Captain Jeff Martin Senior Director Flight Operations Southwest Airlines

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1 Captain Jeff Martin Senior Director Flight Operations Southwest Airlines

2 Southwest s Fleet Southwest achieves one of its primary competitive strengths low operating costs by operating only one aircraft type, the Boeing 737. The use of a single aircraft type allows the Company to simplify scheduling, maintenance, flight operations, and training activities. Southwest Airlines Fleet Information (As of June 30, 2009) Aircraft Average Number Number Number Type Seats Age (Yrs) of Aircraft Owned Leased B B B TOTALS

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4 The Future of Aviation Pic of futuristic plane here

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6 Southwest Airlines is proud to be leading the industry in deploying our 500+ aircraft into NextGen airspace.

7 Southwest Airlines has taken the lead in our industry with our previously-announced commitment to Next Generation navigation techniques known as RNP. With higher energy costs, we need a commitment to the Next Generation of technology to continue to reduce fuel consumption, costs, and emissions, remarked Chairman, President, and CEO Gary Kelly at this year s Annual Shareholders Meeting

8 Elements of NextGen Success The success of NextGen is dependent on the industry and the government working together. Southwest has worked closely with the FAA from the beginning of this project, and we conduct quarterly updates with the FAA Administrator. Coordination and communication are keys to success. FAA Administrator Randy Babbitt said, We must take advantage of what operators already have invested. RNP and RNAV work. We know that with the airlines and the economy still looking at a steep climb, the ROI [return on investment] is even more important. Southwest Airlines could not agree more. Achieving a return on investment is necessary to justify continued NextGen efforts.

9 FAA s Timeframe for Implementation of NextGen NextGen implementation falls into three timeframes. Near term ( ): The focus is on realizing the value of investments by operators, like Southwest Airlines investment of $175 million, as well as FAA investments in satellite-based navigation and conventional navigational infrastructure. Key components of the near term objective is wide-scale RNAV implementation and the introduction of RNP for enroute, terminal, and approach procedures. Mid term ( ): is centered on shifting to predominantly RNP operations for improving flight efficiency and airport access. Far term ( ): initiatives concentrate on PBN in the NextGen Airspace through integrated RNP and automation enhancements.

10 Our NextGen RNP Story In March of 2007, Southwest made an unprecedented commitment of $175 million to advance NextGen and make RNP an integral part of our day-to-day operations. Southwest based our business plan, and set the standard for our Return on Investment (ROI), by determining that we need to reduce our flight track miles by 3 miles per leg. Reducing flight track miles burns less fuel. Fuel is an airlines highest cost behind labor so there is a natural incentive for airlines to reduce fuel burn, which translates into reduced aircraft emissions and lower fuel costs. To put it in perspective: Southwest burned 1.5 billion gallons of fuel in Southwest may have come late to the RNP world, but we hit the ground running and haven t looked back since.

11 Elements of NextGen Success (cont.) Developing and implementing our RNP Program is, without a doubt, one of the most difficult, complicated, time-consuming and expensive projects Southwest has undertaken. In order for the industry and the public to achieve the full benefits of RNP, it is incumbent to design and implement flight procedures like those at Chicago s Midway Airport. For NextGen to succeed, FAA, airlines, and other stakeholders must all be in sync. Existing regulations and guidelines from the 1960s and 1970s need to be updated in order to utilize and benefit from NextGen capabilities and technology.

12 RNP Benefits: Environment, Consumers, and Carriers By using available technologies like RNP, the implementation of NextGen can be accelerated. If implemented correctly and widely throughout the national aviation system, RNP will: 1. Strengthen our environment by greatly reducing the amount of fuel we consume and greenhouse gases we emit. 2. Provide our Customers with less congestion and fewer delays. 3. Improve safety and operational performance of the commercial aviation industry.

13 4 Distinct Areas of Southwest s NextGen RNP Project 1. Aircraft equipage and modification: Each of our 500 aircraft required some equipment modification, which consumed 80% of our NextGen budget. Today, 66% of our fleet is RNP capable, and we will complete our remaining modifications within three years 2. FAA regulatory approval: For two years, Southwest has been working with FAA toward achieving regulatory approval. We are now in Phase 4 of OpSpec approval. Health care required 1000 pages our OPSPEC application consisted of 1871 pages. 3. Pilot Training: Training is underway. Developing the curriculum took 19 months and consumed 13% of our budget. 4. Airport procedures: Southwest is working closely with the FAA to assist in the design of new RNP flight procedures. Our goal is to have at least one carbon negative RNP procedure at each of the airports we serve.

14 Designing RNP Procedures Southwest is working closely with the FAA to design RNP procedures at: BOI, RDU, STL, PBI, MCI, OAK, RNO, and SAN

15 WHAT DOES IT LOOK LIKE

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17 Proof is in the Demonstration Flights On March 8, 2009, Southwest flew a demonstration RNP flight roundtrip between DAL and HOU. Based on these demonstration flights, RNP can reduce fuel burn and carbon dioxide emissions by as much as 6 percent per flight. Translating these savings across our network, we could burn 90.6 million less gallons of fuel and reduce our CO2 emissions by 1.9 billion pounds annually.

18 6% Fuel and Carbon Reduction March 8, 2009 Demo Flight Results Fuel Reduction CO 2 Reduction Demo Flight Full Year Demo Flight Full Year DAL to HOU HOU to DAL -228 lbs, gals -317,533 gals -718 lbs -6,698,378 lbs -59 lbs gals -81,640 gals -186 lbs -1,722,199 lbs City Pair Total Did You Know, In Applying a 6% reduction to the U.S. airline industry lbs, gals -399,173 gals -904 lbs -8,420,577 lbs U.S passenger and cargo airlines consumed 12.7 billion gallons of jet fuel for domestic operations. SWA consumed 1.5 billion gallons of fuel. Used in 2008 (Gallons) Fuel Reduction 6% Reduction (Gallons) CO 2 Reduction Pounds Metric Tons SWA 1.5 Billion Million -1.9 Billion -867 Thousand U.S Billion -760 Million -16 Billion -7.3 Million Based on 2008 data Based on fuel density of 6.7lbs/gal Source: ATA Source: SWA Fuel Committee

19 RNP FACTOID: Track Mile Savings For each mile you save, you... save seconds of flight time. save 29.3 pounds of fuel. eliminate 91.9 pounds of CO2. eliminate.34 pounds of NOx.

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22 Major Modification Milestones December 2010: Dual FMC and GPS will be fully installed on the Classic fleet. Currently, 75 of our Classic aircraft have been modified (40% of our Classic fleet) : LAD (Large Area Displays) glass panel displays installed on Classic fleet. Currently, 66% of our fleet is RNP capable. All remaining modifications will be completed within three years.

23 Old School Technology

24 Current SWA FlightDecks SWA Round Dial B

25 COCKPIT

26 Our Training Continues All 6,000 Pilots will have completed RNP Step 3 Training, consisting of a one-day ground school and one-day simulator, by March As part of the ground school, Pilots utilize AeroSim, an interactive tool that was provided for Pilots to use on their personal computers. Below, Pilots utilize AeroSim during Step 3 Training.

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28 Lessons Learned: Next Steps It s equipment-dependent It s over-regulated It reduces fuel and emissions! It will require the industry working together to move the FAA It s FUN It takes time

29 What Have We Been Doing for the Past Modified more than 340 aircraft Built a four-step automation training program for 6,000 Pilots (who are currently in Step 3 Training) Testified for Congress on PBN On track for first Classic aircraft digital conversion round dial to PFD/ND Audited and redesigned our automation policy Volunteered for Lead carrier status at 6 airports Prepared OpSpec and received approval to proceed to phase 4 for C52 and C384 Test flew DAL/HOU RNP flights 12 Months?

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