After expressing concern last month to the Transport Workers Union (TWU) about uncertain economic conditions, Southwest Airlines is highlighting softening booking trends.
During recent negotiation discussions with TWU Southwest management told the group's negotiating team it had a particular concern about the first and second quarters.
On 2 March Southwest in its monthly traffic report said revenues softened in February in comparison to January, resulting in a two percent range increase in passenger unit revenues for the first two months of 2009.
"As a consequence of the continued deterioration in revenue and booking trends and the current economic environment, the Company's [Southwest's] revenue outlook for the remainder of the year is more cautious," the company explains.
The carrier says business travel in particular has softened significantly as measured by a decline in the percentage of full-fare traffic. Southwest in late 2007 launched several new initiatives to capture business travelers including a separate fare structure that included certain perks such as priority boarding, and making its frequent flyer programme more attractive to corporate passengers.
For the first two months this year Southwest logged as 6.2% drop in revenue passenger miles as capacity fell by 5.4%, resulting in load factors dropping from 66.3% to 65.8%.
Southwest's cautionary tone for revenue growth in 2009 occurs as Delta Air Lines has issued a warning of significant losses during the first quarter driven by its fuel hedging contracts and fallout from the current economic crisis.
Source: Air Transport Intelligence news
