Southwest Airlines Co. (Southwest) operates Southwest Airlines, a major passenger airline that provides scheduled air transportation in the United States and near-international markets.
As of December 31, 2024, Southwest had a total of 803 Boeing 737 aircraft in its fleet and served 117 destinations in 42 states, the District of Columbia, the Commonwealth of Puerto Rico, and ten near-international countries: Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, Belize, Cuba, the...
Southwest Airlines Co. (Southwest) operates Southwest Airlines, a major passenger airline that provides scheduled air transportation in the United States and near-international markets.
As of December 31, 2024, Southwest had a total of 803 Boeing 737 aircraft in its fleet and served 117 destinations in 42 states, the District of Columbia, the Commonwealth of Puerto Rico, and ten near-international countries: Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos.
As part of the company's ongoing modernization efforts, during third quarter 2024, the company announced several transformational initiatives designed to elevate the Customer Experience on its flights, including:
Assigned Seating: Southwest will introduce an assigned seating model to better align with airline passenger preferences. The company expects to begin selling assigned seats in the second half of 2025, with its first flights operating with the new seating model in the first half of 2026.
Premium Seating: Southwest will offer extra legroom options with additional pitch while maintaining a standard economy seat pitch.
Redesigned Boarding Model: Southwest will evolve its boarding process with seat assignments while focusing on operational efficiency and improving the Customer Experience. The updated boarding process will be designed to maintain Southwest's unique and popular approach in boarding through position numbers and signage displayed on stanchions within the gate area.
Global Airline Partnerships: Southwest is seeking partnerships with international carriers to expand its network and connect Customers with more global destinations to generate additional demand for travel across the Southwest network. Icelandair will become Southwest's initial partner with an expected launch on February 13, 2025 through Baltimore-Washington International Airport, which will serve as its first U.S. gateway for the carriers. The Icelandair partnership is expected to add Denver and Nashville gateways during 2025, and Southwest intends to add at least one additional partner carrier in 2025.
Getaways by Southwest: In 2025, Southwest intends to launch a new product, Getaways by Southwest, offering vacation packages that are unique to the industry and come with Customer-friendly policies. These customizable vacation bundles are expected to feature Southwest's generous cancellation policy and flexibility with its no change fees for flights extending to hotels and other elements of packaged vacations.
24-Hour Operations: Southwest is scheduled to add 24-hour operation capabilities with the introduction of overnight (i.e., redeye) flights on February 13, 2025 in key markets to maximize aircraft utilization.
Marketing & Distribution Evolution: In order to attract new Customers and reach them where they are performing travel searches today, Southwest has expanded into new channels such as Google Flights, Kayak, and Skyscanner to broaden its Customer base and begin to engage them in its loyalty program.
Service Modernization: To drive efficiency and improvement in Customer Service, Southwest is transitioning to a digital-first model, offering more self-service options designed to augment the company’s contact centers and airport experience.
Route Structure
Southwest primarily provides ‘point-to-point’ service, rather than the ‘hub-and-spoke’ service provided by most major U.S. airlines. A point-to-point system enables airlines to connect directly to destinations without providing connecting service. By contrast, the hub-and-spoke system concentrates most of an airline's operations at a limited number of central hub cities and serves most other destinations in the system by providing one-stop or connecting service through a hub. By not concentrating operations exclusively through one or more central transfer points, Southwest's route structure has allowed for more direct nonstop routing than a traditional hub-and-spoke service. To provide greater connectivity and support operational reliability and recoverability, in recent years the company has increasingly focused on designing its network around core stations. Southwest’s unique network blends intentional connectivity offered by hub-and-spoke models and point-to-point nonstops, allowing the company to capture nonstop demand and provide reliable one-stop itinerary options.
Southwest’s unique route network has also enabled it to provide its markets with frequent, conveniently timed flights and low fares. For example, Southwest offers 12 weekday roundtrips between Dallas Love Field and Houston Hobby, six weekday roundtrips between Denver and Chicago Midway, six weekday roundtrips between Los Angeles International and Las Vegas, eight weekday round trips between Burbank and Oakland, and ten weekday roundtrips between Phoenix and Denver. Southwest complements its high-frequency short-haul routes with mid-range and long-haul nonstop service, including flights between Hawaii and California, Las Vegas, and Phoenix, and between markets such as Los Angeles and Nashville, New York LaGuardia and Houston, Los Angeles and Baltimore, Oakland and Houston, and San Diego and Baltimore.
In 2024, the United States Department of Transportation (‘DOT’) approved the company’s bid to offer nonstop round-trip flights between Las Vegas and Washington Reagan. Service between Las Vegas and Washington Reagan begins February 13, 2025, with daily service beginning March 6, 2025. As the domestic travel market has matured and structural changes have reduced the demand for short-haul travel, especially post-pandemic, the company has increased its proportion of longer-haul flights. Further, during 2024, the company announced 24-hour operation capabilities with the introduction of redeye flights. Booking of redeye flying on initial routes became available in July 2024, with the first redeye flights scheduled on February 13, 2025, in five initial nonstop markets: Las Vegas to Baltimore and Orlando; Los Angeles to Baltimore and Nashville; and Phoenix to Baltimore.
The company continually works to better optimize its route network and schedule through the adjustment of flights in its existing markets and the addition of new markets and itineraries, while also pruning less profitable flights from its schedule. During 2024, the company sought to restructure and better optimize its network to better match capacity to demand and adjust for post-pandemic Customer travel patterns by reducing short-haul trips, redistributing resources to longer-haul trips in more profitable markets, and reducing flying on weekdays and at off-peak times with lower travel demand. In response to market conditions, the company ceased service at Cozumel, Mexico; Houston Bush Intercontinental; Syracuse; and Bellingham in 2024. Further, the company redeployed underperforming capacity by significantly reducing service at Atlanta, Fort Lauderdale, and Chicago O’Hare, while expanding service at Nashville. The company is continuing to improve the connectivity and efficiency of its network through redesigns in smaller cities and the planned introduction of redeye flying. Additionally, the company is taking a cross-functional, methodical approach to market maturation efforts. The company’s unique route network allows for these adjustments without structurally disrupting its airports in core markets and other large cities. To further improve international connectivity with its domestic network, as discussed under ‘Company Initiatives,’ the company is scheduled to begin operating as a partner with Icelandair on February 13, 2025 to provide for transatlantic connectivity and announced plans to add at least one more partner during 2025.
The company's strategy includes, among other elements, (i) the use of a single aircraft type, the Boeing 737, and (ii) the company’s route structure. Southwest's use of a single aircraft type has historically allowed for simplified scheduling, maintenance, flight operations, safety management, and training activities. Southwest's route structure includes service to and from many secondary or downtown airports such as Dallas Love Field, Houston Hobby, Chicago Midway, Baltimore-Washington International, Burbank, Manchester, Oakland, San Jose, and Providence. These conveniently located airports are typically less congested than other airlines' hub airports, which has contributed to Southwest's ability to achieve high asset utilization because aircraft can be scheduled to minimize the amount of time they are on the ground.
The company focuses on minimizing fuel consumption and improving fuel efficiency through fleet modernization and other fuel initiatives. For example, in 2024, the company added 22 Boeing 737 MAX 8 (‘-8’) aircraft to its fleet, with the goal of lowering operating costs, improving potential growth opportunities, better optimizing the company’s network, reducing carbon emissions per ASM, and further modernizing the company’s fleet with more fuel-efficient aircraft.
The Company’s fuel efficiency was aided in 2024, as compared with 2023, through the addition of 22 -8 aircraft to its fleet and by the retirement of 34 of its oldest, least fuel-efficient Boeing 737-700 (‘-700’) aircraft and the retirement of two Boeing 737-800 (‘-800’) aircraft. As of December 31, 2024, the company had 245 -8 aircraft in its fleet. In second and fourth quarter 2024, the company entered into supplemental agreements (the ‘Supplements’) to its purchase agreement with The Boeing Company (‘Boeing’) relating to the company’s purchase of -8 and Boeing 737-7 (‘-7’, and, together with -8, the ‘MAX aircraft’). Pursuant to the Supplements, the company amended its order book delivery schedule to better allocate aircraft deliveries to the company’s network and capacity plans. The company held 180 remaining MAX options as of December 31, 2024, in addition to 492 firm orders of MAX aircraft to be delivered through 2031. The company previously announced plans to pursue opportunities to take advantage of current market conditions through the sale and/or sale-leaseback of certain aircraft, with the intention of replacing most, if not all, of such aircraft with new -8 and -7 aircraft from Boeing, at the favorable pricing available in the company’s order book with Boeing, by the end of 2031, assuming that Boeing is able to meet aircraft delivery expectations. The delivery schedule for the -7 is dependent on the Federal Aviation Administration (‘FAA’) issuing required certifications and approvals to Boeing and the company. The FAA will ultimately determine the timing of the -7 certification and entry into service, and the company therefore offers no assurances that current estimations and timelines are correct.
Ancillary Services
The company offers ancillary services such as Southwest’s EarlyBird Check-In, Upgraded Boarding, and transportation of pets and unaccompanied minors, in accordance with Southwest’s respective policies.
EarlyBird Check-In provides Customers with automatic check-in and an assigned boarding position before general boarding positions become available, thereby improving Customers’ seat selection options (priority boarding privileges are already a benefit of being an ‘A-List’ or ‘A-List Preferred’ tier member under the company’s Rapid Rewards loyalty program). EarlyBird Check-In pricing is based on multiple factors, including the length of the flight and the historical popularity of EarlyBird Check-In on the route.
When available, Southwest sells Upgraded Boarding at the airport or on Customer mobile devices, which allows a Customer to pay for an open priority boarding position in the first 15 positions in its ‘A’ boarding group.
Southwest’s Pet Policy provides Customers an opportunity to travel with a small cat or dog in the aircraft cabin on domestic flights. Southwest also has an unaccompanied minor travel policy, with pricing to address the administrative costs and the extra care necessary to safely transport these Customers.
Rapid Rewards Loyalty Program
Southwest’s Rapid Rewards loyalty program enables program members (‘Members’) to earn points for every dollar spent on Southwest base fares, also including purchases paid with LUV Vouchers, gift cards, or flight credit, with no portion of the purchase price paid with Rapid Rewards points. The amount of points earned under the program is based on the base fare and fare class purchased, with higher fare products (e.g., Business Select) earning more points than lower fare products (e.g., Wanna Get Away).
Under the program, Members continue to accumulate points until the time they decide to redeem them. As a result, the program provides Members significant flexibility and options for earning and redeeming rewards. For example, Members can earn more points (and achieve tier status such as A-List, A-List Preferred, or a Companion Pass faster) by purchasing higher fare tickets. Members also have significant flexibility in redeeming points, such as the opportunity to book in advance to take advantage of a lower fare ticket (including many fare sales) requiring fewer points, or by being able to redeem at the last minute, if seats are still available for sale. Members can also earn points through qualifying purchases with Rapid Rewards Partners (which include, for example, car rental agencies, hotels, and restaurants), as well as by using Southwest’s co-branded Chase Visa credit cards. In addition to earning points for revenue flights and qualifying purchases with Rapid Rewards Partners, Members also have the ability to purchase, gift, and transfer points, as well as the ability to donate points to selected charities.
Southwest’s Rapid Rewards loyalty program features tier status and Companion Pass programs for the most active Members, including ‘A-List’ and ‘A-List Preferred’ status. A Member who flies 20 qualifying one-way flight segments booked through Southwest or earns 35,000 tier qualifying points per calendar year will qualify for A-List status. A Member who flies 40 qualifying one-way flights booked through Southwest or earns 70,000 tier qualifying points per calendar year will qualify for A-List Preferred status. The Member will maintain A-List or A-List Preferred status for the remainder of the calendar year in which the status is earned and for the entire calendar year immediately following. Both A-List and A-List Preferred Members enjoy benefits such as priority check-in and security lane access, where available, as well as dedicated phone lines, standby priority, and an earnings bonus on eligible revenue flights (25 percent for A-List and 100 percent for A-List Preferred). In addition, A-List Preferred Members enjoy free inflight internet service, where available, and up to two complimentary premium drinks per flight on flights traveling 250 miles or more, added directly to their mobile boarding passes. Members who attain A-List or A-List Preferred status receive priority boarding privileges. When these Customers purchase travel at least 36 hours prior to flight time, they receive the best boarding position available (generally, an ‘A’ boarding pass). If an A-List or A-List Preferred Member’s plans change, subject to Southwest’s No Show Policy, they are entitled to same-day confirmed change, free of airline charges, if there is an open seat on another flight that departs on the same day as the original flight and is between the same origin and destination airports, but the Customer is required to pay any additional government taxes and fees associated with changes in their itinerary. If there is no open seat on this different flight, a traveler may request to be added to the standby list for that flight. Another feature of the Rapid Rewards loyalty program is the Companion Pass. Members who fly 100 qualifying one-way flights or earn 135,000 qualifying points in a calendar year automatically receive a Companion Pass, which provides for unlimited travel for the designated Companion free of charges (other than taxes and fees). The Companion Pass is valid for the remainder of the calendar year in which status is earned and for the following full calendar year to any destination available on Southwest for a designated Companion of the qualifying Member. The Member and designated Companion must travel together on the same flight.
In addition, since early 2024, Members are able to pay for their flights with a combination of cash and Rapid Rewards points—starting with as few as 1,000 points. Bookings with flights completed before January 1, 2025, paid for with a combination of points plus other forms of eligible payment did not earn Rapid Rewards points, tier qualifying points for A-List or A-List Preferred status, or Companion Pass qualifying points, but did earn tier qualifying segment credits. However, starting January 1, 2025, the cash portion of a cash plus points booking earns Rapid Rewards points, Rapid Rewards Business points, tier qualifying points for A-List or A-List Preferred status, and Companion Pass qualifying points.
During 2021, the company added Rapid Rewards Business, giving businesses the ability to earn Rapid Rewards points. By joining Rapid Rewards Business, companies earn Rapid Rewards points that can be applied toward travel on the company’s behalf, while travelers who are Rapid Rewards Members also earn Rapid Rewards points in their personal accounts. Rapid Rewards business accounts generally have the same opportunities and benefits to earn and redeem points as individual Member accounts.
Southwest’s Rapid Rewards loyalty program has been designed to drive more revenue by (i) bringing in new Customers, including new Members, as well as new holders of Southwest’s co-branded Chase Visa credit cards; (ii) increasing business from existing Customers; and (iii) strengthening the company’s Rapid Rewards hotel, rental car, credit card, and other partnerships.
As part of the company’s transformation initiatives announced in third quarter 2024, Southwest plans to update its Tier Benefits, giving A-List and A-List Preferred Members even better benefits, and has updated its credit card program to offer cardmembers more value through assigned seats and premium seating. The company also anticipates eventually providing Rapid Rewards Members more opportunities to earn and redeem points for longer-haul international destinations with the development of its airline partnerships and the evolution of its Getaways by Southwest product.
Investments in Customer Experience
In 2022, the company announced a multi-year plan to modernize and transform the Customer Experience. These enhancements include the company’s plans to bring enhanced WiFi connectivity onboard aircraft; install latest-technology onboard power ports on MAX aircraft to charge personal devices at every seat; offer larger overhead bins on new aircraft deliveries with more space and easier access to carryon items; introduce more entertainment options and a wider variety of refreshments in the cabin; and enable new self-service capabilities to bring elevated ease in doing business with the company, benefiting Employees and Customers.
During 2023, the company completed the enhanced WiFi connectivity onboard its aircraft in order to improve WiFi speed, reliability, and bandwidth. Its new -8 aircraft deliveries are equipped with latest-generation WiFi hardware, and the company completed its upgrade of the WiFi hardware on its existing fleet. In late 2023, the company also began taking delivery of MAX aircraft with the latest-generation of onboard USB-A and USB-C power ports on every seat, with a space-saving system that preserves legroom. The company is also installing the in-seat power ports onboard its existing MAX fleet. Retrofits for in-seat power have begun and occurred at a pace of approximately 11 aircraft per month in 2024. As of December 31, 2024, the company had 164 aircraft with in-seat power. Further, the company’s new -8 aircraft will come equipped with larger overhead bin space, which is expected to result in better operational metrics, fewer gate checked bags, and an improved Customer Experience. As of December 31, 2024, the company had approximately 91 -8 aircraft with larger overhead bins, and plans to retrofit the remainder of its -8 fleet, as well as its -800 fleet, with larger overhead bins, beginning in 2025. Additionally, in 2024, the company also announced a refreshed cabin design, which includes new and more comfortable RECARO seats. Southwest has also invested in modernizing its airport spaces by installing new lobby signage, which is expected to facilitate self-service, enhance the overall visual appeal of the lobbies, and make Customers’ travel journey easier.
Southwest offers inflight entertainment and connectivity service. Southwest’s suite of complimentary offerings includes, where available, movies-on-demand, messaging, live and on-demand television, a flight tracker, and more. The free inflight entertainment offerings include over 125 free movies-on-demand each month and free app messaging via iMessage or WhatsApp. The television product consists of at least 13 live channels and approximately 70 on-demand recorded episodes from popular television series. The inflight entertainment service allows Customers to enjoy gate-to-gate entertainment directly on their personal wireless devices. Customers can also purchase satellite internet service while A-List Preferred Members and Business Select Customers receive complimentary satellite internet service. Activating internet service gives Customers the ability to stream videos, complete work tasks, and browse social media.
In third quarter of 2024, the company announced its ‘Southwest. Even Better.’ transformation plan to evolve and improve its Customer Experience. The plan includes the company’s intentions to introduce assigned seating and premium seating options with extra legroom; evolve its boarding process; formalize partnerships with international carriers to expand its network, beginning with a partnership with Icelandair that is expected to launch on February 13, 2025 through Baltimore-Washington International Airport; launch a new Getaways by Southwest vacation product; and enhance its Rapid Rewards program and benefits.
These initiatives stem from continued monitoring of Customer feedback, travel patterns, and preferences. The introduction of assigned seating is intended to address changes in Customer travel frequency and preferences for a seat assignment, particularly as the company has increased its proportion of longer-haul flights in light of reduced demand for short-haul travel. Research indicates that a vast majority of both existing Southwest Customers and potential Customers prefer an assigned seat.
In addition to assigning seats, the company plans to offer a premium, extended legroom portion of the cabin that research shows many Customers also prefer. The company also plans to evolve its boarding process with the introduction of assigned seating and premium seating options, maintaining the company’s unique approach in boarding through position numbers and signage displayed on stanchions within the gate area.
The move to assigned and premium seating will be a significant undertaking by the company. In addition to incorporating new technologies and procedures for a seamless transition, the new cabin layout will require approvals from the FAA along with other regulatory agencies and vendor partners. The company expects to make assigned seat and extended legroom bookings available in the second half of 2025, with related flights occurring in the first half of 2026.
Getaways by Southwest
Beginning in 2025, the company plans to offer Customers an in-house vacation package product called ‘Getaways by Southwest’, replacing the outsourced product Southwest has historically offered. This new vacation booking platform is expected to allow the company to appeal directly to its broad existing Customer base with an enhanced offering that includes both lodging and excursions, which is designed to drive growth with leisure travelers and grow higher-margin revenues.
Distribution and Marketing Approach
The company primarily offers its fare products directly to Customers through its Internet website, Southwest.com, and the Southwest App. For the years ended December 31, 2024 approximately 81 percent of the company’s Passenger revenues originated from Southwest.com or the Southwest App (including revenues from SWABIZ, the company’s online booking tool designed for business Customers who prefer a self-service and low-cost solution for booking their air travel on Southwest).
In light of changing travel patterns post-pandemic, in 2024 the company focused on attracting new and less frequent Customers, in part, through new distribution channels and the launching of new ad campaigns. The company expanded its distribution channels through partnerships with flight meta search engines, including Google Flights, Kayak, and Skyscanner, to increase visibility and drive traffic for bookings to Southwest.com.
In April 2024, the company launched ‘The Big Flex’: a bold new brand marketing campaign showcasing the company’s fun-loving personality and flexible and Customer-friendly policy points of difference on every fare, everywhere. The campaign highlights choice and flexibility for the company’s Customers delivered with the Hospitality for which the company is famous. Additionally, in May 2024, the company launched ‘Wanna Go Wednesdays’ on Southwest.com, a new weekly program that allows Customers to book the latest low fares on routes that are still available for last minute bookings. The company also invested in technology to support artificial intelligence (‘AI’)-based marketing efforts and more personalized marketing capabilities throughout 2024.
The company supports its distribution approach by offering a broad suite of digital platforms to support Customers' travel needs, including full featured websites and apps. These digital platforms help Customers book and manage their Southwest air travel and facilitate the purchase of the company’s ancillary products, including Fare Upgrades, EarlyBird Check-In, Upgraded Boarding, vacation packages, rental car reservations, hotel reservations, and travel activities. In addition, the digital platforms provide self-service tools for trip management and Customer support.
Digital Hospitality
The company is committed to its goal of widening its Customer Service advantage by enhancing digital Hospitality. The company is amid a multi-year digital service modernization program designed to, among other things, provide better Customer Service at a lower cost. Key focus areas of the digital service modernization program include contact center service modernization, airport service modernization, Customer Service communications, and disruptions management.
In 2024, the company implemented digital enhancements to empower Customer self-service and provide more efficient Customer Service. Key updates included a revamped Help Center, an expanded chatbot for improved information access, and enhanced disruption management tools (such as options to rebook or cancel flights and access nearby airports). In compliance with new DOT regulations, Southwest introduced automated ancillary refunds for canceled flights, additional flight rebooking flexibility for applicable schedule adjustments, and improved content to clearly communicate Customer options. The company added additional Customer Service capabilities, including improved error messaging for increased clarity and actionable options for Customers, improved booking options when booking trips with youth travelers on mobile devices, increased passenger capacity per reservation, self-service features that enable self-management of companion designations, inbound flight tracking, and increased travel flexibility with improved standby booking options for connecting flights.
In 2024, the company introduced generative AI capabilities and automation tools with a goal to improve Customer Service, increase efficiency, and drive lower cost while exceeding Customers’ Hospitality expectations. The company continues to test the effectiveness of generative AI capabilities across the Customer journey.
During 2024, as a result of these efforts, the company experienced fewer contact center calls per trip, while increasing app utilization on the day of travel, each as compared with 2023. The company’s digital service modernization program is expected to continue to deliver additional enhancements and efficiencies in 2025.
The company continues to enhance digital revenue-generating capabilities through strategic investments and innovations. The company deployed a comprehensive suite of optimizations designed to improve product performance across air sales and ancillary offerings, including Upgraded Boarding, EarlyBird Check-In, Cars, Hotels, and Vacations. These efforts are designed to drive incremental revenue while enhancing the Customer Experience.
The company has made significant advancements in marketing automation, particularly on the mobile app. Generative AI-powered copy testing has been introduced to refine marketing messages and optimize conversion rates, yielding increased sales per marketing effort. The company has also implemented enhanced Rapid Rewards acquisition techniques, promotional text message campaigns, increased push messaging marketing, and improved co-brand acquisition strategies to drive Customer engagement and loyalty. The company continues to test ongoing improvements to its digital shopping and booking experience to further increase fare upsells and booking conversion effectiveness.
Further, the company has expanded its offerings to include overnight connection flight options, enhanced Rapid Rewards marketing content, and added the ability for Customers to pay for flights using cash plus points. Improvements to account management tools underscore the company’s commitment to meeting diverse customer needs and growing its market presence.
Southwest Business Initiatives
In addition to improvements in the company’s consumer-direct Southwest.com channel of distribution and new flight search engine partnerships, in recent years the company has taken significant action, including investments in Employees, processes, and technology, in order to grow its corporate travel business with the goal of making it easier for corporate travel Customers and travel management companies to do business with Southwest. The company employs a multi-channel distribution strategy for its corporate business travel, offering the ability for business travelers and travel decision makers to book Southwest fares within all major Global Distribution System platforms via Amadeus, Travelport, and Sabre channels, through third-party partners directly connected to the company’s host reservation system, or through the company’s free corporate online booking tool, SWABIZ.
The company utilizes Airlines Reporting Corporation to implement industry standard processes to handle the settlement of tickets booked through Travelport, Amadeus, and Sabre channels. The company also utilizes ATPCO Routehappy to provide detailed product information that supports robust shopping and selling processes in third-party booking channels.
The company offers Southwest Business Meetings, a product for its corporate Customers that is designed to make it easier for meeting planners to manage travel on Southwest by streamlining the process to book group travel for meetings and conventions. In late 2024, the company beta-launched a new group travel tool, Southwest Groups, designed to bring many self-service features to travel managers in early 2025. The company also offers Southwest Business Assist, a travel portal that enables corporate travel buyers, travel decision makers, and travel management companies to better manage their business travel on Southwest using dashboards, reports, automated processing of travel benefits, and Customer Service. The on-demand self-service tool provides access to real-time information and reporting. Southwest Business has also continued to invest in and enhance SWABIZ with mobile capabilities. SWABIZ is designed for business Customers who prefer a self-service and low-cost solution for booking their air travel on Southwest. The site also facilitates car and hotel bookings and offers a suite of reports for travel managers. The company has additionally developed a new data-sharing API channel, Southwest Business TravelTrack, that provides business travel Customers and third-party partners more visibility into the business they do with Southwest.
Technology Initiatives
The company is focused on the prioritization and execution of its technology investments through an evolving multi-year plan, with the goal of developing stronger, more adaptable, more efficient, and more reliable technology systems to support the company’s strategic priorities. The company has committed, and plans to continue to commit, significant resources to technology improvements in the support of its ongoing operations and initiatives. During 2024, among other things, the company (i) replaced its legacy flight planning system; (ii) expanded its distribution channels via multiple search engine partnerships; (iii) improved communication tools for Employees; (iv) delivered better visual and real-time information to assist both Customers and Employees; (v) leveraged AI to expedite support and call resolution time for Customer Service agents; (iv) worked towards moving to a fully digital (i.e., paperless) turn process; and (v) enabled Rapid Rewards Members to pay for their flights with a combination of cash and Rapid Rewards points. During 2023, among other things, the company invested in technology and tools that are expected to enhance resiliency and improve its recovery during irregular operations, implemented a new revenue management system, introduced Customer bag tracking, enhanced Customer digital self-service capabilities, and launched Southwest Business Meetings. During 2022, the company added technology for (i) a new fare product launch; (ii) a new human resources and payroll system; (iii) a new business travel management system; and (iv) enhanced cyber controls and monitoring.
The company continues to invest significantly in technology resources including, among others, the company’s systems related to (i) new assigned seating, premium seating, and boarding processes; (ii) industry standard interline and codeshare capabilities; (iii) 24-hour operations; (iv) flight planning and scheduling designed to improve operating efficiency; (v) daily flight schedule management designed to improve fleet utilization at lower incremental costs; (vi) aircraft turn capabilities designed to improve operating efficiency; (vii) crew mobility and scheduling designed to improve operating quality and resiliency; (viii) foundational airline operating systems; (ix) ancillary products, including vacation packages such as the announced Getaways by Southwest platform; (x) financial planning; (xi) Customer Service Agent mobility; (xii) technology infrastructure and cybersecurity; and (xiii) digital Customer Service modernization. The move to assigned and premium seating, airline partnerships, and 24-hour operations represent significant undertakings by the company and will require the incorporation of new technologies and procedures for a seamless transition.
Regulation
Specifically, the company and certain of its third-party service providers are subject to the jurisdiction of the FAA with respect to aircraft maintenance and operations, including equipment, ground facilities, dispatch, communications, training, and other matters affecting air safety.
The FAA’s oversight of the company’s original equipment manufacturers and the rate of production of new planes are outside of the company’s control.
In addition to its day-to-day management of the nation’s air traffic control system, the FAA has continued its lengthy and ongoing effort to implement a multi-faceted, airspace modernization program, NextGen.
The company has implemented technology and programs intended to comply with all applicable ADS-B (Automatic Dependent Surveillance - Broadcast) requirements.
The company is subject to any operational changes imposed by the FAA/ATO (Air Traffic Organization) as they relate to the NextGen program, as well as the day-to-day management of the air traffic control system.
The company is subject to various other federal, state, and local laws and regulations relating to health and occupational safety, including Department of Health and Human Services, Centers for Disease Control and Prevention, Occupational Safety and Health Administration, and Food and Drug Administration regulations.
The company, in conjunction with the TSA, participates in TSA PreCheck, a pre-screening initiative that allows passengers deemed low risk by the TSA to move through security checkpoints with greater efficiency and ease when traveling.
The company also participates in the TSA Known Crewmember program, which is a risk-based screening system that enables TSA security officers to positively verify the identity and employment status of flight-crew members. The program expedites flight crew member access to sterile areas of airports.
The company works collaboratively with the TSA, foreign national governments, and airports to provide risk-based security measures at international locations served by the company.
The company is subject to various federal laws and regulations relating to the protection of the environment, including the Clean Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act, and the Comprehensive Environmental Response, Compensation and Liability Act (‘CERCLA’), as well as state and local laws and regulations. These laws and regulations govern aircraft drinking water, emissions, storm water discharges from operations, and the disposal of materials such as jet fuel, chemicals, hazardous waste, and aircraft deicing fluid.
The company must also comply with evolving payment card association and network operating rules, including data security rules, certification requirements, and rules governing electronic fund transfers. For example, the company must comply with evolving Payment Card Industry Data Security Standards (‘PCI DSS’), which impose stringent requirements on how the company processes and protects payment card data.
The company has obtained the necessary economic authority from the DOT, as well as approvals required by the FAA and applicable foreign government entities, to conduct operations, under certain circumstances, to points outside of the continental United States served by the company.
Seasonality
The company's business is ordinarily seasonal. In most markets the company serves, demand for air travel is greater during the summer months, and, therefore, revenues in the airline industry tend to be stronger in the second (April 1 - June 30) and third (July 1 - September 30) quarters of the year than in the first (January 1 - March 31) and fourth (October 1 - December 31) quarters of the year. As a result, in many cases, the company’s results of operations reflect this seasonality.
History
Southwest Airlines Co. was incorporated in Texas in 1967.
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