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Southwest Airlines Co. (LUV - Analyst Report) is extending free in-flight, live TV service to passengers who watch on-demand TV on their devices in collaboration with Dish Network Corp. (DISH - Analyst Report). The live TV service, which began in 2013, will now include up to 20 channels and 75 on-demand programs by the end of this year. We believe the new collaborative effort will enable Southwest Airlines to win more passengers, which is imperative for its revenue generation.

According to reports, nearly 440 planes of Southwest Airlines are equipped with Wi-Fi connectivity that will enable DISH Network's programming on the flight. The company charges around $8 per day to provide WI-Fi access on board to passengers.

As a result, the more that passengers access the live TV service by Dish, the better will be the prospect of ancillary revenue generation by Southwest.  As per the deal, Dish can utilize the loyalty-program points offered to passengers by Southwest as bonus to those who sign up for the live TV service.

Southwest Airlines is focused on a number of initiatives to increase revenues and reduce costs over the next three years. The company is expected to report strong revenues and earnings for full-year 2013 based on the All-New Rapid Rewards program and increased ancillary product offerings such as EarlyBird check-in, fleet modernization effort and pet fees. Southwest is also adding novel features to its services and introducing products, which are enhancing its value and profitability.

Furthermore, Southwest targets introducing a new reservation system based on international reservation technology by 2014. These actions are expected to contribute the most to the planned $1.1 billion revenue increase in 2013 from last year.

Southwest Airlines currently carries a Zacks Rank #1 (Strong Buy).

Other Stocks

Other stocks in this sector include International Consolidated Airlines Group, S.A. (ICAGY), which has a Zacks Rank #1 (Strong Buy) and Air France-KLM SA (AFLYY) that has a Zacks Rank #2 (Buy).

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