Southwest CEO: Competitive environment impacts fares

Southwest Airlines CEO Gary Kelly on the impact of oil prices and the economy on the airline industry.

Southwest CEO: Cheaper Gas Means Cheaper Fares

By Business Leaders FOXBusiness

Oil prices are declining and Southwest Airlines (LUV) CEO Gary Kelly says it’s boosting his businesses’ bottom line.

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During an interview with the FOX Business Network’s Maria Bartiromo he said: “That just means we will be paying less for gas. That pretty much drops straight to the bottom line.”

He said the drop in oil prices has already trickled down to the consumer in the form of lower airfares.

“I think that’s why our unit revenues year-over-year are flat to down slightly and we’re trying to manage the business to have stable revenues, keep our fares low, [we] don’t charge bag fees, we don’t charge change fees and just offer our customers great value,” he said.

Kelly attributes gains in November passenger traffic to lower fuel prices and growth in new markets.

“With lower fuel prices, it’s a very competitive environment in the industry, so fares are a little lower and the demand has continued to be brisk. For us, we are growing aggressively in some new markets, like Dallas. We have also launched a new international flight center in Houston. So we are aggressively trying to get established in those markets and we are winning new customers.”

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He also expects strong sales in December.

“We have to work a little bit harder to attract customers… but we can get the people on the airplanes and it looks like December is going to be another strong month.” 

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