Is SWA Untouchable?

[Superbird]

Kudos to SWA, they have successfully grabbed the industry (over the past 30+ yrs) by the horns , beating many legacy carriers at their own game, and now seem untouchable. They have a great product and business model. Most things they touch turn to gold (good planning).

Although their costs increase each year as they grow; more planes, employees, higher salaries, can anyone truly compete against SWA and make money?

SWA managment has done a great job positioning themselves in cities, hedging fuel and buying assets. Does SWA have any weaknesses? Is there a terminal velocity?

Could a Virgin USA compete?

 

[canyonblue]

All fame is fleeting.

No one is untouchable in a business that has too many unforeseen events.

 

[treetopflyer]

replace every reference to SWA in the above post with UAL and set the clock back a few years to see if you are untouchable. not saying your co. is not great, but UNTIED was great for a long time as well.

 

[TBF]

All fame is fleeting.

No one is untouchable in a business that has too many unforeseen events.

Words of wisdom!

 

[PHXFLYR]

Words of wisdom!

They sure are!!


PHXFLYR

 

[Z_Pilot]

I am not an expert, but if we look at the history of airlines, then we can see the cycles: The Pan-Am and TWA years, the UAL DAL NWA & AA years. Now we are looking at the SWA JetBlue and _____ years...they are the primary airlines of this cycle, but it will not last forever. Perhaps if the govornment allows the floodgates for cabotage to open, then perhaps the next cycle in 20 or so years will include booking a flight on Aeroflot from Chicago to Phoenix flown by Russian pilots on a Russian airline...
More and more American jobs are outsorced every year and my Aeroflot scanrio may sound rediculous, but I think that it may be possible if the passenger wants to fly coast-to-coast for 20 bucks and if the govornment allows it (foreign ownership, etc...).

 

[Dave Siegel]

I am not an expert, but if we look at the history of airlines, then we can see the cycles: The Pan-Am and TWA years, the UAL DAL NWA & AA years. Now we are looking at the SWA JetBlue and _____ years

You actually are trying to put JetBlue in the same class as Southwest? How long has JB been in business??? Not exactly what I'd call a track record of success. OK, smurfs, chime on in now and get all defensive.

I'd personally put Southwest in a class by itself. The likes of Jet Blue and Air Tran are successful, but I don't think they're at the Southwest level. Hasn't Air Tran been around longer than Jet Blue? Even so, I don't think anyone will ever be able to duplicate what Southwest has going on.

 

[Yahtzee]

You actually are trying to put JetBlue in the same class as Southwest? How long has JB been in business??? Not exactly what I'd call a track record of success. OK, smurfs, chime on in now and get all defensive.

I'd personally put Southwest in a class by itself. The likes of Jet Blue and Air Tran are successful, but I don't think they're at the Southwest level. Hasn't Air Tran been around longer than Jet Blue? Even so, I don't think anyone will ever be able to duplicate what Southwest has going on.

Cavet Emptor:

Please remember to bash the flightinfo version of "Dave Siegel" and not Southwest. "Dave Siegel" uses a Southwest avatar but does not work for Southwest and hopefully never will.

Nice flamebait!

 

[Dave Siegel]

Cavet Emptor:

Please remember to bash the flightinfo version of "Dave Siegel" and not Southwest. "Dave Siegel" uses a Southwest avatar, but does not work for Southwest and hopefully never will.

Nice flamebait!

So much for welcoming me with open arms. I was just making the point that Jet Blue hasn't proven themselves over time like Southwest has. I was ready to get attacked from the Blue Kool-Aid drinkers, but holy smokes! I wasn't even trying to flamebait anyone. As a matter of fact, I'm trying to give up flamebait for Lent! Wow, that was a little harsh, Mr. Yahtzee.

 

[Angus]

As a matter of fact, I'm trying to give up flamebait for Lent! Wow, that was a little harsh, Mr. Yahtzee.

I've tried to give up lent... but every time I use my Dryer... there is tons more floating around the laundry room.

How were you able to get rid of the lent??

Signed:
Curious

 

[Yahtzee]

So much for welcoming me with open arms. I was just making the point that Jet Blue hasn't proven themselves over time like Southwest has. I was ready to get attacked from the Blue Kool-Aid drinkers, but holy smokes! I wasn't even trying to flamebait anyone. As a matter of fact, I'm trying to give up flamebait for Lent! Wow, that was a little harsh, Mr. Yahtzee.

Dave,

No you weren't just making a point about JetBlue...You were bashing JetBlue. Do you really believe the folks at JetBlue are going to read your post and think..."Well he's just making a point that we've haven't been in business as long as SW"

In the past you have made posts leading other folks on this board to believe you actually work for SW, and you were called out pilots from all over the board, include SW pilots. Only recently (as in the last week) did you start writing with the "hopes of going to Southwest".

Do these posts ring a bell?

from: http://forums.flightinfo.com/showthread.php?p=515401#post515401

Thanks for MAKING my point...We DO LIKE it here. That's a revealing comment coming from Mr. Air Tran.

Seems to me the Southwest guys LOVE (or LUV) it at Southwest. That's the difference.

or

You're playing with the numbers. I can't wait to see how "successful" you'll be when your scairbuses start having mechanical problems.

By the way, love the blue uniform shirts. I just saw one of your pilots in the lobby of the hotel. Nevermind, it was the bellboy.

or maybe

from: http://forums.flightinfo.com/showthread.php?t=47135&page=1&pp=40

I'm not down on blue, but I am glad that when I go to Southwest, I won't have to wear the Blue Shirt (makes you look like Delta male flight attendants). I just think people think that JB is this fabulous, wonderful airline, and I think you're like Jurassic Park (the movie)--Pretty decent, but impossible to live up to the hype. At least it seems like you have a pretty level head about you, but some of your pilots are WAY out of touch with reality. Maybe you should slap 'em around some.

Do I want you at Southwest? No..not in a million years with your current attitude. Harsh...maybe to you , but not to the folks who work for and fly on Southwest.

If you have already interviewed at SW and are awaiting a classdate, I hope you might change your outlook toward others and realize the only place to go when you're on the top is down. Have you ever studied Roman History? It's interesting, and only further validates my point. Iviair's signature line say it all..."In peace nothing so becomes a man as modest stillness and humility"

I'm not better than you, but I do work for Southwest and hope our people never think we are unbendable, unbreakable. If you're coming to Southwest, I hope you think about what I'm writing and let some of it sink in. It wasn't written to bash you, as so much to possible change you point of view.

Sorry you caught me on a night when I was too weak to ignore your post.

Yahtz

 

[SWA GUY]

One thing to consider in regards to airline history(survivability) are the years of regulation.

I think survivability during the regulation era and the post regulation era are two significant differences. As is survivability in the post 9/11 era.

If an airline can survive in the post regulation era AND the post 9/11 era, while making profits, the airline should be able to weather the storm.

We'll see I guess.

 

[petepilot]

What will do Southwest in is all this hiring/ expanding they are doing this year, it's what always does an airline in in the long run, growing too fast beyond there means, they should have stuck to what they did for the past 30 years but oh well, so the cycle goes

 

[SWAdude]

What will do Southwest in is all this hiring/ expanding they are doing this year, it's what always does an airline in in the long run, growing too fast beyond there means, they should have stuck to what they did for the past 30 years but oh well, so the cycle goes

Since the beginning SWA has grown 8-15% a year. This year I believe we have aircraft deliveries at the 8% growth range. With the exception of crews, mechanics and dispatchers, we have had a hiring freeze for sometime now.

So...what are we doing this year that is so different to start our demise?

You just made a pointless statement.

 

[satpak77]

also

JetBlue has zero (unless I am wrong) retired pilots as of today. Southwest has some, but nothing like United, DAL, AA, NWA, CAL, UAIR, etc. With these retired pilots come pension costs and medical benefits costs, which is one reason United and US Airways wants to/already has thrown these out, so they keep the current company alive.

JetBlue does not have this problem. Southwest really does not either.

In my opinion (worth exactly 2 cents) JetBlue's ability to "take on" LUV is still yet to be seen. Note that CEO David Neeleman has personally dealings with LUV, having sold Morris Air to LUV years ago. The fact that JetBlue is a carbon copy of SWA, based in KJFK, not KDAL, and flying Airbus (and now RJ's) and not 737s, should not be a earth shattering surprise.

JetBlue should tread carefully with expansion, and RJ's, etc, etc. SWA grew slowly and carefully. The airline business has never been easy, and post 9/11 its even more dicey.

Over the long term, as LUV incurs retireee pension costs, medical costs, etc, in the meantime JBLU is still without said costs, this puts LUV into a weaker financial posture when competing with JBLU.

my 2 cents, nothing more

 

[Bake]

Your 2 cents is more money than Southwest has in pension costs now or that they will have for the greater foreseeable future.

 

[T1bubba]

Satpak,

We don't have pension costs because we don't have pensions, not because we don't have retirees.

 

[Immelman]

Here is what I'm wondering: SWA has a big advantage now due to hedging fuel.. this can only last so long; contracts expire at some point and the higher (assuming it stays high) cost of fuel will catch up with SWA -- at some point things will have to give, ticket prices will have to come up, and suddenly its not a 1-2 horse race anymore. Thoughts?

 

[ivauir]

Immelman, you are right, contracts expire, but we just keeping making new ones. As the market reacts to the long term effects of expensive fuel the amount we are able to hedge our fuel at changes. But we are (and will be) able to hedge our fuel expenses indefinatly. There is always someone willing to bet that the price will fall. Because fuel has been pricy for a while our contracts aren't as good as they used to be, but they continue to isolate us from the worst effects. The fuel hedging program is brilliant of course, but I belive our main advantage comes from cash on hand and a manegment team that contiues to make solid decisions on what to do with that cash (e.g. ATA deal).

 

[lowecur]

Here is what I'm wondering: SWA has a big advantage now due to hedging fuel.. this can only last so long; contracts expire at some point and the higher (assuming it stays high) cost of fuel will catch up with SWA -- at some point things will have to give, ticket prices will have to come up, and suddenly its not a 1-2 horse race anymore. Thoughts?

Greenspan coined the term "irrational exuberance." SWA and the rest of the pack are staking their future profits on a shakeout of capacity in the system. The $65K question is who will not have a seat once the music stops.

If UAIR fails they are only 6% of the total capacity today, but none the less it would be a major coup for SWA, DL, B6, and AirTran. It is again rumored that Branson is meeting with Lakefield in PIT.

I have my doubts that FLYi will be around by the end of the year. That leaves UAL as the next possible legacy victim, with DL in close pursuit. I still believe that once UAL discharges their pensions, they will merge with AMR and that merger could reduce capacity by 10% or so. As the dance will continue till the end of the year, I believe AWA and Frontier stand a good chance of filing at the end of this year, thus keeping the music playing well into 2006.

One thing is clear, it's very hard to kill an airline. For SWA sake, it needs to happen soon, or there will be some hard decisions.