This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Southwest CEO: Free Bags = $800 Million

DALLAS ( TheStreet) -- Southwest (LUV - Get Report) says its strategy of eschewing fees for baggage handling and other amenities has boosted revenue by nearly $800 million annually, CEO Gary Kelly said.

Southwest has seen a market share shift of roughly one percentage point in response to its "immensely successful 'bags fly free' advertising campaign, in a time when we are actually reducing our capacity and the domestic market is actually shrinking," Kelly said at an investment conference. With the domestic air travel market worth about $80 billion to $90 billion annually, "a market share shift like that has a very significant positive effect for Southwest," Kelly said.

Southwest spokeswoman Linda Rutherford noted the carrier's market share gains result not only from the bags fly free campaign, but also from being a low-fare carrier in a recession and from competitors' capacity reductions. Not charging for bags reinforces Southwest's image as a low-fare leader, Kelly has said.

Other airlines have said that as they implement charges for baggage handling and other services, they have been unable to discern any resultant shift to Southwest. Last month, US Airways (LCC) CEO Doug Parker told reporters in Charlotte that passengers may be avoiding multiple carriers at imperceptible rates, which in combination create a perceptible gain for Southwest.

Kelly said Southwest expects to be profitable in the fourth quarter. He said the carrier is benefitting from growth in select markets, including Denver and Saint Louis. However, he said he has seen no improvement in business travel. "I don't think it has gotten worse over the last several months, (but) I am comfortable in telling you it still lags," he said. "I am not expecting a rebound in business travel in 2010."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
LCC $0.00 0.00%
LUV $43.45 0.44%
AAPL $132.38 2.10%
FB $81.55 -1.00%
GOOG $565.06 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs