Hey Clown (is great to be able to say that without being accused of flaming someone....),
This is not a "bash' of SWA, but a little correction to your assumption that all SWA will do when fuel prices go up is to raise ticket prices. Unfortunately, it doesn't work that way.
First, lets try some basic assumptions. SWA has a fairly low load factor (compared to the rest of the industry) at current ticket prices. If SWA came out with a promotion that said "free tickets to Vegas for everyone", do you think they would fill up every jet to capacity with long lines of people left over? Like wise, if you cut fares in half, would more or less people want to buy a ticket? What you need to understand is that the revenue management folks at SWA price the tickets to MAXIMIZE revenue. For SWA, this appears to be at 65-75% load factors. If they raised prices, load factor would go down by more than the revenue increase, resulting in LOWER total revenue. If prices were lowered, then the increase in tickets sold would not make up for the lower price per ticket. Maximizing revenue is what these people are paid to do. If they weren't doing it, they'd be fired.
Now SWA could attempt to raise ticket prices, and I'd even argue that if the other airlines decided to raise ticket prices in response, SWA could generate more revenue, as would everyone else. Unfortunately, I don't think that will happen. Currently, SWA does NOT always have the lowest prices. They have built a reputation for having low prices, and refuse to compete on travelocity, ect, so they count on a consumer hearing the "ding" commercial, and going straight to SWA website and buying a ticket, WITHOUT comparing prices, because surely UAL, AMR or DAL won't be cheaper. If SWA suddenly attempts a fare increase, this could induce the consumer to shop around, and if he saves $50 bucks by value shopping once, he'll be a value shopper for the rest of his life. So an attempt to raise fares could have a larger than expected effect on SWA's revenue. Additionally, SWA's continued "profit" forced other airlines to actually reduce costs to a level that they could compete. In Q3, at least two "legacy carriers" posted an operating profit (CAL and UAL) without the benefit of hedges. For the same Q, SWA posted an OPERATING LOSS without the benefit of hedges. While hedging is smart, it is important to note that the UNDERLYING business was NOT profitable. So as the hedges expire, SWA's advantage evaporates, and currently, there are other airlines who are much more profitable when the game is played on a level field. Good luck to you guys in the coming year. It's never fun to be in the spotlight, and hopefully things will return to "normal" for you soon.
