Southwest CEO: Employees don’t want to nickel-and-dime customers

Source Fox Business News – Jan. 22, 2015 – 5:02 – Southwest Airlines CEO Gary Kelly on the airline’s strategy and the decline in fuel prices.

Southwest Airlines may not ‘nickel and dime’ customers on checked bags and change fees but that does not mean that the airline does not benefit from ancillary revenues. Data from IdeaWorks reveal that in 2013 the airline generated $1.6 billion from ancillary sales, or about 9.2% of revenue. The majority of Southwest’s ancillary revenue comes from its loyalty program, however, in 2013 the airline earned an additional $195 million for a-la-carte items such as premium boarding and EarlyBird check-in. Other ancillary channels for the airline totaling $143 million include excess baggage fees (the carrier allows 2 checked bags at 50 lbs each), unaccompanied minor travel fees, pet carriage fees, and business select fares.

Last Thursday Southwest reported a record $1.1 billion net income for 2014, the first time in the carrier’s history it exceed a billion dollars in earnings. This bested 2013 earnings of $754 million.

“Our strategic plan has come together successfully, and we have realized significant contributions from the AirTran integration, fleet modernization efforts and the continued growth of our Rapid Rewards program,” Southwest chairman and CEO Gary Kelly said in the airline’s announcement.

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