Jetrader - September/October 2013 - 11

Q&A

Herb Kelleher
Co-Founder, Former CEO,
Southwest Airlines

Jetrader: How does the U.S. low cost
carrier market today compare to 10
years ago? What have been the biggest
changes? What will the next five years
look like?
Herb Kelleher: The biggest change in
the U.S. low cost carrier market over the
last 10 years is probably the emergence
and expanding success of Allegiant and
Spirit. Each carrier has a carefully deﬁned
niche and, thus far at least, hews to it
religiously.
Another signiﬁcant change is the reduction in costs achieved by the legacy
carriers through the legal mechanism of
Chapter 11. Their lower costs, attained
through the bankruptcy process, makes
them more competitive. In 1982, Braniff
did not believe that a commercial airline
could continue to ﬂy while in bankruptcy
proceedings. Since then, bankruptcy has
emerged as a strategic tool to lower costs
while continuing to operate.
The development, application and proliferation of ancillary fee charges has also
become a factor in the low cost carrier

market. The “fees” are not included in
“fare” quotes, which makes fares appear
lower, and the 7.5 percent federal excise
tax is not paid on the “fees,” which makes
the return on them higher.
The airline industry is so kaleidoscopic
in nature that it is difﬁcult to predict
what the next ﬁve years will look like in
the low cost sector, but I do have the
feeling that there will be more emphasis
on foreign and international air service by
carriers in that category.

In order to
better serve
customers,
while
increasing
profits,
I think that
our industry,
as a whole,
needs to focus
ferocious
energy on
bringing the
Next Gen
ATC system
to pass.

JT: What are your thoughts on the consolidation of the airlines, especially in
the United States? Do you think it is good
or bad for the industry? How is it good
or bad for the consumer?
HK: Since the U.S. commercial air passenger industry has reported an aggregate
net loss since its inception, and far more
carriers have died than survived, I believe
that airline consolidation is an appropriate
response to achieve industry stability, so
long as the Justice Department exacts

Jetrader • September/October 2013 11

Jetrader - September/October 2013

Table of Contents for the Digital Edition of Jetrader - September/October 2013

A Message from the President
ISTAT Calendar/News
Q&A: Herb Kelleher
State of the Regions: Europe
ParISTAT
2013 Current Market Outlook: Minor Adjustments, Major Opportunities
The Import of Export
ISTAT Foundation
International Appraisers’ Program
New Members
Aircraft Appraisals
Advertiser.com/Advertiser Index
Jetrader - September/October 2013 - cover1
Jetrader - September/October 2013 - cover2
Jetrader - September/October 2013 - 3
Jetrader - September/October 2013 - 4
Jetrader - September/October 2013 - A Message from the President
Jetrader - September/October 2013 - 6
Jetrader - September/October 2013 - 7
Jetrader - September/October 2013 - 8
Jetrader - September/October 2013 - ISTAT Calendar/News
Jetrader - September/October 2013 - 10
Jetrader - September/October 2013 - Q&A: Herb Kelleher
Jetrader - September/October 2013 - 12
Jetrader - September/October 2013 - 13
Jetrader - September/October 2013 - State of the Regions: Europe
Jetrader - September/October 2013 - 15
Jetrader - September/October 2013 - 16
Jetrader - September/October 2013 - 17
Jetrader - September/October 2013 - 18
Jetrader - September/October 2013 - 19
Jetrader - September/October 2013 - ParISTAT
Jetrader - September/October 2013 - 21
Jetrader - September/October 2013 - 22
Jetrader - September/October 2013 - 23
Jetrader - September/October 2013 - 24
Jetrader - September/October 2013 - 25
Jetrader - September/October 2013 - 26
Jetrader - September/October 2013 - 27
Jetrader - September/October 2013 - 28
Jetrader - September/October 2013 - 29
Jetrader - September/October 2013 - 30
Jetrader - September/October 2013 - 31
Jetrader - September/October 2013 - 2013 Current Market Outlook: Minor Adjustments, Major Opportunities
Jetrader - September/October 2013 - 33
Jetrader - September/October 2013 - 34
Jetrader - September/October 2013 - 35
Jetrader - September/October 2013 - The Import of Export
Jetrader - September/October 2013 - 37
Jetrader - September/October 2013 - 38
Jetrader - September/October 2013 - 39
Jetrader - September/October 2013 - 40
Jetrader - September/October 2013 - ISTAT Foundation
Jetrader - September/October 2013 - 42
Jetrader - September/October 2013 - International Appraisers’ Program
Jetrader - September/October 2013 - 44
Jetrader - September/October 2013 - New Members
Jetrader - September/October 2013 - 46
Jetrader - September/October 2013 - Aircraft Appraisals
Jetrader - September/October 2013 - 48
Jetrader - September/October 2013 - Advertiser.com/Advertiser Index
Jetrader - September/October 2013 - 50
Jetrader - September/October 2013 - cover3
Jetrader - September/October 2013 - cover4
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