Southwest cuts its commission on eTicket, thus hoping to save $40 million

The impact of September 11, 2001 on Priceline.com and Hotwire.com revenues

After the events of September 11, 2001, it is now time to save money… As a result, Southwest just announced that its commission rates on eTicket that used to be 8% (compared to 5% on paper tickets) would go down to 5% on October 15, 2001.

The company thus hopes to save $40 million a year.

A faster return to normal in "leisure" than in "business"

Nevertheless, Southwest must be optimistic as it noticed that leisure traffic was picking up faster than business travel.

Load factor is increasing

And yet, the company thinks that the increase that was noticed in the volume of leisure traffic could also be the consequence of bookings that had been cancelled or delayed in the last few weeks and that, as a result, we should remain cautious as for what this increase really means.

There was a clear drop after the events as the load factor for Southwest airplanes was 53.4% in September 2001, compared to 65.7% in September 2000.

Please also note that the load factor for the week ending September 23, 2001 was 38.5% and that it went up to 52.4% for the last week of September.

Southwest hopes that this load factor will keep on increasing in the first week of October.

Source : Southwest Airlines

Priceline.com indicated that airline bookings for the last week of September 01 were 71.9% of what they were the week before the events.

As far as car rentals are concerned, this rate was 74.4% of what it was for the same period.

Please note that these rates were…29.7% (airline bookings) and 43.7% (car rentals) for the week ended September 17, 2001.

As for Hotwire, it indicated that the booking rates registered on its site at the end of September 01 were down 40% from what they were before September 11, 2001, which puts into perspective the figures regarding Internet traffic alone that proved a little bit optimistic…

Sources : Priceline.com - Hotwire.com