Southwest Airlines Raises Domestic Fares To Combat Higher Costs

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DALLAS (CBS Local) -- Southwest Airlines has begun raising domestic fares as it struggles to keep up with an unexpected jump in expenses.

The low-cost carrier began raising domestic fares $2 to $5 one-way last week, according to Bloomberg. By Monday, the airline had increased approximately 90,000 fares.

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Southwest is facing unexpected pressure from rising operating costs. The airline has been investing in technology upgrades, new planes and expanded airport facilities.

Last month, Southwest forecast that costs for each seat flown a mile will increase by at least 3 percent in 2019, even after excluding fuel and other items. That's up from the nearly 1 percent that analysts were expecting.

"We're not in a panic. We're not in a crisis. Financially, we've never been stronger," Chief Executive Officer Gary Kelly told Bloomberg. "The revenue outlook for 2019 is very good and suggests that having a goal for operating margin expansion if fuel is constant, is not unrealistic."

Travel demand is booming for 2019 and that makes it easier for airlines to raise prices.

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"The revenue outlook for 2019 is very good, and suggests that having a goal for operating margin expansion, if fuel is constant, is not unrealistic," Kelly said at Southwest's headquarters in Dallas.

While employee-related costs are the airline's biggest expense, Southwest won't offer an early retirement or buyout program to workers, Kelly said.