Total operating revenues increased by $3.6 billion.
We had a strong revenue Performance in 2011. Total operating revenues rose by $3.6 billion, or 29.4 percent, largely from the inclusion of AirTran’s results beginning May 2, 2011. Excluding AirTran’s results, operating revenues increased by $1.6 billion, or 12.8 percent, primarily due to a $1.5 billion increase in Passenger revenues resulting from a combination of strong Passenger yields1 and record load factors. Consolidated freight revenues increased by $14 million, or 11.2 percent, mostly from higher average rates and better economic conditions than the prior year. Southwest Airlines’ products such as EarlyBird Check-In™, Pets Are Welcome on Southwest (PAWS) service, and Unaccompanied Minors charges contributed to other revenues increasing $294 million in 2011.
per available seat mile
SOURCE OF PASSENGER REVENUES
|Customer Support & Services||4%||5%||8%||7%||9%|
At Southwest Airlines, we continue to be the only major U.S. airline that doesn’t charge fees for first and second checked bags or for a Customer’s change in flight plans. By maintaining our low-fare brand and superior Customer Service, Customers keep coming back to fly Southwest Airlines, contributing to our continued domestic market share growth and long-standing annual profitability streak.
Our strategic initiatives helped grow our domestic market share to 25 percent in 20114—a four point increase over 2010. Southwest Airlines Customer Satisfaction remains the best in the business, as our Employees once again achieved the U.S. Department of Transportation’s top ranking in Customer Satisfaction.5 We were also ranked the top Airline Brand of the Year by the 2011 Harris Poll EquiTrend®. Our most recent biennial brand monitoring survey revealed that our low-fare commitment, highlighted by our Bags Fly Free® and No Change Fees policies, contributes to business and leisure travelers’ decisions to choose Southwest Airlines.
Continued Revenue Growth
Although our acquisition of AirTran contibuted to our record operating revenue results in 2011, a number of revenue initiatives were also significant contributors:
During 2011, we continued to optimize our flight schedules to better match demand. We began the process of aligning the Southwest Airlines and AirTran route networks, setting the stage for long-term growth. For example, during 2011, we determined that high jet fuel prices caused a number of AirTran routes to be unsustainable. In response, we made the tough decision to discontinue these flights and reallocate that capacity in 2012 to other markets with higher demand. We expect that optimizing the joint Southwest Airlines and AirTran networks will be a multi-year undertaking, but we believe these efforts will yield significant synergies and financial benefits.
Our Business Select fare offering contributed approximately $94 million in revenues during 2011, up from $88 million in 2010. Business Select Passengers continue to enjoy perks such as priority boarding, bonus frequent flyer credit, priority ticket counter and security access in select airports, and a complimentary adult beverage.
Through this popular program, Customers pay $10 one-way to automatically receive an early boarding position before general checkin begins. EarlyBird Check-In™ produced revenues totaling $142 million in 2011, compared to $98 million in 2010 and surpassing our $100 million annual target.
Volaris International Connect
Southwest Airlines Customers are able to book international flights with connecting service by Volaris, Mexico’s second largest airline. Southwest Airlines offers connecting service opportunities from more than 60 Southwest cities to different Volaris airports in Mexico including: Aguascalientes (AGU), Guadalajara (GDL), Mexico City (MEX), Mexico City-Toluca (TLC), Morelia (MLM), and Zacatecas (ZCL).
All-New Rapid Rewards®
Our All-New Rapid Rewards® frequent flyer program debuted March 1, 2011. Under the revamped program, Members earn points based on fares. Members can redeem their points for any available seat, any day, on every flight with absolutely no blackout dates or seat restrictions. Points won’t expire as long as a Member has earning activity in a 24-month time period. Overall, Members have more flexibility and options for earning and redeeming their rewards than with the previous program. The new program also features enhanced A-List and Companion Pass opportunities for the most active Members and adds a new level of status, A-List Preferred.
In 2011, the new program exceeded our expectations with respect to growth in program Members, credit card applications, flights by existing Members, and fares paid by Members. The cash sales from points sold to business partners during 2011 increased approximately $250 million compared to 2010. The vast majority of this revenue is initially deferred and then recognized as Passenger revenues when Members redeem their points and fly their trips. We forecasted the new program would drive hundreds of millions in incremental annual revenues, net of any associated program costs, by 2014. The progress made in 2011, alone, provides strong evidence that we are well on our way to meeting our goal.
|1||Passenger revenues per revenue Passenger mile flown.|
|2||Includes revenues from southwest.com, swabiz.com (Southwest Airlines’ business travel reservation web page), and airtran.com.|
|3||Includes AirTran revenue sourced through online travel agencies.|
|4||As measured by the number of originating passengers boarded and based on data available from the U.S. Department of Transportation as of Sept. 30, 2011.|
|5||From the 2011 yearend U.S. Department of Transportation Air Travel Consumer Report issued February 2012. Top ranking is for Southwest Airlines only. AirTran ranked fifth in the same report.|