Southwest Airlines will fly any plane (as long as it's a Boeing) 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 90 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 43 straight profitable years, amid the airline industry's ups and downs. Southwest's fleet numbers about 700 aircraft, including 700 Boeing 737s.
Southwest serves more than 90 destinations in some 40 US states in addition to the District of Columbia, Puerto Rico, Mexico, Jamaica, The Bahamas, Aruba, and the Dominican Republic.
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 has achieved unprecedented growth over the last six years. Its revenues grew 7% from $18.6 billion in 2014 to $19.8 billion in 2015, a historic milestone. Profits also skyrocketed 92% from $1.1 billion in 2014 to a record-setting $2.2 billion in 2015 due to the higher revenue coupled with a significant decline in fuel and oil prices.
The historic growth for 2015 was driven by a bump in passenger revenues fueled by increased passenger yield, increased fares, and a marginal increase in capacity. Freight revenues for 2015 also rose by 2% primarily due to higher average rates charged as a result of fuel surcharges and an increase in other revenues.
Southwest's operating cash flow increased from $2.9 billion in 2014 to $3.2 billion in 2015 due to the higher profits in addition to cash generated from accounts payable and accrued liabilities and air traffic liability.
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, and it plans to begin using another new fuel-efficient model, the Boeing 737 Max, in 2017.