In 2010, we experienced a $1.8 billion increase in total operating revenues compared to 2009.
Our 2010 total operating revenues of $12.1 billion increased approximately $1.8 billion, or 16.9 percent, from 2009. Our operating unit revenues1 increased 16.5 percent over 2009 to a record 12.30 cents. Passenger unit revenues were also a record 11.67 cents, a 15.7 percent year-over-year improvement due to the combination of strong Passenger yields2 and record load factors.
Our freight and other revenues increased more than $150 million, primarily due to approximately $120 million in incremental revenues attributed to initiatives launched in mid-to-late 2009 such as EarlyBird Check-In™, P.A.W.S. (Pets Are Welcome on Southwest), and an Unaccompanied Minor service charge.
Southwest Airlines was founded on the principles of low fares, low costs, and great Customer Service—often marching to the beat of our own drum. Not veering from those core principles has served us well for nearly 40 years, and we believe positions us well for the next decade and beyond.F We continue to differentiate ourselves from our competitors by not charging for things we believe should be free. That means No Change Fees; free snacks, seat selection, curbside checkin, and telephone reservations; and, most importantly, every Customer’s first two bags are checked with no charge. During 2010, we expanded our Bags Fly Free® policy to allow each ticketed Customer to check one stroller and one car seat free of charge in addition to two free pieces of checked luggage.
Our market share growing to 21 percent from 20 percent the same period a year ago illustrates that more Customers are flying Southwest Airlines. Recent Customer surveys confirm our low-fare commitment, underscored by our aggressive Bags Fly Free® and No Change Fees policies, is a significant part of both business and leisure travelers’ decisions.
Despite a record load factor of 79.3 percent, the Warrior Spirits of our front-line Employees resulted in a commendable 79.5 percent ontime Performance for 2010. As the only major U.S. airline with a Bags Fly Free® policy, it’s no surprise that we had an increased number of bags were checked on Southwest Airlines in 2010. Again, our Employees were up for the challenge, holding our mishandled bags per 1,000 Passengers steady with 2009 at 3.43—an impressive accomplishment, given the increased awareness of the Bags Fly Free® policy and a 3.3 point increase in load factor in 2010.
Responsible Revenue Growth
Steady revenue growth throughout 2010 continued to outpace industry results. We produced record monthly load factors every month but one in 2010. Business travel demand improved, contributing to a 10.8 percent increase in Passenger yield. The following initiatives were also significant revenue contributors:
Our flight schedule and route optimization story that began in 2007 continued in 2010. Optimization capabilities enabled us to better manage capacity by trimming unprofitable and less popular flights and reallocating that capacity to new markets and existing markets with higher demand. We can also offer more seasonal flights in select markets and publish additional itineraries with enhanced connecting opportunities. During 2010, network optimization allowed us to open a new destination, Panama City Beach, Fla., and add frequencies in key cities, despite relatively no growth in our available seat miles as compared to 2009.
Demand for Business Select remained strong, with 19 percent more Business Select Passengers in 2010 than in 2009. Our Business Select fare offering contributed approximately $88 million in incremental revenues during 2010, up from $72 million in 2009.
EarlyBird Check-In™ produced incremental revenues totaling $98 million in 2010. These outstanding results exceeded our initial expectations for the first full year of the offering. Through this program, Customers pay $10 one-way to automatically receive an assigned boarding position before general checkin begins.
In 2010, we completed a comprehensive rebuild of our web site, southwest.com. Enhancements to the site include:
- New booking platform
- Improved navigation capabilities
- Customer home airport and recent search recognition with the ability to generate customized offers
- Shopping cart feature for flight, car, and hotel options
- Unaccompanied Minor travel booking available online
The improved site provides more product options, which has driven better booking rates and improved ancillary revenues. As the only online source for Customers to purchase Southwest Airlines tickets, southwest.com accounted for approximately 84 percent3 of total Passenger revenues.
Source of Passenger Revenues
|Customer Support & Services||12%||9%||7%||8%||5%|
Wright Amendment Compromise
We recognized approximately $216 million in incremental revenue in 2010 from Dallas Love Field itineraries that we could not previously market prior to the 2006 Wright Amendment compromise.
In November 2010, we launched a new service that allows Customers to book international flights by connecting with Volaris, Mexico’s second largest airline. At yearend, our Customers were able to book travel from 20 Southwest Airlines cities to five Volaris Mexican destinations—Cancun, Guadalajara, Morelia, Toluca/Mexico City, and Zacatecas—creating up to 85 additional flight itineraries. The additional destinations represent our first international gateway and give us an opportunity to grow our Customer base and increase market share.
1 Operating revenues per available seat mile
2 Passenger revenues per revenue Passenger mile flown
3 Includes revenues from SWABIZ, Southwest Airlines’ business travel reservation web page