Good For All of Us?

[HomerJ]

Are extra fees in Southwest Airlines' future?Updateddocument.write(niceDate('3/26/2007 7:01 AM')); 4h 16m ago | Comments 4 | Recommend 3 E-mail | Save | Print | Reprints & Permissions |

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swapContent('firstHeader','applyHeader');By Dan Reed, USA TODAY
Discount king Southwest Airlines (LUV), appreciated by fliers for not charging the kinds of fees common at other carriers, may start charging for extra services.
CEO Gary Kelly says the airline needs to generate more revenue without "nickel-and-diming our customers" or raising fares again.
"Things will be different in the future," he said in a speech last week at an investors conference.
Kelly was mum on specifics. But he said that Southwest's operating costs have jumped 25% in the past five years because of higher fuel prices, and that it needs to generate more revenue to offset those and other rising costs. Southwest's year-over-year revenue rose only 1% in January and February. After six price increases last year, Southwest's average one-way fare is now $104, a record high for the airline.
Jim Parker, a Raymond James & Associates analyst who closely follows Southwest, says it will have to change. In a report, he says that Southwest, which does not assign seats now, could soon start using technology to sell assigned seats for an extra $10 to customers who want them.
FIND MORE STORIES IN: Southwest Airlines | Ryanair | Spirit Airlines | CEO Gary Kelly | Jim Parker
"Ancillary sales" soon will be "pervasive" among U.S. carriers, Parker said.
It would be a turnabout for Southwest. In recent TV ads, Southwest has poked fun at competitors for extra fees. One ad shows a passenger asked to insert coins in a slot to open the overhead compartment.
No airline has gone that far. But many charge for boxed meals, booking a ticket through a telephone reservationist or changing an already purchased ticket.
Some have gone further. Europe's Ryanair charges separately for almost everything beyond a basic seat. Privately owned U.S. discounter Spirit Airlines last month said it will begin charging $10 each for checked bags — $5 if the fee is paid online — in June.
To boost revenue, Southwest already has:
• Focused growth in large, high-demand business travel markets. Southwest entered the Denver market a year ago, returned to New Orleans last year after a post-Katrina hiatus, and is beefing up service in the densely populated East and at Chicago's Midway Airport. This fall, it plans to resume service to San Francisco International. It pulled out in 2001.
•Emphasized cargo service. While Southwest has always carried some cargo, its emphasis on fast turnaround times made it tough to load lots of cargo on its planes.
• Sold ancillary services. It is trying to sell hotel rooms, rental cars, vacation packages and other travel services on its website.
• Improved technology. By 2009, Southwest will have a new computer system that could allow it to offer not only assigned seats but also foreign itineraries.

Posteddocument.write(niceDate('3/25/2007 11:58 PM')); 11h 19m agoUpdateddocument.write(niceDate('3/26/2007 7:01 AM')); 4h 16m ago
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[Saabslime]

CEO Gary Kelly says the airline needs to generate more revenue without "nickel-and-diming our customers" or raising fares again.
"Things will be different in the future," he said in a speech last week at an investors conference.

Corporate speak for: Watch out employees, we're coming after you next....we'll need concessions to remain profitable.

 

[RJAA]

So, I needed to buy a one way confirmed ticket between LAS and LAX 10 days prior. AA had $37.50 and SWA had $110 before taxes. I fully expected SWA to provide one of the cheapest. So what is still attractive to consumers if SWA isn't one of the cheapest between...say Houston and Baltimore....and SWA may make one or two stops along the way.

 

[Green]

So, I needed to buy a one way confirmed ticket between LAS and LAX 10 days prior. AA had $37.50 and SWA had $110 before taxes. I fully expected SWA to provide one of the cheapest. So what is still attractive to consumers if SWA isn't one of the cheapest between...say Houston and Baltimore....and SWA may make one or two stops along the way.

Southwest is PERCIEVED as the cheapest option because historically they have been. They have done an exellent job of branding themselves over the years and many people do not do the extra leg work to check every airline's prices before purchasing. It is only in the last couple years that AA/UAL/AAA, etc have started offering fares cheaper than SWA and I would bet the general public is not yet aware of this fact. I imagine it will take a while to sink in.