BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

_____________________________________

)

Application of )

)

SOUTHWEST AIRLINES CO. )

)

For exemptions from 14 C.F.R. Part 93, ) Docket DOT-OST-2000-7182

Subparts K and S, pursuant to 49 U.S.C. )

§ 41718(b) )

)

For service between Oklahoma City (OKC) )

and Ronald Reagan Washington National )

Airport (DCA) )

_____________________________________ )

APPLICATION OF 

SOUTHWEST AIRLINES CO. 

Communication with respect to this 

 document should be addressed to:

Ron Ricks Robert W. Kneisley

 Executive Vice President -- Associate General Counsel

 Chief Legal and Regulatory Officer Leslie C. Abbott

Madeleine Johnson Senior Attorney

 Vice President General Counsel SOUTHWEST AIRLINES CO.

SOUTHWEST AIRLINES CO. 1901 L Street, NW

2702 Love Field Drive Suite 640

Dallas, TX 75235-1611 Washington, DC 20036

 bob.kneisley@wnco.com

 (202) 263-6284

March 5, 2012
1

BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

_____________________________________

)

Application of )

)

SOUTHWEST AIRLINES CO. )

)

For exemptions from 14 C.F.R. Part 93, ) Docket DOT-OST-2000-7182

Subparts K and S, pursuant to 49 U.S.C. )

§ 41718(b) )

)

For service between Oklahoma City (OKC) )

and Ronald Reagan Washington National )

Airport (DCA) )

_____________________________________ )

APPLICATION OF 

SOUTHWEST AIRLINES CO. 

On February 17, 2012, the Department of Transportation (“DOT” or 

“Department”) established a slot exemption proceeding pursuant to 49 U.S.C. 

§ 41718(b) to request applications from air carriers using Stage 3 aircraft for two Vision100 slot exemptions previously held by Delta Air Lines. These slot exemptions 

authorize service to a small or medium hub airport within the 1,250-mile perimeter 

established for civil operations at Ronald Reagan Washington National Airport (“DCA”) 

under Title 49 U.S.C. § 49109.

The selection criteria applicable to these exemptions, as laid out in the 

Department’s February 17, 2012 Notice, are drawn from Title 49 U.S.C. § 41718(b), 

which directs the Secretary to distribute within-perimeter slot exemptions in a manner 

that promotes air transportation: 
2

(1) by new entrant air carriers and limited incumbent air carriers;

(2) to communities without existing nonstop air transportation to Ronald 

Reagan Washington National Airport;

(3) to small communities;

(4) that will provide competitive nonstop air transportation on a monopoly 

nonstop route to Ronald Reagan Washington National Airport; or

(5) that will produce the maximum competitive benefits, including low fares.

Consistent with these criteria, Southwest Airlines Co. (“Southwest”) applies for 

the two slot exemptions described in this proceeding. These slot exemptions would 

enable Southwest to initiate the only nonstop service betweeen Washington National 

Airport and Oklahoma City, a small hub airport as classified by the FAA. 

DETAILS OF SOUTHWEST’S SERVICE PROPOSAL

ROUTE: DCA – OKC, with continuing single-plane service to 

Dallas Love Field (DAL) 

SCHEDULE WESTBOUND 14:50 DCA – 16:50 OKC 

17:35 OKC – 18:30 DAL

SCHEDULE EASTBOUND 9:00 DAL – 9:50 OKC 

10:15 OKC – 14:04 DCA

START DATE: Within 90 days of the Department’s Final Order

AIRCRAFT TYPE: Stage III Boeing 737 aircraft (137 seats)

I. Southwest’ Service Proposal Meets the Maximum Number

of AIR-21 Decisional Criteria

Southwest Airlines is a recent new entrant to Washington National Airport, as it 

was only through its acquisition of AirTran Airways that Southwest was able to acquire 

slots and operating rights at DCA. Exhibit WN-101 displays Southwest’s four current 
3

routes and its proposed OKC route from DCA. The actual flight schedule for the DCAOKC-DAL round trip routing is shown in Exhibit WN-102. Exhibit WN-103 indicates how 

expansion of routes and services at DCA will integrate well with Southwest’s entire 

network, bringing its low fares, competition, and award-winning customer service to 

passengers throughout the United States as well as points in the Caribbean and 

Mexico. 

Southwest’s proposed service would significantly advance the statutory goals of 

AIR-21 and Vision 100 by fulfilling four out of the five statutory criteria, the maximum 

number possible. See Exhibit WN-100. Specifically, Southwest’s proposal would: 

provide service by a limited incumbent air carrier at Washington National Airport; 

Southwest is a limited incumbent at DCA;

offer DCA nonstop service to a community currently without any such service; 

OKC has no nonstop service to DCA; 

provide DCA service to a small community; OKC is classified as a “small hub” by 

the FAA; and 

produce the maximum competitive benefits, including low fares; Southwest’s 

proposed DCA-OKC-DAL service will generate over $8 million in consumer fare 

savings annually, and will stimulate approximately 55,000 new passengers. See 

Exhibits WN-118 and WN-121. 

In short, Southwest is uniquely positioned not only to fulfill the decisional criteria of AIR21 to the greatest extent possible but to leverage these two available slot exemptions to 

achieve maximum competitive benefits for consumers.1

 

1

The only AIR-21 criterion that Southwest’s proposal does not meet is providing “competitive nonstop air 

transportation on a monopoly nonstop route to DCA,” as this factor is mutually exclusive with providing the 

nonstop DCA service to a community “without existing nonstop air transportation to DCA.” 
4

II. Oklahoma City Is An Ideal Market For Selection In This Case 

Today, with no nonstop service between OKC and DCA, 33,664 O&D 

passengers travel annually between these two points on connecting services. In fact, 

OKC is the largest DCA market without nonstop service today (Exhibit WN-105). The 

DCA-OKC market is 39% larger than DCA-JAN (Exhibit WN-106) which has enjoyed 

nonstop service for many years from Atlantic Southeast Airlines d/b/a Delta Connection 

and Comair, and most recently from US Airways under temporary authority. Further, 

OKC has the highest fare among the top ten inside perimeter markets without nonstop 

service to DCA (Exhibit WN-107). Given these facts, it is not surprising that

Southwest’s low-fare nonstop service in the DCA-OKC market will produce significant 

fare savings to tens of thousands of travelers. 

Southwest Airlines has served Oklahoma City for 32 years. During this time 

OKC has served as a major gateway to Southwest’s network at Dallas Love Field due to 

the Wright Amendment restrictions on nonstop long-haul service at DAL. In its June 

2012 schedule Southwest will operate 146 weekly departures and 19,813 seatdepartures to/from nine OKC nonstop cities (Exhibit WN-104). The DCA-OKC route will 

integrate well in Southwest’s route system, providing one-stop service between DCA 

and many beyond-OKC connecting markets, four of which are less than 30% circuitous

for a DCA-OKC passenger. 

Selecting Southwest’s proposal would provide the State of Oklahoma its only 

nonstop route to DCA, the close-in airport to the Nation’s Capital. Oklahoma is the 

second largest state for natural gas production and the fifth largest in crude oil 

production. Approximately 25% of all employment in Oklahoma is tied to the energy 
5

industries (Exhibit WN-108). Consequently, efficient low-fare nonstop service between 

OKC and DCA is critical to serving the needs of the energy industry and will provide 

convenient access to federal government offices in Washington DC. Beyond this, 

Washington always attracts a high volume of tourist traffic and Southwest expects a 

large leisure component to its traffic forecast. 

III. Despite Being the Nation’s Largest Passenger Airline, Southwest is 

Severely Under-Represented at DCA

Southwest Airlines is the nation’s largest domestic airline in terms of passenger 

traffic carried. For YE Q3, 2011 Southwest carried 101.4 million domestic O&D 

passengers. Delta was second with 78.9 million, and the other limited incumbents 

ranged from 5.5 million (Spirit) to 20.4 million (JetBlue). See Exhibit WN-110. Using 

four common metrics of size, Southwest ranges from 1.6 to 2.0 times the size of all new 

entrants and limited incumbents combined (Exhibit WN-111), yet operates far fewer 

slots.

In fact, Southwest operates only 2.9% of DCA slots (through its AirTran subsidiary) 

today (Exhibit WN-110). Despite carrying over five times more passengers than the 

next largest limited incumbent (JetBlue), Southwest has about a third fewer DCA slots 

than JetBlue (25 vs. 34 slots respectively). Looking at the matter another way, 

Southwest holds by far the smallest share of DCA slots and slot exemptions among 

limited incumbents relative to the number of passengers each airline carries. As Exhibit 

WN-113 shows, JetBlue and Republic hold more than seven and eight times more slots 

respectively than Southwest in relation to the number of passengers they carry. 

By all reasonable measures the under-representation of Southwest at DCA is 

obvious. An award to Southwest of additional slot exemptions in this proceeding would 
6

not only fully satisfy the AIR-21 criteria discussed above but advance the public interest 

by enabling the nation’s largest airline to provide effective low-fare access to DCA from 

travel markets across the country. 

IV. Southwest’s Proposal Will Generate Significant Public Benefits

Southwest’s proposal will provide major public benefits not just for DCA-OKC 

travelers but for consumers in many other DCA markets as well. Oklahoma City is 

currently a small hub without any nonstop service to or from DCA. While OKC has 

service to both Baltimore (BWI) and Washington Dulles (IAD), Southwest will provide 

the only nonstop flights in the DCA-OKC market. In addition, Southwest will provide 

excellent passenger options in the Washington – Dallas market with single-plane 

service between and DCA and DAL. This will benefit thousands of Washington-Dallas 

travelers by offering daily one-stop service between close-in DCA and close-in Dallas 

Love Field. This will be a superior service for many passengers between WashingtonDallas, and will provide sorely-needed competition to the high-fare nonstops offered by 

American Airlines and US Airways between DFW and DCA. 

Furthermore, Southwest’s proposal will add on-line connecting competition in 

several other large markets beyond OKC, by offering new travel options to and from 

DCA through OKC. These connecting markets - including Denver, Las Vegas, Phoenix 

and Houston (see Exhibit WN-205) - will benefit not just from Southwest’s new nonstop 

service between DCA and OKC, but also from Southwest’s low fares and its “no fees” 

policy for checked baggage or reservations changes.2 

 

2 Unlike most other U.S. airlines, Southwest does not charge fees for checking one or two bags, or for 

making changes to passenger reservations. 
7

One of the primary AIR-21 carrier selection criteria, echoed by the DOT’s 

February 17 Notice, is which carrier’s proposal . . . “will produce the maximum 

competitive benefits including low fares.” With respect to this factor, Southwest projects 

significant traffic stimulation and consumer fare savings as a direct consequence of its 

low fares and significant service improvements in the markets discussed above. 

With the assistance of the Campbell-Hill Aviation Group, Southwest has 

projected that its proposed DCA-OKC-DAL service will generate over $8 million 

annually in consumer fare savings (Exhibit WN-118). This total amount is comprised of 

approximately $6 million in the DCA-OKC market, $ .5 million in the DCA-DAL market, 

and $1.5 million in connecting markets between DCA and points beyond OKC (Id.). 

These projected fare savings are attributable primarily to the fact that current DCA-OKC 

fares are 66% higher, and current DCA-Dallas fares are 53% higher, than Southwest’s 

average fare levels for markets of the same distance. See Exhibits WN-119 and WN120. 

Due to the expected fare reductions and improved service, Southwest expects to 

stimulate approximately 55,000 new passengers over the DCA-OKC-DAL route. See 

Exhibit WN-121. This stimulation will occur due to both lower fares and superior service 

in the DCA-OKC and DCA-DAL markets. Southwest will carry many of the new 

passengers of course, while others will be carried by competing carriers who lower their 

fares in response to Southwest. As a result, the market as a whole will grow 

significantly, and passengers will benefit both directly by flying on Southwest’s new 

service and indirectly by patronizing competing carriers that are forced to reduce fares 

in response to Southwest’s competition.
8

Details of Southwest’s traffic forecast and fare benefits calculations, including a 

full explanation of the methodology and assumptions used by the Campbell-Hill Group,

are set forth in the 200 series of exhibits attached hereto. 

CONCLUSION

For the reasons stated above, we urge the Department to grant the two slot 

exemptions at issue in this proceeding to Southwest Airlines to enable it to initiate the 

only nonstop service from Oklahoma City to Washington National Airport, with single 

plane service beyond OKC to Dallas Love Field, as specified in the Application. 

Respectfully submitted,

__________________________

Robert W. Kneisely 

March 5, 2012
CERTIFICATE OF SERVICE

I hereby certify that on March 5, 2012, a copy of the foregoing was served via email on the following persons:

msinick@ssd.com (Alaska Airlines)

carl.nelson@aa.com (American Airlines)

sascha.vanderbellen@delta.com (Delta Air Lines)

jeff.morgan@delta.com (Delta Air Lines) 

robert.cohn@hoganlovells.com (Frontier Airlines)

patrick.rizzi@hoganlovells.com (Frontier Airlines

jhill@dowlohnes.com (JetBlue Airways)

dkirstein@yklaw.com (Spirit Airlines)

jyoung@yklaw.com (Spirit Airlines)

John.Fredericksen@suncountry.com (Sun Country Airlines)

dan.weiss@united.com (United Air Lines)

howard_kass@usairways.com (US Airways)

benjamin.slocum@usairways.com (US Airways)

pmurphy@lopmurphy.com (USA3000)

barbara.russell@virginamerica.com (Virgin America)

susan.kurland@dot.gov

todd.homan@dot.gov

Mark Kranenburg

Director of Airports

Will Rogers World Airport

7100 Terminal Drive, Box 937

PO Box 59937

Oklahoma City, OK 73159

__________________________

Leslie C. Abbott
Southwest’s Proposal Satisfies the Maximum 

Number of AIR-21 Selection Criteria

Docket OST-2000-7182

Exhibit WN-100

Satisfied by

AIR-21 Criteria Southwest Proposal

1. Is the applicant a new entrant or limited incumbent? YES

2. Does the applicant propose nonstop service to a

community without existing nonstop service to DCA? YES

3. Does the applicant propose nonstop DCA service 

to a small community? YES1

4. Does the applicant propose competitive nonstop

service on a monopoly nonstop route to DCA? NO2

5. Will the applicant's proposed service produce

the maximum competive benefits, including low fares? YES

1/ OKC is classified as a small hub by the FAA.

2/ This factor is mutually exclusive with factor # 2 above.
Southwest’s Service Proposal
DAL

OKC

MCO

MKE

DCA

ATL

RSW

Southwest Airlines’ DCA-OKC Proposal with

Single-Plane Service to DAL

Docket OST-2000-7182

Exhibit WN-101

Source: OAG Schedules for the week of June 11th through the 17th, 2012

Current WN Routes

Proposed WN Route 

 The DCA-OKC route is 1,158 nonstop 

miles, inside the 1,250-mile DCA perimeter
Southwest’s DCA-OKC B737-700 Nonstop Service Proposal

1405

1015

0950

0900

Washington

(DCA)

Oklahoma City

(OKC)

Dallas

(DAL)

1450

1650

1735

1830

Daily Daily

Note: All Times Local.

Freq/Wk

Docket OST-2000-7182

Exhibit WN-102
Southwest’s System Route Map

Docket OST-2000-7182

Exhibit WN-103

Source: OAG Schedules for the week of June 11th through the 17th, 2012

Weekly Departures 27,690

Weekly Seat-Departures 3,737,079

Airports Served 103

 

DCA

OKC
OKC is the Largest Inside Perimeter 

Market Without DCA Nonstop Service

And Has Extremely High Fares
DCA

BWI

DAL

OKC

DEN

PHX

LAS

HOU

MCI

MDW

STL

From OKC, Southwest Serves DAL

And Eight Other Large Markets

Docket OST-2000-7182

Exhibit WN-104

Source: OAG Schedules for the week of June 11th through the 17th, 2012

Weekly Departures 146

Weekly Seat-Departures 19,813

Airports Served 9

 

Current WN Routes

Proposed WN Route

Current DAL Route 
OKC is the Largest Inside Perimeter

Market Without Nonstop Service from DCA

(Top Ten Markets)

DCA

Fared Passengers

33,664

30,257

25,665

20,695

18,716 18,340 18,161 18,060 18,028

16,458

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Oklahoma City Tulsa Wichita Moline Key West

Cedar Rapids

Gulfport

Baton Rouge Northwest Arkansas Montgomery

Docket OST-2000-7182

Exhibit WN-105

Source: US DOT O&D Survey YE Q3 2011, via Diio, LLC.
DCA-OKC Has 39% More Passengers than DCA-JAN

33,664

24,303

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

DCA-OKC DCA-JAN

+39%

Source: US DOT O&D Survey YE Q3 2011, via Diio, LLC; OAG Schedules June 2012

O&D Fared Passengers

(YE Q3 2011)

Current Daily Nonstop

Seats (June 2012): 0 69

Current Daily Nonstop

Flights (June 2012): 0 1

Docket OST-2000-7182

Exhibit WN-106
OKC Has the Highest Fare of the Top Ten Inside

Perimeter Markets Without Nonstop Service 

DCA

Average Fare1

$271

$257 $245 $234 $222 $212 $208 $200

$187 $187

$0

$50

$100

$150

$200

$250

$300

Oklahoma City

Cedar Rapids

Montgomery Northwest Arkansas Baton Rouge Tulsa Gulfport

Key West Wichita Moline

1/ Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees.

Source: US DOT O&D Survey YE Q3 2011; US DOT Form 41, via Diio, LLC.

Docket OST-2000-7182

Exhibit WN-107
Oklahoma And Texas Are the Nation’s Leading Energy Producers

1/ According to Mickey Hepner, an economist and Dean of the University of Central Oklahoma’s College of Business Administration.

Source: http://stateimpact.npr.org/oklahoma/tag/energy-industry/

Source: U.S. Energy Administration.

• Roughly one-quarter of all jobs in Oklahoma are tied to the energy industry, either directly or 

indirectly /1

• Oklahoma is one of the top natural gas-producing States in the Nation (ranking #2 in the U.S. 

in 2010 with 9% - Texas was #1 with 31%).

• More than a dozen of the 100 largest natural gas fields in the country are found in Oklahoma.

• Oklahoma was the 5th largest state for crude oil production in 2009.

• Oklahoma has five petroleum refineries with a combined capacity of roughly 3 percent of the 

total U.S. refining capacity.

• In terms of total energy production in 2009, Oklahoma ranked 8th in the country

Docket OST-2000-7182

Exhibit WN-108
Southwest is the Largest Domestic U.S. Carrier

But is Severely Under-Represented at DCA
Despite Carrying More Domestic Passengers than

Any Other U.S. Airline Southwest Has Only 2.9% of DCA Slots

Source: FAA Slot Reports, Current and Future, dated 2-13-2012 and OAG schedules June 2012.

460

109

97

76

18

6

34 25 20

6

0

50

100

150

200

250

300

350

400

450

500

US DL AA UA AC AS B6 WN F9 NK

Legacy/Foreign Flag Carriers Low Cost Carriers

DCA Slots

Total Slots = 851

Percent of 

Airport Total 54.1% 12.8% 11.4% 8.9% 2.1% 0.7% 4.0% 2.9% 2.4% 0.7%

54%

Docket OST-2000-7182

Exhibit WN-110

Total 

Domestic O&D 

Passengers 

(Millions) 41.6 78.9 46.2 64.2 N/A 15.1 20.4 101.4 10.7 5.5
Southwest Is Nearly Twice The Size of All Other 

Limited Incumbents Combined

Ratio of Southwest to 

All Other New/Limited 

Incumbents Combined

2.0

1.9

1.6 1.6

0.0

0.5

1.0

1.5

2.0

2.5

Domestic Mainline Departures per

Week

Domestic Mainline Seats per Week Domestic Annual O&D Passengers Domestic Annual Revenue

Docket OST-2000-7182

Exhibit WN-111

Sources: OAG Schedules for week of June 11-17, 2012; U.S. DOT O&D Survey YE Q3 2011 and U.S. DOT Form 41, via Diio, LLC.
Southwest Carries Five Times More Passengers

Than the Next Largest Limited Incumbent 

Annual Domestic

O&D Passengers

(Millions)

Source: US DOT O&D Survey YE Q3 2011, via Diio, LLC.

Docket OST-2000-7182

Exhibit WN-112

101.4

20.4

15.1

10.7

5.5 5.6 4.3 1.1

62.7

0

20

40

60

80

100

120

WN B6 AS F9 NK G4 V X SY New/Limited

Incumbent

Combined
Southwest’s Share of DCA Slots is Disproportionately Small 

Among Limited Incumbents 

DCA Slots per 

100,000 Domestic

O&D Passengers

8

13

38

59

66

0

10

20

30

40

50

60

70

WN AS NK B6 F9 Source: US DOT O&D Survey YE Q3 2011, via Diio, LLC.

Docket OST-2000-7182

Exhibit WN-113
Summary of Benefits from 

Southwest’s DCA-OKC-DAL Proposal
1/ From WN-202

2/ From WN-204, WN-207, WN-208, WN-209.

43,617

10,337

18,450

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

72,404

Fared Passengers1

Carried by Southwest

$6.1

$0.5

$1.5

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

$8.2

million

Consumer Fare SavingsTotal Market

(Millions)2

Summary of Southwest’s Consumer Benefits Forecast

(First Normalized Year)

Docket OST-2000-7182

Exhibit WN-117

DCA-OKC

DCA-DAL

DCA-Cnx Beyond OKC
$3.6

$2.5

$6.1

$0.1

$0.4

$0.5

$1.5

$1.5

$ 0

$ 1

$ 2

$ 3

$ 4

$ 5

$ 6

$ 7

$ 8

$ 9

$10

Savings to Existing Passengers Savings to New Passengers Total Passenger Savings

Docket OST-2000-7182

Exhibit WN-118 Southwest’s DCA-OKC Proposal Would Generate 

More Than $8 Million Annually In Total Consumer Fare Savings

(First Normalized Year)

$5.3

Million

$2.9

Million

Total

Consumer Fare 

Savings (Millions)

$8.2

Million

Source: Sum of Exhibits WN-204, WN-207 and WN-208.

DCA-OKC

DCA-DAL

DCA-Cnx Beyond OKC
$271

$163

$0

$50

$100

$150

$200

$250

$300

Current Southwest

Current DCA-OKC Fares Are 66% Higher than 

Southwest’s Average Fare Levels

+66%

1/ Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees.

2/ Based on Southwest Yield Curve (Appendix 6)

Source: US DOT O&D Survey YE Q3 2011; US DOT Form 41, via Diio, LLC.

Average Fare 1 DCA-OKC

Docket OST-2000-7182

Exhibit WN-119

2
$251

$164

$0

$50

$100

$150

$200

$250

$300

Current Southwest

Current DCA-Dallas Fares are 53% Higher than 

Southwest’s Average Fare Levels

+53%

1/ Fared passengers only. Excludes all taxes and government charges. Includes estimated checked baggage and rebooking/change fees.

2/ DAL and DFW combined.

3/ Based on Southwest Yield Curve (Appendix 6)

Source: US DOT O&D Survey YE Q3 2011; US DOT Form 41, via Diio, LLC.

DCA-Dallas2

Average Fare 1

Docket OST-2000-7182

Exhibit WN-120

3
Source: Exhibits WN-203 and WN-206

Docket OST-2000-7182

Exhibit WN-121

Southwest’s Low Fares And DCA-OKC Nonstop Service

Will Generate nearly 55,000 New Passengers In the Single-Plane Markets

(First Normalized Year)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

DCA-OKC Market

Stimulation

DCA-DAL Market

Stimulation

Total New Passengers

46,220

8,614

Fared O&D

Passengers

54,834

As a result of Southwest’s new nonstop service between DCA and OKC, and first single-plane (one-stop) service between 

DCA and DAL via OKC, Southwest will stimulate the markets and generate new passengers. This stimulation occurs due to 

lower fares and improved service. Assuming competitors respond by lowering their fares, some of the newly generated 

passengers will be carried by Southwest and others will be carried by competing carriers who lower their fares in response 

to Southwest. Southwest’s own traffic will be composed of some newly generated passengers (people who would not have 

traveled at all but for the lower fares and/or improved service), and some passengers diverted from other carriers.
Docket OST-2000-7182

Exhibit WN-200

Page 1 of 6

Narrative Introduction to the Southwest Airlines

Traffic And Consumer Fare Savings Forecast

Introduction

One of the primary carrier selection criteria articulated by the DOT is which carrier’s proposal . . . “will produce the 

maximum competitive benefits including low fares.”1 Southwest projects significant competitive benefits, traffic 

stimulation, and consumer fare savings as a direct consequence of its low fares and service proposal. These benefits will 

accrue to passengers in the (1) local DCA-OKC nonstop market, (2) DCA-DAL one-stop (single-plane) market, and (3) 

DCA-beyond OKC to points other than DAL.2 

In order to support the estimates of consumer savings and traffic stimulation occasioned by Southwest’s low fares 

in the new markets at issue, detailed forecasts have been prepared by Campbell-Hill Aviation Group using several of its 

models. This narrative discusses the forecast methodology and summarizes the results. Exhibit WN-201 shows 

Southwest’s proposed DCA-OKC route that is 1,158 nonstop miles and well inside the perimeter. The data on this chart 

summarize the impact of Southwest on traffic stimulation, as well as the number of local O&D passengers it expects to 

carry. Exhibit WN-205 presents the complete DCA-OKC-DAL routing including the four connecting segments that would 

be less than 30% circuitous to/from DCA. The base year O&D traffic is also shown for each of the three relevant traffic 

components. 

 

1 DOT Notice served February 17, 2012, in this docket. 

2

For purposes of this forecast Southwest has limited its participation in connecting markets to DCA-HOU, PHX, LAS, and DEN.
Docket OST-2000-7182

Exhibit WN-200

Page 2 of 6

Campbell-Hill’s forecast follows the DOT tradition of estimating traffic and fare savings in the first normalized year. 

This is the 12 month period following six months of introductory marketing and operational activity. For purposes of this 

case Campbell-Hill assumed a July, 2012 start-up of operations and so the first normalized year would be CY 2013. The 

base year for historical traffic is YE Q3, 2011. Campbell-Hill used this as the initial level of traffic in CY 2013 prior to the 

application of fare and service stimulation formulae. 

Total fare savings in the DCA-OKC local market are forecast to be $6.1 million (Exhibit WN-204). In addition,

consumer fare savings in the DCA-DAL and DCA-connecting beyond OKC markets will be $0.5 million and $1.5 million 

respectively (Exhibits WN-207 and WN-208). The total fare savings due to Southwest’s proposal is $8.2 million (Exhibit 

WN-209). This is the same amount of savings that is shown in Exhibits WN-117 and WN-118. 

Total forecast consumer savings that will result from Southwest’s DCA-OKC-DAL service may be summarized as 

follows:

Market

Consumer Savings – First Normalized Year

(Millions)

DCA-OKC $6.1

DCA-DAL 0.5

DCA-Connections beyond OKC3 1.5

 Total $8.24

 Source: Exhibits WN-204, WN-207 and WN-208.

 

3 Connecting passengers in four markets: DCA-HOU, PHS, LAS, and DEN.

4

Total does not add due to rounding
Docket OST-2000-7182

Exhibit WN-200

Page 3 of 6

The DCA-OKC Local Market

Exhibit WN-202 presents the local traffic forecasts (Lines 1 through 7). Campbell-Hill estimated traffic stimulation 

assuming all market participants reduce their fare to Southwest’s level. For YE Q3, 2011 the average fare was $271. The 

expected average fare to be earned by Southwest is $163 (Exhibit WN-106)

5

. 

When the fare values are input to the Campbell-Hill price elasticity model, and using an elasticity coefficient of -1.2 

(Appendix 1), the base traffic of 33,664 DCA-OKC annual O&D passengers will increase by 85.1%. Using Campbell-Hill’s 

QSI model6to estimate the additional service stimulation resulting from Southwest’s daily nonstop in the DCA-OKC 

market, traffic is projected to increase by a further 28.2%. The combined stimulation is 137.3%. When the base traffic is 

increased by 137.3% the resultant market forecast for the first normalized year is 79,884 passengers (Exhibit WN-202, 

Line 5). Southwest’s share based on the QSI model will be 54.6%, or 43,617 local DCA-OKC passengers for its nonstop 

flight. 

 

5

For YE Q3, 2011 Southwest’s average fare earned in the BWI-OKC local market was $205. BWI is a major focus city for Southwest and seats 

available to the local OKC-BWI market are limited due to the significant capacity allocated to passengers connecting at BWI. This has the effect of 

raising the weighted average fare earned for the local BWI segment. In the case of the DCA-OKC market, the share of seats available for the 

local market will be greater and it is expected that a larger share of the market will be leisure at DCA than at BWI. The leisure market books 

further in advance and pays lower fares than the business market. Finally, as a small DCA participant and a relative newcomer, Campbell-Hill 

expects Southwest to be more price aggressive in order to create patronage and capture loyalty as it builds a more significant DCA presence over 

the long run. All factors considered, Southwest’s weighted average fare in the DCA markets will resemble its system average for comparable 

distances (see Appendix 6), rather than the BWI-OKC average fare. 

6

The Campbell-Hill QSI model for estimating service stimulation includes all relevant schedule and capacity characteristics of competing flights, 

including on-line connecting options. 
Docket OST-2000-7182

Exhibit WN-200

Page 4 of 6

Southwest has demonstrated to the Department in many previous proceedings7the significant traffic stimulation 

generated by its low fares. In fact, the DOT has publically characterized this phenomenon as the “Southwest Effect.” In 

this case the additional traffic stimulated as a consequence of Southwest’s low fares and new service at DCA is 46,220 

passengers in the local DCA-OKC market and 8,614 passengers in the DCA-DAL market.8 Southwest’s traffic forecast 

conservatively claims no stimulation in the connecting markets beyond OKC, but in reality there would be some. The 

traffic projected to be carried by Southwest has two sources: (a) Southwest will carry a significant number of the newly 

generated passengers, and (b) it will divert some traffic from other carriers offering an inferior service. It is only 

coincidental that the Southwest local DCA-OKC O&D traffic (43,617 passengers) is similar to the amount of stimulation in 

the market (46,220 passengers). 

Campbell-Hill’s price stimulation model estimates the change in traffic as a result of the change in average fare. 

For the DCA-OKC local market the current average fare is $271 and the expected Southwest average fare, derived from 

its system yield curve,9is $163 (Exhibit WN-119). All fares shown in Southwest’s exhibits exclude taxes and government 

charges, but they include the estimated average amount of checked baggage and reservation re-booking/cancellation 

fees per passenger.10 

The Campbell-Hill model is presented in Appendix 1. It incorporates a price elasticity coefficient of -1.2 which is 

consistent with prior FAA findings (Appendix 1, page 3). The model assumes that competitors will reduce their fares to 

match the Southwest level ($163 per DCA-OKC passenger). The estimated fare savings to existing passengers in the 

 

7

See for example the pending 2012 Chicago-Cancun Combination Service Proceeding, Docket OST-2012-0001. 

8

Exhibits WN-203 and 206. 

9

Appendix 6. 

10 Estimated by analysis of carrier revenues reported in DOT Form 41 filings.
Docket OST-2000-7182

Exhibit WN-200

Page 5 of 6

market is determined by multiplying the difference in average fare11 by the YE Q3, 2011 actual passenger volume. This 

amounts to $3.6 million (Exhibit WN-204). 

The next step is to estimate the monetary value of Southwest’s low fares to the newly generated passengers. They 

are consumers who would not have made the trip at all except for the availability of Southwest’s fare, or the matching fare 

by one of Southwest’s competitors. For this purpose Campbell-Hill employs a consumer surplus model as it has been 

utilized by the FAA.12 This benefit amounts $2.5 million for the newly generated passengers (Exhibit WN-204). Adding 

together the two components of consumer fare savings produces a projected value of $6.1 million in the DCA-OKC local 

market (Exhibit WN-204). 

Campbell-Hill recognizes that all competitors may not match Southwest’s fare precisely. Some carriers may 

charge more than Southwest, and for certain segments of the market some carriers may charge less than Southwest. On 

average, however, the operative assumption about fare-matching is reasonable. If competitors do not reduce fares to the 

same level of Southwest, then Southwest will achieve a higher market share than Campbell-Hill has forecast using only its 

QSI analysis. Either way it is reasonable to conclude that Southwest will achieve its traffic and load factor, as forecast in 

Exhibit WN-202.

The DCA – Beyond OKC Markets

To estimate the number of passengers Southwest will generate for markets beyond OKC Campbell-Hill examined 

other comparable market scenarios in the Southwest system. For this purpose the BOS-STL and beyond STL markets 

 

11 $271 minus $163, or $108 per passenger (Exhibit WN-119). 

12 See Appendix 1, page 4. 
Docket OST-2000-7182

Exhibit WN-200

Page 6 of 6

were utilized. In this example, the flow and single-plane beyond-STL traffic is 66% as great as the local BOS-STL 

passengers (Appendix 3). Applying this factor to the projected Southwest local DCA-OKC passengers produces an 

estimate of 28,787 passengers who will originate or terminate at DCA and travel beyond OKC, either single-plane to/from 

DAL, or they will be connecting in OKC to other Southwest flights (Exhibit WN-202, Line 8). 

The portion of beyond traffic that is forecast to be DCA-DAL is 10,337 passengers. This is based on the 

relationship between Southwest’s BWI-OKC and BWI-DAL (single-plane through OKC) passengers. In this instance BWIDAL is 23.7% of the local BWI-OKC traffic. (Exhibit WN-202, Line 9 and Appendix 2). The residual amount beyond OKC 

traffic is 18,450 passengers which is only 2.1% of the total 880,830 passengers in four beyond markets (Exhibit WN-202, 

Line 10 and Exhibit WN-205). 

The total fared passengers that originate or terminate at DCA is forecast to be 72,404 (Exhibit WN-202, Line 11). 

Adding 8.6% for zero-revenue passengers brings the total on-board to 78,630 passengers and a load factor of 80.2% in 

the first normalized year (Exhibit WN-202, Lines 12-14). 

Exhibit WN-207 utilizes the same Campbell-Hill methodology to estimate consumer savings that will accrue to 

existing and newly generated passengers in the DCA-Dallas market. The total is $518,000 in the first normalized year.13 

Exhibit WN-208 shows the projection of annual consumer fare savings for the OKC connecting passengers 

Southwest expects to carry in four markets: DCA-HOU, PHX, LAS, and DEN. To be conservative Campbell-Hill has 

made no assumption of fare-matching or traffic stimulation in these connecting markets. Consequently, the projection of 

consumer savings for connecting passengers is limited to only the savings obtained by the passengers who travel on 

Southwest. This will amount of $1.5 million in the first normalized year (Exhibit WN-208). 

 

13 See also Appendix 4. 
Southwest’s 

Traffic and Consumer 

Fare Savings Forecast
After Stimulating the Market with Its Low Fares and Nonstop Service 

Southwest Will Carry 43,617 Local DCA-OKC Passengers

(First Normalized Year)

Docket OST-2000-7182

Exhibit WN-201

OKC

DCA

1 Base Year O&D

2 Market After Stimulation

3 Newly Generated (stimulation)

4 WN Local O&D

33,664

79,884

46,220

43,617

1/ Line 2 – Line 1

2/ Southwest’s share of the total market after stimulation.

Source: Exhibit WN-202

1,158 Nonstop Miles 

Line

DCA-OKC 

Market

Annual

Passengers

1

2
Southwest Airlines’ DCA-OKC Passenger Forecast

(First Normalized Year)

Docket OST-2000-7182

Exhibit WN-202

Source/Basis

1 Base Passengers 33,664 YE Q3 2011 from O&D Survey via Diio, LLC.

2 Fare Stimulation 85.1% See Appendix 1.

3 Service Stimulation 28.2% From Campbell-Hill Aviation Group QSI Model.

4 Total Stimulation 137.3% (1+Line 2) x (1+Line 3) -1.

5 Passengers After Stimulation 79,884 Line 1 x Line 4.

6 Southwest Share 54.6% From Campbell-Hill Aviation Group QSI Model.

7 Southwest Local Passengers 43,617 Line 5 x Line 6.

8 Total One-Stop DAL and Connecting Passengers Beyond OKC 28,787 Calculated at WN'S BOS-STL One-Stop/Connecting to Local Ratio = 66% (See Appendix 3). 

9 Estimated DCA-DAL One-Stop Southwest Passengers 10,337 Estimated at 23.7% of Local (Line 7) based on WN's experience in its BWI-OKC and BWI-DAL markets (See Appendix 2). 

10 Other Beyond OKC Southwest Passengers 18,450 Line 8 - Line 9. This equates to 2.1% of the Other Beyond OKC base passengers (Exhibit WN-201).

11 Subtotal Southwest Fared Passengers 72,404 Line 7 + Line 8.

12 Adjusted Passengers Including Non Fared 78,630 Calculated at 108.6% of fared passengers derived from WN system-wide O&D traffic for YE Q3 2011.

13 Total Seats 98,010 137 seats x 365 days x 2 directions x 98% completion.

14 Load Factor 80.2% (Line 12 / Line 13) x 100%
Source: U.S. DOT Origin & Destination Survey, via Diio, LLC.

1/ Includes fare and service stimulation based on QSI. See Appendix 1 for details of stimulation estimates.

Note: Includes fared passengers only.

Docket OST-2000-7182

Exhibit WN-203

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Market Passengers Before Southwest Service Market Passengers After Southwest Service

Southwest Service Would Generate 46,220 Additional 

DCA-OKC Passengers Assuming Other Carriers Match Its Low Fares

(First Normalized Year)

+137%

DCA-OKC 

Annual

Passengers

79,884

Potential 

Stimulation1

46,220

33,664

(YE Q3 2011) (First Normalized Year)

33,644
Source: Appendix 1.

Docket OST-2000-7182

Exhibit WN-204

Southwest’s DCA-OKC Service Would Generate More Than $6 Million 

Annually In Consumer Fare Savings to Local Passengers

(First Normalized Year)

$0

$1

$2

$3

$4

$5

$6

$7

Savings to Existing

Passengers

Savings to New

Passengers

Total Passenger

Savings

$3.6

Million

$2.5

Million

DCA-OKC

Consumer Fare 

Savings (Millions)

$6.1

Million

(Market Stimulation)
DAL

PHX

LAS

DEN DCA

OKC

HOU

Southwest’s DCA-OKC-DAL Single-Plane Service Will Provide 

Connecting Opportunities to Almost 900,000 Passengers Annually

(Constrained to Maximum 30% Circuity)

1/ YE Q3 2011

Source: OAG Schedules for June 2012, US DOT O&D Survey YE Q3 2011, via Diio, LLC.

DCA-OKC

DCA-DAL/DFW

Other Beyond OKC

Total Passengers 

33,664

410,214

880,830

1,324,708

O&D Passengers1

Current WN Routes

Proposed WN Route 

Docket OST-2000-7182

Exhibit WN-205
Source: U.S. DOT Origin & Destination Survey, via Diio, LLC.

1/ Service stimulation only. See Appendix 4 for details of stimulation estimates.

Note: Includes fared passengers only.

Docket OST-2000-7182

Exhibit WN-206

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Market Passengers Before Southwest Service Market Passengers After Southwest Service

Southwest’s Service Would Generate 8,614 Additional 

DCA-DAL Single-Plane Passengers Due To Service Stimulation

(First Normalized Year)

+2.1%

DCADAL/DFW

Annual

Passengers

418,828

Estimated

Stimulation1

8,614

410,214

(YE Q3 2011) (First Normalized Year)

410,214
Source: Appendix 4.

Docket OST-2000-7182

Exhibit WN-207

Southwest’s DCA-DAL One-Stop Service Would Generate More Than $518,000 

Annually In Consumer Fare Savings For Dallas Passengers

(First Normalized Year)

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

$550

Savings to Existing

Passengers

Savings to New

Passengers

Total Passenger

Savings

$148,000

$370,000

DCA-DAL/DFW

Consumer Fare 

Savings 

(Thousands) $518,000

(Market Stimulation)
Source: Appendix 5.

Docket OST-2000-7182

Exhibit WN-208

Southwest’s DCA-OKC Service Would Generate 

$1.5 Million Annually In Consumer Fare Savings to Beyond OKC Passengers

(First Normalized Year)

$0.0

$0.5

$1.0

$1.5

$2.0

Savings to Existing

Passengers

Savings to New

Passengers

Total Passenger

Savings

$1.5

Million

0

DCA-Beyond OKC

Consumer Fare 

Savings (Millions)

$1.5

Million

(Market Stimulation)

Conservative 

Assumption
Source: Sum of Exhibits WN-204, WN-207 and WN-208.

Docket OST-2000-7182

Exhibit WN-209 DCA-OKC-DAL Proposal Will Generate $8.2 Million 

of Annual Consumer Fare Savings

(First Normalized Year)

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

Savings to Existing

Passengers

Savings to New

Passengers

Total Passenger

Savings

$5.3

Million

$2.9

Million

Total

Consumer Fare 

Savings (Millions) $8.2

Million

(Market Stimulation)

This corresponds to the same fare savings shown in Exhibits WN-117 and WN-118
Appendices
Summary of Consumer Surplus Benefits from

Southwest Proposed DCA – OKC Service

Appendix 1

Page 1 of 4

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (K) (L) (M) (N) (O)

Passengers Predicted Projected WN Fare Passengers After New Total Consumer

O&D Market Miles Before Stimulation Service Stimulation Base Fare Fees Total Fare Absolute % Stimulation Stimulation Passengers Existing Passengers New Passengers Surplus

Market

DCA-OKC 1,158 33,664 28.2% $256.35 $14.90 $271.25 $163.15 -$108.10 -40% 85.1% 79,884 46,220 $3,638,952 $2,498,104 $6,137,056

Fare Stimulation

Average Fare Before WN Fare Change Consumer Surplus 
(A) Nonstop Miles

(B) DCA fared passengers for YE Q3 2011

(C) Predicted Service stimulation from Campbell-Hill Aviation Group, QSI model.

(D) Average Fare for Fared Passengers (excludes passengers using frequent flier miles). Includes nonstop and connecting passengers. Uses 

YE Q3 2011 U.S. DOT Origin-Destination Passenger Survey data via Diio, LLC.

(E) Average checked baggage and rebooking/cancellation fees per passenger derived by Campbell-Hill Aviation Group using DOT Form-41 and 

DOT data (YE Q3 2011).

(F) Column D + Column E

(G) DCA-OKC fare calculated at Southwest’s yield curve (Appendix 6) for YE Q3 2011, plus checked baggage and rebooking/cancellation fees. 

(H) Column G – Column F

(I) Column H / Column F

(J) Calculated using a price elasticity coefficient of -1.2 (See Appendix 1, page 3). 

The arc elasticity formula is: Arc Ep = [(Q2-Q1)/((Q1+Q2)/2)] / [(P2-P1)/((P1+P2)/2)] , where Q1 = passengers before WN service,

Q2 = Passengers after WN service, P1=Fare Before WN service, P2 = Fare After WN service.

(K) Column B x (1+ Column C) x (1+ Column J)

(L) Column K – Column B

(M) Column H x -1 x Column B

(N) Column H x Column L x 0.5 x -1. This is the triangle area in Appendix 1, page 4.

(O) Column M + Column N

Summary of Consumer Surplus Benefits from

Southwest Proposed DCA – OKC Service

Appendix 1

Page 2 of 4
Lower Fares Would Increase Passenger Volume

“Total elasticity of demand for air travel is a measure of air travelers’ response to 

variations in the cost of air travel. This parameter measures the percentage change in air 

passenger trips resulting from a one-percent change in trip prices. Total elasticities are 

negative because price and quantity demanded are inversely proportional. ...

... FAA sponsored an extensive review of the economic literature regarding total elasticity 

of demand for air travel at a national level. The findings of this review are summarized in 

Chapter 2 and Appendix G of Report to Congress: Child Restraint Systems, Vol. 1 and 2, 

May 1995. The elasticity values found in the academic literature range from –0.6 to –4.5. 

Representative values for business and non-business travelers are presented in Table 

C.2. Values in Table C.2 can be tailored to the mix of passengers at an airport. Overall 

weighted values are –0.79 and –1.59 for business and non-business travelers, 

respectively, with an overall average (assuming the 50/50 mix typical of the nation at 

large) of –1.2. ...”

Source: “FAA Airport Benefit-Cost Analysis Guidance”, Office of Aviation Policy and Planning, Federal Aviation Administration, December 15, 1999.

Appendix 1

Page 3 of 4
Consumer Surplus Illustration

Fare

Passengers

Marginal Consumer Surplus to Current Passengers 

(Measured in this report)

Consumer Surplus to New Passengers

(Measured in this report)

P1

P2

Q1 Q2

Unchanged Consumer Surplus

(Not measured in this report)

Demand Curve

Source: “FAA Airport Benefit-Cost Analysis Guidance”, Office of Aviation Policy and Planning, Federal Aviation Administration, December 15, 1999.

Appendix 1

Page 4 of 4
Calculation of BWI-DAL One-Stop Passengers As a Percent of 

BWI-OKC Local Passengers

Appendix 2

Source/Basis

1 WN BWI-OKC Local Passengers 40,200 From O&D Survey via Diio, LLC., YE Q3 2011.

2 Total WN BWI-DAL One-stop Passengers - All Routings 46,130 From O&D Survey via Diio, LLC., YE Q3 2011.

3 OKC Share of BWI-DAL One-Stop Seats 20.64% From OAG YE Q3 2011.

4 Estimated DAL One-stop Passengers via BWI-OKC 9,521 Line 2 x Line 3.

5 DAL One-stop Passengers As a % of BWI-OKC Local 23.7% (Line 4 / Line 1) x 100%.
Calculation of WN One-Stop/Connecting Percentage for DCA-OKC

Based on Southwest’s BOS-STL Experience

Appendix 3

Source/Basis

1 WN BOS-STL Local 94,428 From O&D Survey and T-100 Data via Diio, LLC., YE Q3 2011.

2 WN BOS-STL Flow and Direct 62,734 From O&D Survey and T-100 Data via Diio, LLC., YE Q3 2011.

3 Flow % of Direct 66% (Line 2 / Line 1) x 100%.

4 BOS-STL Distance (Miles) 1,044

BOS-STL is comparable to DCA-OKC

because they both are east-west markets with 

little flow behind the east coast point, and the markets 

are similar in distance
Summary of Consumer Surplus Benefits from

Southwest Proposed DCA – DAL Single-Plane Service

Appendix 4

Page 1 of 2

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (K) (L) (M) (N) (O) (P)

Passengers Predicted Projected WN Fare Passengers After New Diverted Total Consumer

O&D Market Miles Before Stimulation Service Stimulation Base Fare Fees Total Fare Absolute % Stimulation Stimulation Passengers WN Passengers Existing Passengers New Passengers Surplus

Market

DCA-DAL/DFW 1,184 410,214 2.1% $236.54 $13.51 $250.05 $164.16 -$85.89 -34% 0.0% 418,828 8,614 1,723 $147,984 $369,916 $517,900

Fare Stimulation

Average Fare Before WN Fare Change Consumer Surplus 

This analysis conservatively assumes 

no fare matching by other carriers.
Summary of Consumer Surplus Benefits from

Southwest Proposed DCA – DAL Single-Plane Service

Appendix 4

Page 2 of 2

(A) Nonstop Miles.

(B) DCA fared passengers for YE Q3 2011.

(C) Predicted Service stimulation from Campbell-Hill Aviation Group, QSI model.

(D) Average Fare for Fared Passengers (excludes passengers using frequent flier miles). Includes nonstop and connecting passengers. Uses YE 

Q3 2011 U.S. DOT Origin-Destination Passenger Survey data via Diio, LLC.

(E) Average checked baggage and rebooking/cancellation fees per passenger derived by Campbell-Hill Aviation Group using DOT Form-41 and DOT 

data (YE Q3 2011).

(F) Column D + Column E

(G) DCA-DAL/DFW fare calculated at Southwest’s yield curve (Appendix 6) for YE Q3 2011, plus checked baggage and rebooking/cancellation fees. 

(H) Column G – Column F.

(I) Column H / Column F.

(J) For this one-stop market Southwest did not estimate traffic stimulation due to its lower fares.

(K) Column B x (1+ Column C) x (1+ Column J)

(L) Column K – Column B

(M) 10,337 forecast WN DCA-DAL passengers less the stimulated passengers from Column L. This is the estimated passengers diverted from 

current DCA-DAL/DFW flights.

(N) Column M x -1 x Column H.

(O) Column H x Column L x 0.5 x -1. This is the triangle area in Appendix 1, page 4.

(P) Column N + Column O.
Summary of Consumer Surplus Benefits from

Southwest’s Connecting Service Beyond OKC

Appendix 5

Page 1 of 2

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (K) (L) (M) (N) (O)

Passengers Assumed Projected WN Assumed Fare Passengers After Weighted Forecast WN Consumer

O&D Market Miles Before Stimulation Service Stimulation Base Fare Fees Total Fare Absolute % Stimulation Stimulation Passenger Share Ave. Fare Savings Connecting Passengers Surplus

Market

DCA-DEN 1,476 286,416 0.0% $205.85 $10.62 $216.47 $174.51 -$41.96 -19% 0.0% 286,416 32.5%

DCA-HOU/IAH 1,218 282,256 0.0% $277.72 $16.20 $293.93 $165.46 -$128.47 -44% 0.0% 282,256 32.0%

DCA-LAS 2,089 163,318 0.0% $230.94 $12.71 $243.65 $192.17 -$51.48 -21% 0.0% 163,318 18.5%

DCA-PHX 1,979 148,841 0.0% $291.66 $13.26 $304.92 $189.30 -$115.62 -38% 0.0% 148,841 16.9%

 880,830 880,830 -$83.89 18,450 $1,547,852

Fare Stimulation

Average Fare Before WN Fare Change

This analysis conservatively assumes 

no traffic stimulation or fare matching by other 

carriers in these four connecting markets.
(A) Nonstop Miles

(B) DCA fared passengers for YE Q3 2011

(C) Assumed no service stimulation for connecting markets.

(D) Average Fare for Fared Passengers (excludes passengers using frequent flier miles). Includes nonstop and connecting passengers. Uses YE 

Q3 2011 U.S. DOT Origin-Destination Passenger Survey data via Diio, LLC.

(E) Average checked baggage and rebooking/cancellation fees per passenger derived by Campbell-Hill Aviation Group using DOT Form-41 and 

DOT data (YE Q3 2011).

(F) Column D + Column E

(G) DCA-Beyond fare calculated at Southwest’s yield curve (Appendix 6) for YE Q3 2011, plus checked baggage and rebooking/cancellation fees. 

(H) Column G – Column F

(I) Column H / Column F

J) For Beyond OKC markets Southwest did not estimate traffic stimulation.

(K) Column B (no stimulation is assumed)

(L) Share of O&D passengers from Column K

(M) Fare Change from Column H weighted by O&D share from Column L

(N) Forecast WN connecting passengers. Assumes that all are diverted from existing services.

(O) Column H x -1 x Column N

Summary of Consumer Surplus Benefits from

Southwest’s Connecting Service Beyond OKC

Appendix 5

Page 2 of 2
y = 2290.2x-0.722

R

2

 = 0.9174

0.0¢

10.0¢

20.0¢

30.0¢

40.0¢

50.0¢

60.0¢

70.0¢

80.0¢

90.0¢

100.0¢

0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600

Southwest's Yield Curve

Nonstop Miles

YE Q3 2011 Nonstop 

Market Yield

Yield is based on fared passengers.

Note: Fare curve includes markets with nonstop service and over 600 one-way departures for YE Q3 2011.

Source: U.S. DOT, O&D Survey and Schedule data, YE Q3 2011, via Diio, LLC.

Appendix 6