Flying Shouldn't Be a Sin

Southwest Airlines (NYSE: LUV) CEO Jim Parker recently talked with David and Tom Gardner on The Motley Fool Radio Show. We weren't able to broadcast their whole discussion, so we're publishing it in its entirety here, exclusively on Fool.com. Join us each day through May 23 for the full conversation.

TMF:  There has been a lot of talk of the federal bailout packages for the industry. How much money does Southwest Airlines get from the government?

Parker: We don't know exactly, at least I have not seen any numbers. I think they are still trying to total it up in Washington. It looks like we will probably get something over $200 million from this most recent legislation.

TMF:  Do you think the government should put together a broader package for the airlines that are struggling today?

Parker: First of all, we are grateful to Congress for what it has done. Personally, I think the overriding issue will continue to be the fact that the airline industry overall is the most heavily taxed industry in America. We don't think flying ought to be taxed as if it were a sin. It shouldn't be a sin tax. The cost of security really has been totally dumped on the airline passengers, which we think is fundamentally unfair because when the terrorists did what they did on 9/11, it was not intended to be an attack on American Airlines or United Airlines or the U.S. airline industry; it was an attack on America. The cost of defending against that kind of an attack on America really ought to be treated as a national security cost, a national defense cost.

TMF:  Jim, can you envision a future where a lot of the major airlines are no longer around and Southwest then begins to fly internationally?

Parker: We don't have international flying on our radar screen right now. We are a domestic airline and we do that very well. We know how to do it very well. That is what we are going to continue doing for the foreseeable future.

TMF:  Jim, what threat does JetBlue(Nasdaq: JBLU), which turned in a strong quarter this quarter, pose to Southwest... let's say over the next five years?

Parker: I think JetBlue is a good company, a well-run company. I think they are going to be a formidable competitor in the airline industry. With respect to competition with Southwest, I don't think JetBlue or anybody else would go out and put together a business plan saying we want to go compete against Southwest Airlines, which has the lowest unit cost of any airline in America (even after 32 years), the strongest financial position in the industry, and very loyal customers. So, we are certainly going to be aware of all current and potential competitors.

But at the present time we don't actually compete on an airport-to-airport basis anywhere with JetBlue. I have got a lot of respect for them and they certainly are a potential competitor. I think they will be a competitive force in the airline industry. So, we are definitely going to keep our eye in that direction. In terms of being a competitive threat to Southwest, at this point I would not describe them that way.

TMF:  Have you learned anything from JetBlue? I am assuming you have observed them.

Parker: Well, we are always learning. We are always learning from everything that goes on in the world. I wouldn't necessarily say we have learned anything specifically from JetBlue, but we are always trying to learn from every available source, all available sources.

Tomorrow: Herb Kelleher, smoking, drinking, and naked pilots.