Southwest Drops Travel Agency Commissions

20th Oct 2003

PRNewswire-FirstCall DALLAS Oct. 20 :
Southwest Airlines today announced it will no longer pay commissions on
all Southwest flights booked by traditional travel agencies.

The new policy will be effective Dec. 15, 2003. Southwest was the last
major airline paying base commissions to travel agents (Southwest does not
pay commissions for online bookings).

“We appreciate the choice our travel agency partners continue to provide
to our Customers,” said Jim Parker, Southwest`s chief executive officer
and vice chairman. “We waited this long to make the change in our
commission policy to give all agencies—large and small—ample time to
shift their business model to the industry norm of fee-based services.”

Even prior to the industry-changing events of Sept. 11, 2001, most travel
agencies were charging Customers fees for their services. Now, it is
largely the business model upon which agencies operate. Changes in
distribution brought about by the popularity of the Internet also have
changed the way a Customer purchases travel.

In third quarter 2003, Southwest`s online bookings generated 55 percent of
the airline`s revenues, while travel agency bookings accounted for about
15 percent.


Southwest, the industry`s low-cost provider, has been vigilant about
keeping operating costs low to ensure low fares for Customers. The change
in travel agency commission policy will save Southwest about $40 million
annually, Parker said.

Southwest operates 385 Boeing 737s in 58 cities in 30 states. The airline
has nearly 2,800 daily departures, and was named the number one airline in
the United States in May and June 2003 for the most passenger boardings in
each of those months.



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