Southwest's ancillary revenue slips as AirTran merger continues

Washington DC
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Southwest Airlines' ancillary revenue from items like reservation change fees continues to decline as the airline assumes more flying from subsidiary AirTran Airways.

The Dallas-based carrier reports ancillary revenue under a category called "other revenue".

During the second quarter, other revenue declined by $7 million, or 3.1%, to $220 million.

The drop was "primarily due to a decline in ancillary revenues," according to Southwest's second quarter securities filing, posted today with the US Securities and Exchange Commission.

"The majority of the decline in ancillary revenues was due to the conversion of AirTran aircraft into the Southwest livery and the adoption of Southwest fee policies for a larger portion of customers," Southwest says in its filing. "The company currently expects such trend to continue as the integration process continues."

Though Southwest recently began charging customers for early check in and priority boarding, it remains the only US carrier that does not charge customers to change reservations. Southwest also does not charge for checking a first and second bag.

Like most other US carriers, AirTran charges for a host of additional services and products: customers pay $15 for phone reservations and $75 to change or cancel reservations. First checked bags cost $25 on AirTran and second checked bags cost $35, according to AirTran's website.

Despite the decline in ancillary fees, Southwest's total operating revenue climbed 0.6% during to quarter to $4.64 billion.

The carrier reports an operating profit for the quarter of $433 million, down from $460 million during the same period last year.