SWA Business plan Tanking..Did I miss something?

[jonjuan]

Can't wait to see the Virgin America FAs and IFE - they will set the standard.

You forgot the Virgin America pilots. Likewise, they will also "set the standard." Tool.

 

[cessnapilot]

http://www.forbes.com/2007/05/30/mc...ity-cx_cg_0530markets10.html?partner=yahootix

How much longer will these cool guys, be cool guys? All the boasting and rash comments on this forum. Every dog.....

We need all the good paying airlines to do well. It doesn't do anyone any good to gloat if swa finds itself having a hard time. I admit, many swa guys seem to not be so modest... but was it any different at United or AA? I was at TWA, and they were a humble group (for obvious reasons). It would be nice if we could just appreciate what we have and wish the best for the others. We don't need to see VA or Skybus redefining the industry... but hopefully swa people realize that they aren't totally safe, and there is no reason to gloat about the new contracts at nwa or Delta... as I had one capt do to me when jumpseating... We only do well if we see our counterparts at other good airlines doing well.

 

[Hose A. Jiminez]

It's called "market share." Southwest will fly a route (even if they lose money on it) just to secure market share. Once they attract and establish a customer base on that route with extremely low fares, they'll start raising the fares enough to make a profit. This strategy is talked about in the book, "Nuts." That article was one person's opinion. I'm sure Gary Kelly and Southwest management know what they're doing!

The book "NUTS" said we specifically avoid expanding solely to grab market share. Granted our business plan today has changed, and im not saying that doesnt happen now (SFO?). Just wanted to point out what the book really said.

 

[On Your Six]

You forgot the Virgin America pilots. Likewise, they will also "set the standard." Tool.[/quote]

Why don't you re-read what I wrote Jacka$$. I specifically referred to VA's flight attendants and the in-flight entertainment vs. SWA's limited offerings. I mentioned nothing about the pilots - we are all aware of how low wages will negatively impact the profession. Check it out: http://www.virginamerica.com/difference/

You can't tell me SWA can compete with this product on overlapping routes if the prices are similar - especially on longer routes.

Jonjuan, you need to focus on what we are discussing - we are looking at the changing competitive environment - get it? Again, name calling and personal attacks are not great substitutes for logical arguments. This is a discussion board and I'd love to hear some counterpoints or people who don't believe SWA can be impacted by the rising LCC storm. Sometimes the truth hurts.

 

[SWA GUY]

On Your Six eats his own poop!

How's that for debating?

 

[Skyboy722]

Six- You have to realize that SWA HAS BEEN competing with this product for some time now. I will agree that this is an ever-changing and much more competitive landscape. And I also agree that SWA needs to be able and willing to adapt. But for you to say that "NOBODY LIKES" that cattle call boarding process, or the FA's jokes, or the SWA product in general is a bit excessive. Ticket prices are all pretty much the same these days, and in many markets, SWA is not the cheapest way to get there. Yet SWA carries more pax than anyone, and with consistently industry leading customer satisfaction. Hard to argue that "NOBODY LIKES IT".

 

[beytzim]

On Your Six,

As a former Netjets pilot, I will tell you that rich people will NOT "throw their money" at will. In fact, many of them are the cheapest a-holes out there. Rich people fly Netjets at any cost because the current perception is Netjets the safest and most reliable corporate airline. If that perception ever changes, Netjets will fail the next day. Nothing is written in stone, even Netjets, my friend. In fact, Netjets has some major flaws, such as most of their profits are from selling new shares - what happens when their growth flattens (and for more than just 18 months, like it did in '04)?

My favorite line from that article:
Instead of emulating the corrective steps taken by Delta Air Lines (nyse: DAL - news - people ) and AMR (nyse: AMR - news - people )'s American Airlines, Southwest's mangement simply implemented “modest cost-cutting” and other minor measures, he said.

Classic.

 

[momalley81]

The only thing worse than airline executives talking about airline economics, is airline pilots talking about airline economics.

 

[On Your Six]

Six- You have to realize that SWA HAS BEEN competing with this product for some time now. I will agree that this is an ever-changing and much more competitive landscape. And I also agree that SWA needs to be able and willing to adapt. But for you to say that "NOBODY LIKES" that cattle call boarding process, or the FA's jokes, or the SWA product in general is a bit excessive. Ticket prices are all pretty much the same these days, and in many markets, SWA is not the cheapest way to get there. Yet SWA carries more pax than anyone, and with consistently industry leading customer satisfaction. Hard to argue that "NOBODY LIKES IT".

Skyboy,

SWA has never had to compete with a better product at a similar price point on competing routes. That's the point. The LCCs are scheduled to receive a huge number of airplanes in the next year or two (Air Tran has incoming 700s and Jet Blue will continue to add A320s/E190s while Skybus and VA increase their fleet sizes) and they will look for profitable routes to target. If SWA is profiting on certain routes, these other LCCs could enter those markets to capture a piece. It's bound to happen and you are already seeing competition heating up at MDW, FLL, MCO, DEN and shortly SFO. People put up with SWA because there haven't been many choices at the low price point up until now. Sure, SWA has a loyalty program, but it does not have a great international tie-up like other carriers. Up until now there really haven't been any non-Legacy choices. Given the option and travel flexibility, I'd much rather fly Jet Blue from LGB-IAD than SWA from LAX-BWI because a 5 hour flight on a crowded 700 (with a crap seat because I was in the last 30 boarding numbers) with no IFE is not a good option... Most people would agree - regardless of whether they like the SWA FA jokes or not.

Give me a break about the cattle-car boarding. Do you really like not knowing whether you will get a preferred seat or not? Really? You don't care. I bet 95% of current SWA passengers would prefer assigned seating. I actually know people who avoid SWA specifically because of that reason - if they can find a comparable fare they will select the other choice because of the anxiety created by the cattle-car boarding. Sounds funny but that's the case. SWA's lack of entertainment options on their newer transcon 737-700 flights is also a negative with other carriers providing a lot more for comparable fares.

Another big issue (as I stated previously if you read my original post) is that the Legacies are putting more E170s/CR9s and E190s into the mix at lower operating costs. I would rather fly on a USAirways E170 than a SWA 737-300/700 because the reserved seats are far more comfortable. Obviously this is not good for the pilot profession (we want more high-paying jobs), but it will impact the competitive environment. Delta is using Shuttle E170s to directly compete with Air Tran out of ATL (note ATL-MDW flights for example). Expect more use of these airplanes going forward to better match LCC cost levels.

The environment is changing and we can either ignore it or adapt. Sounds like a lot of people on this board are oblivious or they simply can debate effectively.

 

[momalley81]

Give me a break about the cattle-car boarding. Do you really like not knowing whether you will get a preferred seat or not? Really? You don't care. I bet 95% of current SWA passengers would prefer assigned seating. I actually know people who avoid SWA specifically because of that reason - if they can find a comparable fare they will select the other choice because of the anxiety created by the cattle-car boarding. Sounds funny but that's the case. SWA's lack of entertainment options on their newer transcon 737-700 flights is also a negative with other carriers providing a lot more for comparable fares.

SWA did a VERY intensive study about assigned seating out of SAN. The pax overwhelmingly voted for NO assigned seating. So, I guess you are wrong in that respect. Most SWA pax actually prefer they way it is done now.

As far inflight entertainment, until they can get a 15% ROI it aint going to happen. People still are not willing to pay more for TV's and XM radio. SWA has studied it indepth and has the data. Until they can get 15% ROI for it, they aint buying it.

 

[On Your Six]

On Your Six,

As a former Netjets pilot, I will tell you that rich people will NOT "throw their money" at will. In fact, many of them are the cheapest a-holes out there. Rich people fly Netjets at any cost because the current perception is Netjets the safest and most reliable corporate airline. If that perception ever changes, Netjets will fail the next day. Nothing is written in stone, even Netjets, my friend. In fact, Netjets has some major flaws, such as most of their profits are from selling new shares - what happens when their growth flattens (and for more than just 18 months, like it did in '04)?

My favorite line from that article:
Instead of emulating the corrective steps taken by Delta Air Lines (nyse: DAL - news - people ) and AMR (nyse: AMR - news - people )'s American Airlines, Southwest's mangement simply implemented “modest cost-cutting” and other minor measures, he said.

Classic.

I appreciate your perspective because you have seen it. Sure, wealthy people can be cheap bastards - I know this. That being said, sales at Netjets have increased (Marquis Jet cards sell pretty well) and the 135 market continues to grow. It is a general statement - the number of millionaires in the US continues to grow and grow. Obviously there will be cycles but the added burdens of airline travel (long and annoying lines due to TSA checks, crowded airline terminals, sick passengers coughing in your face, etc.) will likely not be reduced any time soon. Flying on a private airplane is not cheap, but it beats any airline experience. My owner spends a ridiculous amount of money on travel, cars, entertainment, etc. and he is a small fish in the NYC area.

Not all rich people spend their money lavishly (I agree with you), but more people with money will open up to private travel (VLJs will be popular) because of the terrible airline experiences that are so pervasive nowadays - flying on airlines to crowded airports sucks (and having to push old ladies over on SWA flights to ensure that you get your coveted window seat in the back only makes it worse). Netjets is not a bad choice for pilots with the intensifying competition found in the airline industry these days. No other fractional can compare to Netjets in terms of worldwide fleet (NJA, NJI, NJE, NJME, EJM), infrastructure, etc.

Now, back to the SWA discussion...

 

[The Victors]

You forgot the Virgin America pilots. Likewise, they will also "set the standard." Tool.[/quote]

Why don't you re-read what I wrote Jacka$$. I specifically referred to VA's flight attendants and the in-flight entertainment vs. SWA's limited offerings. I mentioned nothing about the pilots - we are all aware of how low wages will negatively impact the profession. Check it out: http://www.virginamerica.com/difference/

You can't tell me SWA can compete with this product on overlapping routes if the prices are similar - especially on longer routes.

Jonjuan, you need to focus on what we are discussing - we are looking at the changing competitive environment - get it? Again, name calling and personal attacks are not great substitutes for logical arguments. This is a discussion board and I'd love to hear some counterpoints or people who don't believe SWA can be impacted by the rising LCC storm. Sometimes the truth hurts.

Of course swa can compete. This might be hard for you to understand, but swa mgmt are some smart people. The dont retreat much. (by the way, they tried a test change to the boarding process and the passengers HATED it and IFE is on the way). My previous post was against your "I can't wait to see VA" comments. BTW, are you referring to VA and skyloser as the "rising LCC strom"? :laugh: :laugh: :laugh: Of course swa can be effected by low ball piece of crap start ups. So will every other airline, which is the main point that we don't need them around or people like you pulling for them.

 

[On Your Six]

SWA did a VERY intensive study about assigned seating out of SAN. The pax overwhelmingly voted for NO assigned seating. So, I guess you are wrong in that respect. Most SWA pax actually prefer they way it is done now.

As far inflight entertainment, until they can get a 15% ROI it aint going to happen. People still are not willing to pay more for TV's and XM radio. SWA has studied it indepth and has the data. Until they can get 15% ROI for it, they aint buying it.

Please post evidence on this - I want to see the results (article) about this survey. It is counterintuitive. Perhaps that option was weighted against other options - I think it is called conjoint analysis. They never asked me or anyone else I know about boarding options. It is terrible - regardless of what Cletus of Hazzard County has to say on a survey. I am sure you love not having a preferred seat waiting for you. I suggest you ask SWA passengers (in the 2nd and 3rd boarding segments - seats 31 through 120) next time you are on your flight whether they would prefer an assigned seat. The first 30 pax probably are elated to be at the head of the line (reduces the anxiety inherent in any SWA flight boarding process). Why do you think pre-boarding software is so popular among SWA passengers now? Pax can use special software to ensure that they get a good seat ahead of time. If all SWA pax love the current system, why are these online services becoming so popular? Any answers to that question? Why do these new services exist?

If pax levels (and yields) at SWA start to dive on highly competitive routes with comparable fares, watch SWA reconsider investments in IFE. Offering service below industry standard (and that standard may soon include IFE with low fares) generally does not lead to increasing profits. Why be an outlier when IFE is so popular on other airlines?

 

[momalley81]

Please post evidence on this - I want to see the results (article) about this survey. It is counterintuitive. Perhaps that option was weighted against other options - I think it is called conjoint analysis. They never asked me or anyone else I know about boarding options. It is terrible - regardless of what Cletus of Hazzard County has to say on a survey. I am sure you love not having a preferred seat waiting for you. I suggest you ask SWA passengers (in the 2nd and 3rd boarding segments - seats 31 through 120) next time you are on your flight whether they would prefer an assigned seat. The first 30 pax probably are elated to be at the head of the line (reduces the anxiety inherent in any SWA flight boarding process). Why do you think pre-boarding software is so popular among SWA passengers now? Pax can use special software to ensure that they get a good seat ahead of time. If all SWA pax love the current system, why are these online services becoming so popular? Any answers to that question? Why do these new services exist?

If pax levels (and yields) at SWA start to dive on highly competitive routes with comparable fares, watch SWA reconsider investments in IFE. Offering service below industry standard (and that standard may soon include IFE with low fares) generally does not lead to increasing profits. Why be an outlier when IFE is so popular on other airlines?

DUDE, management did a test out of SAN and the PAX overwhelmingly stated that they didn't like assigned seating.

There was a lot information provided by SWA management to the employees at SWA. SWA management stated that all the data showed that the PAX of a SAN (a very high priced market for SWA) didn't like assigned seating.

If you want the data call SWA management and ask for it. I am only a worker bee and dont have that information. However, I do trust SWA and realize they know what they are talking about.

Sorry that your argument that people avoid SWA because of no assigned seating is BS. But your argument is incorrect. I tried to be polite and tell you the truth but I guess that is not good enough for you.

 

[On Your Six]

Of course swa can compete. This might be hard for you to understand, but swa mgmt are some smart people. The dont retreat much. (by the way, they tried a test change to the boarding process and the passengers HATED it and IFE is on the way). My previous post was against your "I can't wait to see VA" comments. BTW, are you referring to VA and skyloser as the "rising LCC strom"? :laugh: :laugh: :laugh: Of course swa can be effected by low ball piece of crap start ups. So will every other airline, which is the main point that we don't need them around or people like you pulling for them.

Jet Blue was completely discounted when it started - nobody believed it could work. Now look at Jet Blue. It was very well funded and now Skybus has something like $170 million in funding. I am not suggesting that Skybus will eventually be as successful but you never know in this business - that's the point. I am not pulling for Skybus or VA - I am merely pointing out that they could adversely impact SWA's position in competing markets. Do you disagree with that?

Not every airline will be hit the same by the LCCs. Legacy carriers will continue to focus on international growth because there is less competition there and that is where the growth is (margins are much higher). CAL and DAL are focusing growth on international markets and will ultimately increase the number of E190/E170/CR9 aircraft in their fleets to directly compete against the LCCs. But the Legacies have great international feed and very strong marketing alliances with other airlines - these benefits are not shared by the LCCs. That's the point - the LCCs are fighting for the same, low-yield domestic passengers. They are increasing capacity quickly and this will force them to put airplanes wherever they can. People talk about Air Tran's motivation for acquiring Midwest is to find a place to put their incoming 737-700s... I don't know if that is true but that could be one motivating factor.

The LCCs will have to battle with each other for growth and margins (fares will decrease on competitive routes) and they won't have many high-margin growth opportunities like the Legacies (i.e., international). Instead, the legacies will deploy cheaper 90-100 seaters to maintain their feed on competitive routes while continuing to offer better loyalty/frequent flier programs to secure more lucrative business passengers.

SWA will continue to succeed, but it will be a far tougher environment going forward (not the same time period as the one discussed in NUTS) and profits will likely be strained unless SWA can adapt to capture more revenue or cut costs elsewhere. That's the original point...

 

[The Victors]

we can go around and around trying to predict the future. Like the new open skies deal is going to screw the legacies international growth margins and so on. Or like VA is going to feed V Atlantic and further screw the legacies. Like I said, Everyone, including swa, can be hurt by these start ups. WE DONT NEED THEM HERE!

 

[On Your Six]

DUDE, management did a test out of SAN and the PAX overwhelmingly stated that they didn't like assigned seating.

There was a lot information provided by SWA management to the employees at SWA. SWA management stated that all the data showed that the PAX of a SAN (a very high priced market for SWA) didn't like assigned seating.

If you want the data call SWA management and ask for it. I am only a worker bee and dont have that information. However, I do trust SWA and realize they know what they are talking about.

Sorry that your argument that people avoid SWA because of no assigned seating is BS. But your argument is incorrect. I tried to be polite and tell you the truth but I guess that is not good enough for you.

Can we still do polls on Flightinfo? I'd like to ask all of Flightinfo participants for their opinions on this. I'm betting most people prefer to select a seat early and know where that seat is before boarding.

My argument is correct because it is logical. Regardless of what a select group of people in SAN say. Why did they pick SAN for the study? Why not ISP or LAS? Did they ever ask pax who routinely get placed in the middle or last boarding groups for their preference? What do you think their preference would be?

Why do these online boarding services (pay a fee to get a better seat selection) even exist if nobody cares about where they sit? Just answer that question for me...

 

[momalley81]

Can we still do polls on Flightinfo? I'd like to ask all of Flightinfo participants for their opinions on this. I'm betting most people prefer to select a seat early and know where that seat is before boarding.

I dont know nor do I care. SWA has collected the data and the results were reported to its employees. The data does not reflect what you as an individual feel. Sorry, but a lot of other passengers feel differently than you do.

My argument is correct because it is logical.

No, you argument is not correct and SWA has the data to prove it.

Why did they pick SAN for the study?

I don't know nor do I care. Maybe it is because it is a high price city with more affluent Pax?

Why not ISP or LAS?

Again, I dont know nor do I care.

Did they ever ask pax who routinely get placed in the middle or last boarding groups for their preference? What do you think their preference would be?

Again, I don't have the data. I dont know and I dont care. SWA management is a lot smarter than me, and I can guarantee you that they are better and smarter than you are.

If you think you can do a better job at this why dont you go to www.southwest.com and apply for an exec position?

Why do these online boarding services (pay a fee to get a better seat selection) even exist if nobody cares about where they sit? Just answer that question for me...

People care where they sit. However, many would rather get to the airport early to get the seat they want vs paying for it.

It's not a very hard concept to grasp. Really, it's not all that hard to understand. I promise.

 

[SWA GUY]

On Your Six,

I know you interviewed at SWA. I know you were not hired. These two facts may shed some light to others on your frustrative posts regarding SWA.

The questions are; Why are you bitter with SWA management and their proven track record of success? And, why are you worried about the future of SWA?


Don't give me a BS answer. Do some introspection and be honest with yourself and those of us on FI.

 

[The Victors]

nice!