Southwest Goes For Share; American Emphasizes Profits
American Airlines CEO Gerard Arpey was indirectly critical of Southwest Airlines yesterday for sticking with its aggressive growth plan, even as its CEO, Gary Kelly, has complained publicly about the financial effects of industry capacity growth.
Although passenger demand is still up over last year--a boom period for airlines --its rate of growth has slowed. Coupled with the new capacity added to the nation's air transportation system this year, it has been difficult for airlines to raise prices enough to offset rising fuel and other costs.
Southwest's Kelly compares the current situation to instances in 1990 and 1995 when the carrier weathered diminished profits to grab a bigger share of the overall domestic market. "We're not after bigger market share, like some," says American's Arpey. "We're after bigger profits."