I think the thing that's interesting is if you look at business select as not necessarily a proxy bu

Airchive: The focus of this interview is certainly going to be around the evolution that I think you guys [Southwest] have undergone over the last few years. Specifically with regards to making yourselves a very attractive option for business travelers in a way that I don t know that you were in the mid 90’s, late 90’s or early 2000’s. So I’ll start with sort of a high level question. Why does Southwest today present a compelling value proposition to business travelers?
Bob: Well, one thing to dispel is the fallacy that we have not been a business airline. Business customers value the right fare, and the right schedule and we have a very broad network now and a lot of flexibility: the ability to change car and rentals andtoronto flights if needed and the ability to do that without paying car and rentals andtoronto fees to do it. So there’s the schedule, reliability and flexibility.
So, it is kind of funny that folks think automatically of Southwest as a leisure airline [when] we carry more business customers car and rentals andtoronto than any other domestic carrier here. What we’re seeing that does confuse folks, is that business customers with all airlines, more and more over the years, are learning how to buy advanced purchase fares. So not just those last minute expensive fares. In the old days it was pretty easy: The cheap fares went to leisure and the expensive fares went to business, right? car and rentals andtoronto And that’s just not the case now.
Airchive: Right, and I know Jet Blue and Virgin America already had a revenue based program when you guys made the switch which I believe was in ’09. So, what kind of response has there been to that from the corporate and small business travelers that use your network frequently?
Bob:  Well, a couple car and rentals andtoronto things. You have to look at that in the context of the broad value composition, right? So, again, you know you have to offer the right fares, the flexible policy, the right network, great service all those things. So the loyalty program car and rentals andtoronto gets one component of the broad value composition. And we did make the change to base the program car and rentals andtoronto more on what you’ve paid. Because what we saw, really, is over time as we shifted from a short haul carrier to a more of a medium to long haul carrier, the rewards stayed the same. So the reward for long haul are credited with the exact same as a reward with a very short flight…[it] didn’t match the way our customers were flying any longer- [especially] our business customers.
We’re seeing just a tremendous response to the program. car and rentals andtoronto The share of wallet that we get. The annual spend per member. Every single metric is up-double digits. Every year since we introduced the program. Our Chase Rapid Rewards Visa card is one of the largest car and rentals andtoronto card- it’s one of the largest Visa card portfolios in the world. And it’s seen just tremendous growth since we’ve changed the program.
Bob:  Well, when you hear that, I think people automatically assume: well that must not be very good for the airline, but the economics of the program are right, so your partners are paying you the right amount of money for the points.  The economics of the program are very favorable as well, so not only is it a great quality program and it’s helped grow our rapid rewards quality program, but it’s a great financial program for Southwest.
Airchive: Staying along the theme of your business traveler focused product… Business Select, do you see opportunities for further enhancements? Adding services to that? …is there potential to kind of add different services on top of that? Or is the growth car and rentals andtoronto in Business Select revenues going to come from you guys winning more Business Select customers. Where do you think that mix lies?
Bob: You know, I think that s a great question. I think it’s all of that. So, we added business select. See we got a couple of different things. car and rentals andtoronto I’m sure you know we have different fare products; business car and rentals andtoronto select is a fare product that has attributes like more credit and early boarding and those kinds of things. And then we have add-ons like early bird where you can simply buy automated check in so you’re earlier car and rentals andtoronto in the line, you have better access to big space, seats and those kind of things. So over time, we have added optionality to what you can buy. Which is really different than forcing you to buy something a check bag, or you have to buy a fare product if you want flexibility to change your ticket. So we avoided that and rather give you the options.
We looked at adding things like live tv for example, car and rentals andtoronto rather than make that an option where there’s a charge and it’s free for business select [but] we decided instead to make live tv free to everybody.
I think the thing that’s interesting is if you look at business select as not necessarily a proxy but maybe just compare it to business class on other carriers, what we see is we actually sell more business select than other carriers sell first class seats. You might get on a plane on a competitor [with] 12 seats up front. But what you typically see is they only sell about 2% of the seats. So just a couple are actually sold as first class [while] all the rest of those are given away as part of the loyalty program. With business select, we’re obviously selling all of those. Part of that is a very modest differential from our other fares. car and rentals andtoronto And then second we have tried to maintain that to a reasonable number of people because you want to preserve the benefit. Is there a chance car and rentals andtoronto that we could expand that to perhaps a larger number? Of course we’ve looked at that, but I think to preserve the benefit there will always be a relatively small percentage of folks on the aircraft.
car and rentals andtoronto Airchive: I’m looking for some color as to how Southwest corporate market share and corporate business has sort of performed the past 2 to 3 years. I mean we get some data on your quarterly earnings call, but I’m maybe looking for sort of how that’s done and how it’s going to do moving forward, more importantly.
Bob: We divide corporate into three buckets. One is what I would call the corporate managed business…typically larger companies that we’re working with directly through technology. They may have agreements, they may not. They’ve got a way to display southwest fares and schedules through car and rentals andtoronto a piece of technology we have…we’re working with them through a more sophisticated way. Those are typically larger companies and larger car and rentals andtoronto contracts, larger amounts of staff.
We have corporate un-managed car and rentals andtoronto travel, so we have a relationship with typically a small business, but typically not a contract. So they’re coming at Southwest Airlines a different way. They may be offered a discount…they may have things like early bird, but we are not dealing with them technically car and rentals andtoronto the same way we’re dealing with the managed business.
And then third we’ve got corporate business that comes to us that we can detect that it’s corporate, but we have no literal relationship. So somebody is buying a business fare, or flying for business, but there’s no relationship with southwest airlines that we can detect. But we can detect you’re flying for business through symmetrics.
So you’ve got all three channels. And what I can tell you is that all three of those channels are growing faster than this entirety. So our corporate business is growing car and rentals andtoronto faster than our base business. The second thing I would tell you is that corporate managed business is growing substantially faster than the other corporate business. So we’re seeing double-digit growth in that managed car and rentals andtoronto corporate space. Again larger span, larger contracts, larger companies. And we’ve got a real focus there, so we got a team of people that work that like most carriers do. They have very aggressive goals. They have some marketing incentives that they can provide. So it’s definitely a focus area. But it comes down to if you don’t have the fare and you don’t have the service or the schedule or the network, you can’t win the business because you don’t have the product on the shelf without the buy. So that’s our biggest advantage-it’s just having the right fare and the right schedule.
Bob:  I’m really pleased, I tell you, I’m really pleased with the corporate business. It’s just kind of like the rapport of oyster discussion. They’re both growing faster than the base business by a lot.
Airchive: Network wise- this is going to be kind of my interpretation. I’m going to ask for sort of your response car and rentals andtoronto to it. So my interpretation of how you guys made yourself more prevalent in the business travel game is that you’ve car and rentals andtoronto always been there in places like Nashville, Baltimore, Washington- markets where you guys launched in mass in the ‘90’s. And you were sort of backfilling car and rentals andtoronto the loss of legacy hubs like US Air in Baltimore or Washington or American in Nashville or Raleigh-Durham. And you guys have always been sort of very compelling value proposition to business travelers in the secondary car and rentals andtoronto markets and kind of making sure they’re not- they have the wide range of network access that they need or would’ve lost without car and rentals andtoronto the HUB. Right, so then in recent years, places like ST Louis, Denver to a certain degree now that Frontier has sort of converted to an ultra-low class carrier in a quint network. You guys are playing sort of a similar role. So am I interpreting the role, the way you guys build some of your secondary markets car and rentals andtoronto in former legacy hubs correctly?
Bob:  You know what? That’s a great question and we could talk for an hour because it’s- network theory and how we got to where we are is really car and rentals andtoronto interesting because we’re a combination of all of our history and all of the moves we made and we’ve done things for a lot of reasons and it’s funny because people think like well you avoid primary airports. Well of course we don’t. We’re the largest carrier in the US. We’re in primary airports all over. But I think it’s like anything- as the company and network expanded, you’ve got to take on multiple strategies. So we started car and rentals andtoronto just in Texas flying short haul, connecting (something) to Texas. And as you expand, a couple of things happen. You can’t avoid geographies b