Originally Posted by sailingfun

If GK does not care about SWA costs relative to the competition then the future at SWA is a bit clouded at best. The difference in cost structure between SWA and the legacy airlines is what pushed SWA to make a major change in corporate strategy. When SW enjoyed a large cost advantage over the competition it could order aircraft and expand at will. They could go into any market and run the competition out. This allowed SW to maintain a 10 percent yearly growth rate. This kept the employees happy and kept employee costs low with a constant flow of new employees at the bottom of the pay charts.
SWA made a decision with their lottery win on fuel hedges to drive at least one and hopefully two major airlines out of business. With 20 percent of the domestic market they could dictate yields and did exactly that. They were able to prevent the other airlines from increasing yield to match the increase in fuel prices. It was a bold gamble on the part of SW. It came within a matter of months of being a complete success. The only thing that saved the legacy airline industry was the collapse in fuel price from 140 a barrel to 40 a barrel almost overnight. Without that collapse the domestic US airline industry would be vastly different today.
The result however was that SW in effect helped management at the legacy airlines make huge adjustments in cost structure. SW no longer had a dramatic cost advantage. The result has been stagnation at SW and increasing labor costs. In the end management made a huge philosophical shift to grow via purchase or mergers. No matter how you work out a merger it never makes the employees happy. When you go from 10 percent a year internal growth to a merger strategy its a bitter pill to swallow. Especially for a group used to quick advancement. Mergers mean little or no advancement.
That is however not Airtrans fault. Its a result of the cost structure at SW relative to its competition. I suspect that within the next 5 years there will be at least one more merger at SW. SWAPA needs to get used to this and realize that arbitration is not a huge evil. SWAPA has many compelling arguments they can make before the arbitrator and I suspect if it goes that route will do quite well in arbitration. The strategy of simply trying to strong arm a list will in the end turn out to be a poor long term choice.