Full Description

Southwest Airlines Co. (Southwest), incorporated in 1967, is a passenger airline that provides scheduled air transportation in the United States. As of December 31, 2008, the Company operated 537 Boeing 737 aircraft and provided service to 64 cities in 32 states throughout the United States. The Company focuses principally on point-to-point service, rather than hub-and-spoke service. As of December 31, 2008, Southwest served 438 non-stop city pairs. Approximately 78% of the Company’s customers fly non-stop. Southwest predominantly serves short-haul routes with high frequencies. It complements this service with more medium to long-haul routes, including transcontinental service.

The Company’s average aircraft trip stage length during the year ended December 31, 2008, was 636 miles with an average duration of approximately 1.8 hours. Daily flights are offered for various markets, including Dallas Love Field to Houston Hobby, 30 weekday roundtrips; Phoenix to Las Vegas, 17 weekday roundtrips, and Los Angeles International to Oakland, 18 weekday roundtrips. Southwest complements these high-frequency, short-haul routes with long-haul, non-stop service between markets, such as Phoenix and Tampa Bay, Las Vegas and Orlando, Nashville and Oakland, and San Diego and Baltimore.

Southwest serves many secondary or downtown airports, such as Dallas Love Field, Houston Hobby, Chicago Midway, Baltimore-Washington International, Burbank, Manchester, Oakland, San Jose, Providence, Ft. Lauderdale/Hollywood and Long Island Islip airports. During 2008, approximately 89% of the Company’s customers chose the Ticketless travel option and approximately 78% of its passenger revenues came through its Website, www.southwest.com.

The Company’s frequent flyer program, Rapid Rewards, is based on trips flown rather than mileage. Rapid Rewards Customers earn a credit for each one-way trip flown or two credits for each roundtrip flown. Rapid Rewards Customers can also receive credits by using the services of non-airline partners, which include car rental agencies, hotels and credit card partners, including the Southwest Airlines Rapid Rewards Visa Card. During 2008, the Company introduced a dining program for Rapid Rewards Members that enables them to earn Rapid Rewards credits when dining at approximately 9,000 restaurants, bars, and clubs across the United States and Canada. Southwest offers a Freedom Award. Southwest also offers a Rapid Rewards Companion Pass, which is granted for accumulating 100 credits within a consecutive 12 month period. The Companion Pass offers unlimited free roundtrip travel, to any destination available on Southwest, for a designated companion of the qualifying Rapid Rewards Member. For the designated companion to use this pass, the Rapid Rewards Member must purchase a ticket or use a Standard Award. During 2008, Southwest introduced Cashless Cabin for the purchase of food and beverages without cash.