How does Southwest Airlines make money?

Pretty simple: Southwest airlines makes money by providing passenger air transportation in the continental US and "near-international" (Mexico, US Territories). More specifically, they make money via:

• Fares for air travel

• Recently, ancillary fees like baggage and in-flight concessions

Southwest differentiates itself from other airlines by offering competitively low fares, a high number of direct flights, and a promise of excellent customer services. These are currently "paid" for by fewer premium offerings like lounges, as well as a fleet that is comparatively old.