I don’t think you will be surprised to hear me say that we are in the midst of one of the most challenging times in aviation history. In fact, it’s my opinion that this decade has been the most difficult in our industry’s 100-year history, and this year is arguably the most difficult we’ve seen this decade. While Southwest Airlines is prepared for these tough times, we are certainly not immune to the effects of a deep recession in this economic environment. The good news is that the 35,000-plus Employees of Southwest Airlines (the most talented in the world, by the way), are up to the challenge, and we’re facing these turbulent times head-on.
Today, we are announcing one new program and a few other changes that are designed to enhance the service we provide our Customers, and at the same time, create opportunities for incremental revenue growth. These new programs and processes are just the starting point with additional initiatives planned for later this year. As many of you know, we are very proud of the fact that at Southwest Airlines, we don’t surprise our Customers with fees–unlike our competitors. We remain committed to maintaining our famous low fare brand. We truly believe in setting the right Customer expectation and not charging for those amenities that a Customer would “expect” to get for free. That being said, it is our fiscal responsibility to our Employees, our Customers, and our Shareholders to maximize our existing and potential revenue opportunities.
We are very pleased to welcome pets onboard our aircraft for the very first time as part of a new program called P.A.W.S. (Pets Are Welcome on Southwest). We will begin allowing our Customers to bring along a limited number of small cats and dogs in the aircraft cabin for a low pet fare of $75 each way. Our Employees and our Customers have told us for years that this is something that they want from Southwest, and our enhanced boarding allows us to offer this new service without impacting the efficiency of our operation. Customers can begin purchasing tickets for their pets on June 1, 2009, for travel beginning June 17, 2009.
Additionally, we will soon implement a $25 service charge each way for Customers who travel on Southwest Airlines as an Unaccompanied Minor (UM — Customers from the age of five through 11 traveling without an adult), in addition to the fare paid for the child or a Rapid Rewards Award ticket. Internally, this has been a topic of conversation and debate for years at Southwest Airlines. Up to this point, we’ve been fortunate enough to offer this added service without a charge—even though we carry increasing numbers of Unaccompanied Minors each year—but we simply cannot afford to continue down this same path. There is a substantive cost associated with the extra care needed to safely transport unaccompanied children, including Employee time and administrative work, and these costs can not be ignored any longer, not in today’s economic environment. The Unaccompanied Minor service charge will apply to tickets purchased June 1, 2009, and later, for travel beginning June 17, 2009. Unaccompanied Minors currently represent less than one percent of our Customers.
Lastly, we are increasing the charge to check a third bag and heavy bags onboard our aircraft. Don’t worry, you can still check two pieces of luggage for free on Southwest Airlines– that has not changed–but beginning June 17, Southwest will increase the amount currently charged to check overweight bags weighing 51 to 70 pounds and excess luggage from $25 per bag to $50 per bag. All other checked baggage policies and charges remain the same. Our baggage policy is still far and away the most generous in the industry, and this change will impact approximately one percent of our Customers. As an example, a family of four (including two small children over the age of two) may check two sets of golf clubs, two strollers, two car seats, and four pieces of luggage (under 50 pounds each) all for free on Southwest Airlines. In addition to the incremental revenue this change will generate, we also anticipate seeing a reduction in the total number of checked bags we handle, allowing us to transport everyone’s luggage more efficiently.
We are proud to introduce the new P.A.W.S. service. We believe this new service, and the changes to our existing policies, will generate incremental revenue for the airline; how much revenue is yet to be determined, but we anticipate a modest annual benefit in the tens of millions of dollars. We will continue to actively pursue additional revenue generating initiatives in both the near-term and long-term, while keeping a keen eye on our low fare brand and costs; all with the best interest of our Employees and our Customers in mind.
Again, we are well-prepared and poised to survive these rough economic times and emerge an even better airline. It’s not going to be easy, but I could not have hand-picked a more courageous and capable group of People than the Employees of Southwest Airlines to see us through.