Southwest CEO: Tax Reform Good for Airlines
Joe Cortez December 22, 2017
Lowering corporate taxes could allow airlines to increase investments and offer better service.
Southwest Airlines chief executive Gary Kelly is a fan of the recent tax code overhaul bill to pass through Congress, because it could translate to more new aircraft joining their fleet now and into the future. According to Travel Market Report, the airline leader made the comments at a recent meeting of The Wings Club in New York.
By lowering the corporate tax rate from 35 percent to 21 percent, Kelly told the audience his airline could increase the rate of purchasing new aircraft and adding them to their all Boeing 737 fleet. The carrier currently flies 687 aircraft, including 508 Boeing 737-700 airframes and only nine next generation 737-MAX 8 aircraft.
With the goal of increasing their network in the coming year, Southwest could begin offering flights to Hawaii before 2019, pending Federal Aviation Administration certification of the Boeing 737-MAX 8 on flights of that length. Kelly told those in attendance that he is confident tickets will go on sale in 2018.
Kelly also said that as a result, flyers would also benefit from the new tax benefits the airline would possibly receive. While he provided no specifics, he told the audience: “We can share the tax savings with our employees and savings with our customers.”
The revised tax code wasn’t the only thing Kelly was gleeful about during the holiday-season meeting. The executive once again stood behind the airline’s stance on allowing bags to fly for free, despite shareholders pushing for Southwest to join the legacy carriers in charging checked luggage fees. Kelly also highlighted the airline’s move to Amadeus’ OneRes system, which increases flexibility for booking options.
[Photo: Shutterstock]
The checked-luggage fee pressure from shareholders shows how policies that are hostile to customers can turn into an industrywide "race to the bottom." Southwest is still the best option for many leisure travelers, though they do need to sharpen the advertising to better make that case.
They're just going to use the money to upgrade airplanes, buy more fuel, supplies and services from their vendors, give raises to well-paid crews and employees, and then pass out what's left to their owners (I.E., individuals who own their stock). In some worlds we would all be better off if they didn't.
“...Lowering corporate taxes could allow airlines to increase investments and offer better service.” On what planet?