Southwest CEO: 'I'd rather have a customer than a bag fee'

[DieselDragRacer]

http://travel.usatoday.com/flights/post/2011/01/southwest-fees/139690/1

 

[Full of LUV]

http://travel.usatoday.com/flights/post/2011/01/southwest-fees/139690/1

Kelly has committed to this strategy, and it may pay off in some market segments, but as he stated in the article, to charge fees now would be like when Napster started charging for music, well maybe not that bad. If he were to go back now, it would really slap the face of the SWA customer.

The FFlyer program already reeks of conforming to industry standards, no fees is really the only thing that stands out about SWA except no assigned seats and no food.

Truth is the majors don't charge fees to their best customers in their FFlyer plans, only the "flying once a year, looking for the cheapest fare" crowd.

As fuel continues up, it's going to be a challenge for all the airlines to price that into their fares without choking demand.

 

[General Lee]

The legacies aren't bringing capacity back at huge amounts, DL may raise capacity this year 1-3%. That means if people want to fly, they will still fill seats at all the airlines, and that includes airlines with bag fees. SWA will have to start paying more for the Airtran employees, and they may have to look for extra revenue generation somehow. They used to never charge extra fees, but then added the "board first for an extra $10" fee (that comes with a free drink). I bet they will figure out ways to find some more. They have to, the Airtran raises will be expensive.


Bye Bye--General Lee

 

[Bake]

May all airlines fill their planes with paying passengers this year. Hopefully we have room to raise fares and charge a fair dollar for transportation. Of course, for all you commuters, I hope there is a seat or three left. It's time all airlines did well, and for all of us out there to get some fair pay increases. I hope we all do great, besides I still need to pay for that type rating, daddy said he wouldn't (That was for you scope, hope you have a great year too).


Bake

 

[desolo]

Please explain why Southwest has to pay more for Airtran employees wages?, you lost me there...

 

[hyflyin]

Please explain why Southwest has to pay more for Airtran employees wages?, you lost me there...

You were the kid during ground school asking all the questions at that end of the day, weren't you??

 

[The Prussian]

Please explain why Southwest has to pay more for Airtran employees wages?, you lost me there...

What he 'meant' was that all those AT employees will be coming up to SWA payscales...what he wonders, is if he made the right decision.

 

[desolo]

Just like to pick the brain of all the airline CEO's here at Flightinfo.

 

[Captzaahlie]

What he 'meant' was that all those AT employees will be coming up to SWA payscales...what he wonders, is if he made the right decision.

Nicely put....

but I believe the stupid LBB overnight comments will start in 5,4,3,2,1.....

THEN

the equally stupid paid for your job comments.

(cave man dude plz note I'm signing my comment)

captZ.

 

[The Prussian]

Nicely put....

I'm not one to readily accept endorsements, but.........Thankyou!

 

[AC560]

They used to never charge extra fees, but then added the "board first for an extra $10" fee (that comes with a free drink). I bet they will figure out ways to find some more.

I think optional fees are a lot different than a surcharge. If traveler wants to pay $200 to sit in United Plus, or $600 to upgrade to business, or buy a day lounge pass, etc. those are all options which bring some value to the customer (in the case of the upgrades sometimes a good savings as well) and are entirely optional.

Charging $200 online for a ticket and then hitting the unsuspecting consumer for another $50-100 at the airport in various fees isn't the way to build brand loyalty.

Carriers need to be looking how to upsell and differentiate which WN (which I rarely fly but like when I do) is doing.

 

[johnsonrod]

Please explain why Southwest has to pay more for Airtran employees wages?, you lost me there...

Compared to current day wages? I don't think GK will pay the two groups differently, do you? The Airtran employees should get a huge raise.

 

[jonjuan]

I think optional fees are a lot different than a surcharge. If traveler wants to pay $200 to sit in United Plus, or $600 to upgrade to business, or buy a day lounge pass, etc. those are all options which bring some value to the customer (in the case of the upgrades sometimes a good savings as well) and are entirely optional.

Charging $200 online for a ticket and then hitting the unsuspecting consumer for another $50-100 at the airport in various fees isn't the way to build brand loyalty.

Wait a sec-On one hand, Gary says people are flocking to WN because they don't want to pay bag fees and on the other you say these same people are ambushed and unsuspecting when they get to the airport? It's a free freaking country. I've seen plenty of hayseeds shopping at Whole Foods when they could be shopping at the local blue collar store.
If I were a frequent business traveller on WN, I would be ticked that I had to subsidize the mouth-breathers who show up with their BBQ grill at check-in.

 

[General Lee]

I think optional fees are a lot different than a surcharge. If traveler wants to pay $200 to sit in United Plus, or $600 to upgrade to business, or buy a day lounge pass, etc. those are all options which bring some value to the customer (in the case of the upgrades sometimes a good savings as well) and are entirely optional.

Charging $200 online for a ticket and then hitting the unsuspecting consumer for another $50-100 at the airport in various fees isn't the way to build brand loyalty.

Carriers need to be looking how to upsell and differentiate which WN (which I rarely fly but like when I do) is doing.

For awhile USAir was charging for water. That is wrong. But, changing an itinerary can cost an airline money because that seat, if it is a premium seat in first class etc, is limited in number, and holding it when other people may want it should cost something if you can't take it later. It's like putting a deposit on something of value. If someone dumps the ticket with one day left before departure, that high priced seat may have to be dumped onto priceline or some other website to just fill the seat, because other people who wanted that seat have moved on to other flights or airlines. Southwest doesn't really have any premium seats, so that is why they just don't care. Airtran has a first class with XM radio throughout the planes, but that will all be gone too.


Bye Bye---General Lee

 

[General Lee]

Compared to current day wages? I don't think GK will pay the two groups differently, do you? The Airtran employees should get a huge raise.

That is correct Rod, that is what I was trying to say. Airtran cost SWA $1.4 billion, and will cost them more when Southwest has to increase the pay for each Airtran employee to match their counterparts at Southwest. That Low Cost Operation won't be so low cost soon. Add higher oil prices, and I see extra fees sneaking in to Southwest's game plan, and a bunch of one time charges in the future.



Bye Bye---General Lee

 

[General Lee]

What he 'meant' was that all those AT employees will be coming up to SWA payscales...what he wonders, is if he made the right decision.

Made the right decision? You mean about paying for a 737 type rating to try to get an interview? Didn't have to do that, and I made the right decision. I see the world and enjoy my job at the same time. It is fantastic.


Bye Bye--General Lee

 

[Tejas-Jet]

Nothing says one has to "buy" a type rating to get hired at SWA.

 

[seerickyfly]

SWA is not the norm again. Internal goal to have 20% of domestic market. Well we will see.

 

[desolo]

what i meant to say is that eventually everybody will be paid equally, not to keep the operation separately. That does not increase southwest costs.

 

[redflyer65]

That is correct Rod, that is what I was trying to say. Airtran cost SWA $1.4 billion, and will cost them more when Southwest has to increase the pay for each Airtran employee to match their counterparts at Southwest. That Low Cost Operation won't be so low cost soon. Add higher oil prices, and I see extra fees sneaking in to Southwest's game plan, and a bunch of one time charges in the future.



Bye Bye---General Lee

It's not that bad General, especially when you own most of the planes and don't have NINE fleet types.

 

[Captzaahlie]

Nicely put....

but I believe the stupid LBB overnight comments will start in 5,4,3,2,1.....

THEN

the equally stupid paid for your job comments.

(cave man dude plz note I'm signing my comment)

captZ.

Thanks for not letting me down General.....

 

[GuppyWN]

SWA is not the norm again. Internal goal to have 20% of domestic market. Well we will see.

Dude we've already got that. The goal is 40%!

Gup

 

[Captzaahlie]

Dude we've already got that. The goal is 40%!

Gup

:beer:


Now plz get "Luv mission control" to start interviewing again

so I can be of help with that!​

 

[Stifler's Mom]

I've noticed that the "Bag Fee" commercials aren't on TV lately, replaced with the "Change Fee" ones now. I'm wondering if a move to bag fees may be on the horizon, and attack the competitors with their change fees.

 

[StopNTSing]

That is correct Rod, that is what I was trying to say. Airtran cost SWA $1.4 billion, and will cost them more when Southwest has to increase the pay for each Airtran employee to match their counterparts at Southwest. That Low Cost Operation won't be so low cost soon. Add higher oil prices, and I see extra fees sneaking in to Southwest's game plan, and a bunch of one time charges in the future.



Bye Bye---General Lee

Yet another pilot who can't seem to grasp the relationship between labor rates and labor productivity. If you look at the two airlines' flight ops cost per available seat mile, they're already pretty close. But how can this be? Because SWA's scheduling & utilization of aircraft and crews is much more efficient than AAI's. When the AAI aircraft & pilots are completely folded into the mix we will actually be short crews. This is also why we didn't have to accept pay cuts for our current contract, despite already having the highest rates in the industry. Even with the new raises our costs are still competitive within the industry. <cue sound of several legacy pilot heads exploding>

Sorry, is that being too cocky for you, General?.

 

[vikesfanIV]

I've noticed that the "Bag Fee" commercials aren't on TV lately, replaced with the "Change Fee" ones now. I'm wondering if a move to bag fees may be on the horizon, and attack the competitors with their change fees.

Nope. Gary stated in the conference call they feel they pretty well saturated the market with the "no bag fee" campaign. Now they are moving on to another one to educate everyone about our no change fee policy. This whole conversation reminds me of a few years ago when everyone talked about how "doomed" SWA was once we lost the advantage of all our fuel hedges. Now here we are talking about how doomed we are for not charging for bags. And yet we just posted a $500million+ profit for 2010. Seems to me we are doing fairly well.

 

[Max Powers]

Nothing says one has to "buy" a type rating to get hired at SWA.

No but to get the interview you virtually have to.

 

[StopNTSing]

No but to get the interview you virtually have to.

As has been pointed out here ad nauseam, you don't have to buy the type to be competitive, you just have to have the type. It can be obtained in many ways other than buying, and they all count the same in the People Dept's eyes.

But you don't have to worry about that anymore, Max.

 

[BlueandWhite]

No but to get the interview you virtually have to.

Nobody told me that. I got the interview and got "the call" without a type. So did about half of my new hire class.

Hiring requirements have not changed. Having a type helps, but is not required to get an interview.

 

[johnsonrod]

Nobody told me that. I got the interview and got "the call" without a type. So did about half of my new hire class.

Hiring requirements have not changed. Having a type helps, but is not required to get an interview.

The problem is if you do get the interview without the type, and do well, you then have to buy it if you don't already have it. That is paying for your own training. Do you disagree with that assessment?