Southwest Airlines will fly any plane (as long as it's a
) and let passengers sit anywhere they like (as long as they get there first). Sticking with what has worked, Southwest has expanded its low-cost, no-frills, no-reserved-seats approach to air travel throughout the US to serve nearly 100 destinations across North America. Now the largest carrier of US domestic passengers, Southwest still stands as an inspiration for scrappy low-fare upstarts the world over. The carrier has enjoyed 44 straight profitable years, amid the airline industry's ups and downs. Southwest's fleet numbers about 720 Boeing 737s.
Simplicity has been key to Southwest's success. Most of the carrier's flights are less than two hours, and it usually lands at small airports to avoid congestion at competitors' larger hubs; in Dallas it's the big dog at little Love Field, its birthplace, and in Chicago it accounts for most of the traffic at Midway Airport. Southwest's (and AirTran's) fleet consists primarily of one type of aircraft -- the Boeing 737 -- to minimize training and maintenance costs.
Southwest serves more than 100 destinations in some 40 US states in addition to the District of Columbia, Puerto Rico, Mexico, Jamaica, Costa Rica, Belize, Cuba, The Bahamas, Aruba, and the Dominican Republic.
Southwest has achieved unprecedented growth over the last six years. Its revenues grew 3% from $19.8 billion in 2015 to $20.4 billion in 2016, a historic milestone. The historic growth was driven by a bump in passenger revenues fueled by increased passenger yield driven by strong demand for low-fare air travel. On the flip side, freight revenues declined 5% due to sluggish demand throughout 2016.
Profits jumped 3% from $2.18 billion in 2015 to a record-setting $2.24 billion in 2016 due to the higher revenue coupled with a significant decline in fuel and oil prices. Southwest's operating cash flow increased from $3.2 billion in 2015 to $4.29 billion in 2016 due to the higher profits in addition to cash generated from fuel derivative instruments.
Protective of its low-cost image, Southwest has staunchly resisted charging passengers baggage fees. However, it has seen the value of this strategy and has rolled out new fees that have included allowing passengers to bring small dogs or cats into the cabin for a one-way charge of $75 and charging a one-way $50 fee for unaccompanied minors.
A large part of the carrier's strategy to stay profitable includes fleet modernization. Southwest is replacing older Boeing 737 planes with the larger and more fuel-efficient Boeing 737-800 for expansion to locations of greater distance.
During 2016, Southwest grew by adding a scheduled service to Long Beach, California, and the three Cuban cities of Havana, Varadero, and Santa Clara.
Another prong of the carrier's growth strategy involves technology. To tap into potential Latin American passengers wanting to travel to the US, Southwest is investing in technology that features foreign-currency exchanges and point-of-sale programs. Southwest’s new reservations platform, launched in late 2016, will also give the carrier more revenue management capabilities and functions to sell to international customers. The carrier has spent more than $500?million on the system.