All Articles Leadership Live from #SABEW11: Southwest's Gary Kelly and American's Arpey on the state of the airline industry

Live from #SABEW11: Southwest’s Gary Kelly and American’s Arpey on the state of the airline industry

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Southwest Airlines CEO Gary Kelly and American Airlines CEO Gerard Arpey shared the stage for a discussion of the state of the airline industry at the annual convention of the Society of American Business Editors and Writers this week in Dallas.

Among the key points from their conversation:

  • Fuel costs continue to be a concern. High oil prices dampen demand for the industry, and both companies are looking for ways to reduce those costs. Kelly downplayed the role of alternative fuels, at least in the near term.
  • Modernizing the air traffic control system needs to become a greater priority, to improve reliability and reduce fuel costs. “We were very disappointed with ourselves as an industry that we went through the big stimulus bill and there was very little money there for the modernization of our air traffic control,” Arpey said. More money should have gone to aviation, as opposed to high speed rail, he argued. “Shame on us, that we didn’t effectively make the case.”
  • Last week’s safety incident took Southwest by surprise, given the age of the plane. “We didn’t expect that kind of event,” Kelly said. “Boeing didn’t either.” He emphasized the company’s “flawless” safety record and that the airline was in compliance with the FAA’s maintenance rules.
  • Not filing for bankruptcy continues to drag on American’s earnings, relative to other airlines that did. It creates a cost gap, especially with pensions, Arpey acknowledged. Still, it’s “not something we’re ashamed of. It’s something we’re proud of.”