizedanannualrevenuebenet
of$113millionfromourabilitytoofferthrough-ticketingfromDallasLoveField,exceedingouroriginalexpectations.
TheWrightAmendmentReformActof2006willalsoallowustoaddnonstopservicebetweenDallasLoveFieldandany
domesticairportweservebeginningin2014.
20072003 2004 2005 2006
Operating Revenues (in millions)
$9,086
$9,861
$5,937
$6,530
$7,584
$10,000
$9,000
$8,000
$7,000
$6,000
$5,000
20072003 2004 2005 2006
Operating Revenues Per Available Seat Mile
9.81¢ 9.90¢
8.27¢
8.50¢
8.90¢
10.0¢
9.5¢
9.0¢
8.5¢
8.0¢
7.5¢
9
In fall 2007, Southwest launched Business
Select, a perk for our frequent travelers,
who now have a new "first to board"
option for a small fee. All Rapid Rewards
Customers have a new A-List option based
on frequency of travel.
On September 26, 2007, “DING!
You are now free to move about
the country” was inducted into
the Madison Avenue Walk of Fame
as America’s Favorite Advertising
Slogan. Our battle cry, created
by GSD&M’s Idea City, has served
us well for many years and will
continue to remind our Customers
that Southwest Airlines is, indeed,
A Symbol of Freedom.