Southwest Airlines earned $400 million last year from fliers eager to board earlier to snag a better seat, the famously fee-averse carrier reported Thursday.
Southwest's EarlyBird Check-In lets customers pay to automatically check-in for their flight 36 hours before departure, giving them a crucial 12-hour head start on general travelers to help make sure they get their preferred spot in Southwest's open-seating system.
When it launched in 2009, Southwest charged $10 for the upgrade one-way and planned for it to bring in $100 million annually.
On Thursday, the company’s Chief Financial Officer Tammy Romo revealed that revenue from EarlyBird Check-Ins hit that mark -- in just the last three months alone.
“It’s been very successful,” Romo said. “It’s in high demand by our customers.”
The company’s CEO Gary Kelly pointed out that Southwest is a much bigger airline than it was in 2009 when EarlyBird Check-In was introduced. The service costs $15 today, a 50 percent jump from its early days.
Still, that works out to just over 70,000 passengers per day paying for early check-in, an average of about 15 to 20 travelers per flight.
That would work out to ~72,000 per day buying the product. Or 15-20 passengers per departure. #PaxEx $LUV https://t.co/mCAGoTESCW
— Seth Miller (@WandrMe) January 25, 2018
And it’s a meaningful boost in revenue for an airline that has avoided luggage and change fees to the chagrin of Wall Street analysts who worry the Dallas-based carrier is missing out on its share of ancillary revenue streams that have become worth tens of billions of dollars for the industry.
Southwest also offers upgraded boarding that guarantees one of the first 15 spots in the boarding line starting at $30. The option can only be purchased at the ticket counter or gate and availability varies by flight.
Romo revealed the EarlyBird numbers during Southwest’s Thursday earnings call with analysts, when the company reported fourth quarter profits of $1.9 billion.
That’s nearly quadruple what the company earned during the same time period the year before, a spike Southwest’s executives attributed to benefits from the recently passed tax legislation. For the full year, Southwest reported $3.5 billion in profits on revenues of $21.2 billion.
Still, the company’s share price closed the day down 3.3 percent at $60.19 amid a broader slump in airline stocks as investors fretted about the possibility of a fare war triggered by United Airlines' aggressive growth plans.
