2. Low Cost Carriers within an Evolving Industry - Growth and Challenge With special thanks to: Raymond James and Associates, Inc. (RJ&A) and GCW Consulting 2

3. U.S. Airline Industry Earnings History and Projections Source: RJ&A, SEC Filings, Forms 41, Carrier Reports 3

4. U.S. Airline Industry Earnings History and Projections 4 Source: RJ&A, SEC Filings, Forms 41, Carrier Reports

5. Forms 41, Reported Profit and Loss Year Ending 2004 3Q 5

6. 6

7. PAX MARKET SHARE CAN OVERSTATE LCC PENETRATION 7

8. 8 LCC Growth did not happen entirely by Accident

9. Non-Fuel Costs Have Stayed More Stable Than You Think 9 Source: Forms 41, GCW Consulting

10. Highest Cost Carrier Twice as Expensive as Best LCC in Adjusted Stage Length Analysis 10

11. 11 The GAP is closing very slowly.

12. 12

13. Recently Legacy Carriers have tried to keep up with LCC capacity. 13 Source: Form 41s, GCW Consulting

14. Thesis: They Have Not Done it in a Cost Minimizing Way Legacy Carrier Airplane Size Chart Source: Form 41s; GCW Consulting 14

15. Breathtaking Negative Impact on Infrastructure Financing from Reduced Aircraft Size Government Failure: Executive, Legislative, and Judicial. Market Failure: Fighting the Last War. 15

16. A typical Regional Jet imposes the same infrastructure costs but contributes $60 per passenger less than a typical mainline narrow-body. 16

17. LCCs - Sharp Growth In Aircraft 17

18. AirTran’s Fleet To Almost Double Over Next Four Years (Includes the exercise of options) 18

19. JetBlue - Strong Growth in Aircraft to Drive Strong Capacity Growth End of Year Cumulative Total Fleet 19

20. 20 Southwest Growth Moderate in Relative Terms

21. Cost advantage particularly compelling for Southwest. 21

22. Profile of Fuel Hedges Pro Forma Comparison Ex-Fuel Hedges  Southwest utilizes financial derivative instruments for both short-term and long-term time frames when it appears the Company can take advantage of market conditions  LUV’s average fuel price during 2004 was $26.00/ barrel while market average was $ 41.51 / barrel  Has a mixture of purchased call options, collar structures, and fixed price swap agreements in place to hedge against rising fuel prices Southwest’s Average % Fuel Hedged Southwest’s ambitious fuel hedging program has enabled them to remain profitable while while holding fares to historically low levels. 22

23. 23

24. THE FATE OF THE HUBS - One Man’s Opinion 24

25. THE OTHER APPROACH 25

26. Concentration at National Level Not Dangerous National Herfindahl-Hirschman (HH1) Index Since Deregulation Source: US DOT OD1A Database Notes: Domestic O&D Passengers 26

27. The Seven Phases of Airline Deregulation - Thus Far Phase 1 (1978 - 1980) INITIAL SHOCK Entry of former charter carriers; UA goes Point-to-Point; Two Tier Pricing Approved. Phase 2 (1980 - 1984) BIG ADJUSTMENTS Frequent flyer programs; information technology and yield management; Hubs develop including international; new entrants fail (all but one). Phase 3 (1984 - 1988) MERGER MANIA An historic shift in competition policy. WN moves onto the radar screen. Phase 4 (1989 - 1993) RETRENCHMENT AND HUB DOMINANCE Recession, war, oil prices, too much for the unprotected middle tier except for one. 27

28. The Seven Phases of Airline Deregulation (continued) Phase 5 (1994 - 2000) RECOVERY, BOOM, AND DOMINANCE Demand soars; price discrimination accelerates; new entrants fair poorly; profits approach records but labor costs keep pace. Phase 6 (2000 - Present) TRAGEDY AND RESTRUCTURING LLCs emerge; Swissair and United in the Tank; Do you believe in the “great (wo)man” theory or in the market? Phase 7 - BE OPTIMISTIC 28