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Southwest has lower payroll expense due to being newer and gambled successfullt when they hedged their fuel prior to gas prices going way up. They also cherry
by wtvanhest 9y ago
Southwest has lower payroll expense due to being newer and gambled successfullt when they hedged their fuel prior to gas prices going way up.
They also cherry pick routes (smart).
They will eventually revert to the mean.
- tyingq 9y agoThis is not correct. Southwest actually has the highest labor costs in the US airline industry, as measured by percentage of revenue.
- wtvanhest 9y ago% of revenue is not the correct measure since they are low cost. You need to compare costs independent of rev.
- tyingq 9y agoDefine low cost. Their actual costs per seat mile are closer to AA and Delta than they are to Spirit. You may be thinking of a time long ago.
- wtvanhest 9y agoI am saying that revenue has no baring on employee cost structure. They have a much younger workforce, didnt have the issues with pensions that the other major carriers had and still pay their people less on average. Their only real advantage was a speculative bet on fuel prices. Again, they are already reverting to the mean and will continue to do so.
- deleted 9y ago[deleted]
- deleted 9y ago[deleted]