Dec 14 Southwest Airlines, the discount
airline that has heavily promoted its "bags fly free" feature,
on Friday said it will implement new fees next year under a plan
to raise revenues by $1.1 billion in 2013.
The new fees, including higher fees on excess baggage, are
expected to generate about $100 million in revenue next year,
The company, at an meeting with analysts in New York that
was webcast, also said it plans to trim 300 positions from its
work force by the end of 2013, though there will be no layoffs,
as it seeks to double earnings next year from 2012 and meet its
target of a 15 percent return on invested capital.
"We're looking for our revenue initiatives to take hold in
2013 in a way that would produce very strong earnings," assuming
the economy holds up and fuel prices don't markedly rise, Chief
Executive Gary Kelly said.
Dallas-based Southwest has nearly 46,000 workers. The
reduction in positions will be made via attrition and by not
hiring to fill some positions budgeted for 2013.
The traditional discount leader, Southwest is now finding it
must work harder to stay profitable in the face of labor and
fuel cost pressures and rising competition not just from legacy
airlines like Delta Air Lines, but also from newer
carriers with a low-cost focus such as Spirit Airlines.
Southwest's cost advantage compared with rivals "is not as
great as it was in 2000 but is still very significant," Kelly
said. He said it was "critical" for Southwest to keep its cost
advantage, and noted that the company's wage rates were higher
The airline, which allows passengers to check up to two bags
for free, said it will raise fees on additional bags and on
overweight baggage. It will also increase bag fees for AirTran,
the carrier it bought last year, and roll out new fees tied to
the sale of open and premium boarding positions at airport
Southwest also said it planned a no-show fee for restricted
tickets that are not canceled prior to departure.
Of the total revenue gains it expects next year, $300
million would come from the new fees and other moves related to
improving operations, the Dallas-based carrier said.
Fees will rise to $100 from $50 for overweight bags and to
$12.50 from $10 for early boarding. AirTran bag fees will rise
to $25 from $20 for a first checked bag and from $25 to $35 for
a second-checked bag.
Last year's Chapter 11 filing by AMR Corp's
American Airlines leaves Southwest as the only major U.S.
carrier that has not reorganized in bankruptcy.
"We have a reconstituted legacy competitive set," Kelly
said. "They are more competitive today than they were in '07,
than they were in 2002 by a long shot. Just look at their
Shares of Southwest were up 1.1 percent to $10.25 in