Southwest Airlines 2015 Annual Report Download - page 26

Customer Service, Comfort, and Amenities
Southwest also competes with other airlines in areas of Customer Service such as ontime performance,
passenger amenities, flight equipment type, and comfort. According to statistics published by the DOT,
Southwest consistently ranks at or near the top among domestic carriers in Customer Satisfaction for
having the lowest Customer complaint ratio. Some airlines have more seating options and associated
passenger amenities than does Southwest, including first-class, business class, and other premium
seating and related amenities. Additionally, some major U.S. airlines, including Southwest, are adding
a significant number of new aircraft to their fleets. Such efforts could provide cost benefits to these
airlines through fleet simplification, improved fuel efficiencies, and lower maintenance costs.
Additionally, such new aircraft could have newer and different passenger amenities than those
contained in the Company’s existing fleet.
Other Forms of Competition
The airline industry is subject to varying degrees of competition from surface transportation by
automobiles, buses, and trains. Inconveniences and delays associated with air travel security measures
can increase surface competition. In addition, surface competition can be significant during economic
downturns when consumers cut back on discretionary spending and fewer choose to fly, or when
gasoline prices are lower, making surface transportation a less expensive option. Because of the
relatively high percentage of short-haul travel provided by Southwest, it is particularly exposed to
competition from surface transportation in these instances. The airline industry is also subject to
competition from alternatives to travel such as videoconferencing and the Internet, which can increase
in the event of travel inconveniences and economic downturns. The Company is subject to the risk that
air travel inconveniences and economic downturns may, in some cases, result in permanent changes to
consumer behavior in favor of surface transportation and electronic communications.
Seasonality
The Company’s business is seasonal. Generally, in most markets the Company serves, demand for air
travel is greater during the summer months, and therefore, revenues in the airline industry tend to be
stronger in the second (April 1 - June 30) and third (July 1 - September 30) quarters of the year than in
the first (January 1 - March 31) and fourth (October 1 - December 31) quarters of the year. As a result,
in many cases, the Company’s results of operations reflect this seasonality. Factors that could alter this
seasonality include, among others, the price of fuel, general economic conditions, extreme or severe
weather, fears of terrorism or war, or changes in the competitive environment. Therefore, the
Company’s quarterly operating results are not necessarily indicative of operating results for the entire
year, and historical operating results in a quarterly or annual period are not necessarily indicative of
future operating results.
Employees
At December 31, 2015, the Company had approximately 49,600 active fulltime equivalent Employees,
consisting of 21,100 flight, 2,800 maintenance, 17,300 ground, Customer, and fleet service, and 8,400
management, technology, finance, marketing, and clerical personnel (associated with non-operational
departments). Approximately 83 percent of these Employees were represented by labor unions. The
Railway Labor Act establishes the right of airline employees to organize and bargain collectively.
Under the Railway Labor Act, collective-bargaining agreements between an airline and a labor union
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