Aviation Southwest CEO: Competing on price remains critical By Robert Silk / January 21, 2016 Share 1 -- Southwest plans to continue competing with its low-cost competitors on price, CEO Gary Kelly said during the carrier’s fourth-quarter earnings call Thursday. “We’ll win if we provide the best service at the lowest price,” he said. Kelly’s comments came in response to a stock analyst’s question about whether Southwest needs to offer fares as low as ultra-low-cost competitors, especially in light of the higher end product it offers. The Dallas-based carrier used to have the lowest operating costs in U.S. airline industry, but now is outperformed in that category by Spirit and Frontier.“I think it is a slippery slope to think that our costs can be higher based on service,” Kelly said. He also noted that fares at Southwest, which doesn’t charge change fees or for carry-on bags or the first two checked bags, have to be compared carefully to the unbundled fares offered by other carriers.His remarks were part of an upbeat conference call in which Southwest reported record earnings for the fourth quarter as well as record annual earnings.The carrier recorded net income of $2.18 billion in 2015, an improvement of 92% over 2014. Net income in the fourth quarter was $536 million, up from $190 million the previous year. Bucking the trend of other major U.S. airlines, Southwest passenger revenue also grew in the fourth quarter, coming in at $4.6 million, up 3.3% from last year. The airline overcame a 5.1% decrease in the average paid fare by increasing its total passenger count by 8.7%.On the expense side, Southwest benefitted from a 31.6%, or $369 million, year-over-year decrease in fuel costs during the fourth quarter. The carrier reported earnings per share of 90 cents, in-line with analysts’ expectations. Revenues of $4.98 billion missed forecasts by $20 million.