EXPAND FUEL EFFICIENT FLEET
Another method of improving their CASM is by reducing the dependence on fuel. As seen above, fuel is the most significant contributor to their operating costs. As such, any reduction would help their operating margin. Boeing in recent years has been developing lighter and more fuel efficient planes, such as the 737 MAX and the Next-Generation 737. Southwest will be the first customer of the 737 MAX, and has ordered 150 with the first to be delivered in 201731. The Next-Generation 737 is a more immediate modernization solution, as Southwest continues replacing older aircraft. These new planes will also allow Southwest to phase out the Boeing 717s, which are essentially unnecessary in the point-to-point system they operate. Southwest must continue to be on the forefront of these developments, and though investing in the first of a technology carries an inherent risk, it is important that they take every opportunity to minimize fuel expenses and differentiate from the rest of the industry.