"Look at the CASMs net of fuel. Southwest does have a shrinking cost advantage and they will have to do something different when fuel hedges run out."

Cactus Mike--

Let me start by saying your pilot group is awesome. I jumpseat on you guys all the time and I've NEVER had a hassle. You guys treat us very well. Muchisimo gracias!

However, net of fuel SWA CASM right now is 3.8 cents. That is the lowest in the industry by far.

If all of SWA's fuel hedges ran out tomorrow there would be an annual revenue shortfall of $600 million. A 1% increase in fares equates to $60 million a year in additional revenue. So, a 10% increase would cover it. About $10-$20 per ticket. NOT what SWA wants to do but considering the fuel hedges don't fully run out until 2010 it's not imminent. So yes, SWA will have to do something different when the hedges run out. Hopefully they won't attack labor but who knows? In four years will fares overall be up 10% anyway? I don't know.

I don't think because SWA is going into Denver it spells doom for other airlines. I think we'll be successful but not necessarily at the perill of UAL and Frontier. It just means the city pairs SWA serves out of DEN will have permanantly lower fares. Fares that SWA can sustain year after year, not just for a couple of months.


Tak care and thanks for the jumpseat!

S.B.