Southwest Airlines Raising Domestic Fares

Southwest Airlines has begun raising domestic fares to combat higher costs.

According to JPMorgan Chase & Co. analyst Jamie Baker via Bloomberg, the low-cost carrier has increased close to 90,000 fares $2 to $5 one-way amid a fortunate boom in travel demand.

Southwest CEO Gary Kelly told the publication the airline is still in the process of trimming the 2019 budget and working on a “fairly significant initiative” to increase revenue and improve efficiency.

On top of investments in technology upgrades, new planes, and expanded airport facilities, Southwest is facing unexpected pressure from rising operating costs. The carrier recently forecasted that costs for each seat flown a mile will increase by at least 3 percent in 2019 even after excluding fuel and other items.

Employee-related costs remain the airline‘s biggest expense.

“We’re not in a panic. We’re not in a crisis. Financially, we’ve never been stronger,” Kelly told Bloomberg. “The revenue outlook for 2019 is very good and suggests that having a goal for operating margin expansion if fuel is constant, is not unrealistic.”

Southwest President Tom Nealon is currently leading an effort to boost efficiency at airports, flight operations, and crew scheduling. However, network changes designed partly to reduce the cost of recovering from storms and other flight-disrupting events are likely to go unnoticed by passengers.

The airline airlines/southwest-airlines-begins-operating-new-flights.html” target=”_self” rel=”nofollow”>recently announced new flights ahead of the holiday season.

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