[extropy-chat] Air / Car Accident rates

J. Andrew Rogers andrew at ceruleansystems.com
Thu Jan 20 17:20:08 UTC 2005


> Scan down the list of airlines with no fatal accidents.  
> One of them stands out, waaaaay out, since these airlines
> are all little guys except...  Southwest Airlines!  SWA has
> been around for over 30 years, they run skerJILLions 
> of flights every day, and no fatalities!  Remarkable.


It is a very well-run airline.  It probably helps that they only have a
single type of aircraft across their fleet (Boeing 737) and that their
ground crews, mechanics, and pilots are non-union.  I had friends who
worked for SWA as mechanics and ground crew, and while you often had to
work harder and there was no union protection (it did not take much
sloppiness for a mechanic to get fired), most preferred the working
environment at that airline to the others.  They also have a flatter pay
scale than many of the other airlines.

One of the very smart things they've done over the years is accumulate a
vast stockpile of futures contracts on jet fuel, often purchased during
times when fuel prices were very cheap like the '90s.  This was
sometimes criticized as foolish use of capital, since the futures
contracts were generally priced with a comfortable margin above market
(probably an incentive for the fuel companies to agree to them).  Of
course, given where crude oil prices are today, having bought jet fuel
futures contracts from here to eternity at the equivalent of $20/bbl
crude has them laughing all the way to the bank.  A number of other
airlines buy some futures contracts on jet fuel as a hedge against
market fluctuations, but SWA basically lives on its futures contracts
and does not even worry about market prices.  It makes it easier to
project operational costs, that's for sure.


j. andrew rogers




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