Southwest's fuel supplier contract rumor???

[loveysbydesign]

Just curious if anyone else has heard this.
My dad told me that he heard on one of the news shows that the reason SW offers such low fares is because they had a 5 year contract with their fuel supplier(fuel is at a set price and wouldn't go up in price until contract is up)and that once it runs out in 2008 their prices will go up. Apparently the fuel supplier is kicking themselves in the butt for agreeing to such a contract as they're losing out on $$$.

 

[bavaria]

It's not a rumour, it's a fact. And SW has already raised prices twice in the last few months, citing this as part of the reason.

 

[loveysbydesign]

aha...I googled and I did find a few links about this, one old one and one new one!

http://money.cnn.com/2005/04/14/news/fortune500/southwest_oil/

http://www.chron.com/disp/story.mpl/business/energy/4560866.html

 

[ducklite]

It's called hedging, and it's what has allowed SW to keep thier fares artificially low and keep the airline profitable for the past few years. That will quickly come to an end over the next twelve months.

Anne

 

[Luckymommyx2]

Yes, and the legacy airliners are loving SWA right now. Since SWA announced that they are raising prices, so have the legacy carriers. It's going to be harder and harder to get good deals.