I'm blogging from Texas this evening because I'm attending a national air service conference sponsored by the American Association of Airport Executives. This is one of the conferences where you get a chance to talk to others in the airport/airline industries and find out what's going on across the country.
This afternoon I listened to a speaker that I know many of you would find interesting: the director of network strategic planning for Southwest Airlines, Lee Lipton. I know if some of you were here you would chew his ear about the absence of Southwest in the Springfield-Branson market. For those of you who haven't followed these past blog conversations, click here and here and catch-up!
Anyway, one point made by Mr. Lipton caught my attention because it vividly illustrates the financial conundrum facing all U.S. airlines. According to Lipton, Southwest presently has to sell the first 95 seats on every flight BEFORE the flight makes money. That's 95 seats out of 137 on every flight — the 96th passenger puts the flight in the black. Put another way, if the flight is 69.3 percent full (these percentages are called "load factors"), the airline only breaks even.
It wasn't that long ago that most airlines were modestly content with a 70 percent load factor. What's changed? Energy prices. I hate to think about what it's like right now for those airlines that aren't as efficient as Southwest...