Southwest Airlines 2010 Annual Report Download - page 12

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and dogs into the aircraft cabin for a $75 one-way fare. During 2010, the Company also increased its service
charge for Customers who travel as an unaccompanied minor from $25 to $50 one-way to address the costs to the
Company related to the administrative work and extra care necessary to safely transport these Customers. The
Company’s 2010 revenues from EarlyBird Check-in, PAWS, and unaccompanied minor services charges were
$119 million, an increase of $95 million from 2009.
The Company also expects to benefit from new ancillary revenue opportunities created by its scheduled
launch in March 2011 of a new and improved Rapid Rewards frequent flyer program, which is discussed in detail
below under “Rapid Rewards Frequent Flyer Program.”
International Connect
During 2010, the Company continued its work towards implementing international marketing alliances and
codesharing relationships. Although the Company terminated its agreement with WestJet to offer connecting
service between the United States and Canada, in November 2010, the Company launched a new service that
allows its Customers to book international flights by connecting with Volaris, Mexico’s second largest airline.
Southwest Customers can book travel from 20 Southwest cities to five Volaris Mexican destinations (Cancun,
Guadalajara, Morelia, Toluca/Mexico City, and Zacatecas). The new service connects through Los Angeles
International Airport, Oakland International Airport, and San Jose International Airport and currently creates up
to 85 additional flight itineraries. Behind the scenes, the Company’s international connect portal conducts two
separate transactions – one with the Company’s reservation system and one with Volaris’s reservation system.
Tying the two systems together provides Customers with an easy booking experience, one low fare, allows for
thru-checking of luggage, and blends the airlines’ flight schedules.
Inflight Internet Connectivity
In 2010, the Company entered into an equipment purchase contract with Row 44 to allow for an inflight
satellite (broadband) WiFi offering, rather than the air-to-ground service used by several of the Company’s
competitors. As of January 31, 2011, WiFi connectivity was available on more than 60 aircraft, and the Company
expects these installations to continue on its remaining 737-700 fleet. The Company’s arrangement with Row 44
enables the Company to control the pricing of the service, which has initially been set at an introductory flat rate
of $5.00 per flight for any device or flight length.
Proactive Customer Communications
During 2010, the Company enhanced the capabilities of its Automated Outbound Messaging (“AOM”)
service. The Company’s AOM capability, which was originally launched in August 2008, enables it to
(i) proactively deliver customized automated telephone messages to 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
Customers the option to connect to a Customer Representative in the case of cancelled flights. In 2010, for
Customers who book their travel on southwest.com, the Company began providing Customers with the option to
receive these alerts via SMS texting. The new SMS strategy is designed to increase proactive Passenger outreach,
reduce inbound calls, improve contact center management, and save costs. In addition to providing flight
information to Customers using their preferred method, if applicable, the Company also directs Customers to
southwest.com/rebook.
Ongoing Revenue Initiatives
In 2010, the Company announced its plans to implement a new reservations system to better enable
international operations either via a codeshare arrangement or with the Company’s own aircraft. In addition, the
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