It's no secret that airlines have been raising fares in an attempt to offset soaring jet fuel prices in the wake of the Iran war.
However, it does come as a surprise that travelers have so far been more than willing to pay extra for their trips, with Southwest Airlines CEO Bob Jordan reporting zero drop-off in terms of demand, according to Reuters.
"With fares up though that much, there's been no drop-off in demand at all," Jordan said during a Bernstein investor conference this week.
It hasn't been just one or two cost hikes. Southwest has joined at least seven industry fare increases since February and that has Jordan confident that the airline industry can retain a higher share of these fare increases after fuel prices eventually come down.
The collapse of budget carrier Spirit Airlines also benefits Southwest and its rivals, which have one fewer competitor in the market.
The fact that demand has sustained points to a future where these higher airfares become the norm.
Jordan also suggested that Southwest could continue to improve its bottom line by investing further in premium options such as enhanced cabin offerings like a "true first class."
The recently transformed airline, which now operates with assigned seating, charges for checked bags and offers extra legroom seats, could also expand its network to include some in-demand long-haul international routes.
"I want to give you fewer and fewer reasons to book another airline," Jordan told the conference.
In terms of mergers and acquisitions, Southwest currently has nothing in the works, but Jordan acknowledged the current environment is opportune for a combination, evidenced by rumors involving major U.S. carriers in recent months.
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