Southwest to ‘trim headcount’ after growth in costs

[jonjuan]

In a few years SWA will start charging for bags because they will realize the potential for 500 Million extra dollars per year is far more than the extra passengers gained from not charging. It may have worked initially but now folks just book cheapest ticket online and expect fees at the airport. After we start charging, SWA will will be giddy over the bag fee money like they were the first to figure this out. Our problem is inability to say we F'd up.

Then why not changed now (and saying it was a screw up doesn't count)?

 

[thrasher]

It's like if American had of filed Bankruptcy with all the other majors back after 9-11, they probably wouldn't be in their current situation. Same with SWA and bags...should have done it with the rest of them. IMO they should say..."to stay competitive, bags fly cheaper" and charge 10 bucks a bag.

 

[BILL LUMBERG]

In a few years SWA will start charging for bags because they will realize the potential for 500 Million extra dollars per year is far more than the extra passengers gained from not charging. It may have worked initially but now folks just book cheapest ticket online and expect fees at the airport. After we start charging, SWA will will be giddy over the bag fee money like they were the first to figure this out. Our problem is inability to say we F'd up.

This was probably the most non kool-aid post from the SWA posters yet....

There's money to be made there no doubt.

 

[madjack]

When GK leaves bag fees will begin...IMHO

 

[Whine Lover]

Ah, good ole' Marketing.

Southwest sets the market price...AKA " the Southwest effect" and charges an honest price that already has their costs and fees associated with it.

Airline "X" comes in with their brilliant ploy...Charge less for the ticket and hit the customer with baggage fees at the airport if they aren't savvy enough to read the fine print/fees schedule. This BTW is a large part of the traveling public. The folks who fly once every 2-3 years or so.

Great, they captured that segment of the customers for THAT flight.

Most people then realize ( when they get hit with the baggage fees) that the actual price was the same or very close to what they would have paid on SWA...and they feel as if they have been lied to.

They are NOT return customers. Ever. Next time, they pay to fly SWA and learn that not only was the price almost exactly the same, the service, people, and product are just that much better.

Those folks tell Milly and Bob down the street ALL about their experience with the two different airlines...and the following year when they go to see the new grandkid in Des Moines, I wonder who they are calling to book their flight?

The airlines that play the baggage fee game don't REALLY recognize ANY additional revenue(s) over what SWA did or does on the same flights or in the same markets.

They just move the Peas around among the Walnut shells in the accounting office and slap each other on the back while they blow smoke up each others arses and gloat over the "additional revenues" their brilliant bag fee plan has showed....in the "TPS Reports".



Meanwhile, back at the Ranch in DFW, the SWA people sit and smile and say " Hey, Thanks for a great Marketing gimmick. WE can do just the opposite, garner the same revenue ( in every market where we set the price anyway ) AND make people think we're the Good Guys who aren't trying to rip you off."

"Bags Fly Free. "

Perfect.

I'd bet my remaining testicle....that SWA NEVER plays the baggage fee game.

EVER.


YKW





.

 

[Ty Webb]

It looks to me like I am carrying anywhere from 30-120 bags per flight lately (even in the slower time of the year). That's $750. - $3,000. per flight.

You would have to sell 5 to 10 more tickets per flight to make up the revenue lost from the bag fees.

Are they doing it? Apparently. . . . It shouldn't be very difficult to determine.

Agreed, the turn times/boarding process could be much better without the carry-on circus.

 

[Whine Lover]

" You would have to sell 5 to 10 more tickets per flight to make up the revenue lost from the bag fees."

As compared to... what and whom and what baseline ticket price on a given flight?

WL

 

[crxpilot]

Had this exact discussion with Mike V and Chuck M a few months ago.

The short answer was, Southwest will never charge for bags until the money offset from customers choosing SWA so they don't have to pay those fees is SUBSTANTIALLY less than what they could make charging for bags.

Right now, it's estimated they make a lot more money with their "Bags Fly Free" policy (and the associated ad campaign bringing in people who have been burnt by bag fees, especially with Spirit and Allegiant) than they would if they charged for bags in their system.

There's also other ancillary fees that help make up for it. People paying the up-charge to get the first boarding passes, etc. Their response was more detailed than that and had some proprietary $$$ info to it that I can't put on here, but the impression that I got was that they review this topic on a regular basis, have detailed estimates on the exact dollar figures each way, and they believe they aren't even close on reaching a changing point yet.

They're certainly smarter than I am about a lot of things, including revenue management, so I'll just keep flyin' 'em.

Lear,

I am going to politely disagree with you on your attack with Allegiant as an example. First, Allegiant and Southwest really dont compete much at all. Most places that Allegiant flies to, Southwest doesnt. However, lets take a route that there is some "overlap". Greenville SC to Orlando FL. I used October 31 for comparison.
Allegiant---> $42.30 (includes all ticketing fees/taxes). 1 bag online $20 , airport $35. Total-->$62.30 ( with online bag) or $77.30 (for the airport checked bag)

Southwest lowest fare $99 if you want to take a tour of Houston on your way to disneyworld or $166 nonstop (and all Allegiant flights are nonstop)

Either way the southwest customer is ponying up $25-125 MORE to get to orlando on Southwest with Allegiants Bag fee "burning" their customer! (depending on which combo you choose, bags/no bags, nonstop vs connection,,,,,either way the customer pays more on Southwest)

 

[crxpilot]

SWA can not ride the bags fly free forever. Every carrier that is making money is doing so by extra fees. With the avg number of bags that SWA is carrying on a daily basis, it could easily just charge 10.00 for a checked bag. That would equate to about 1.25 million per day. So if you do the math that would bring in about $37.4 million per month or $150 Million per quarter. No bad if you ask me but no one did I just ran the numbers.

Yeah when you see them quietly painting over the "bags fly free here" spot on the planes, you will know the bag fee is coming!

Btw, I wish all airlines went back to no bag fee policy, the whole a la carte fees policy has gotten out of hand!

 

[NoJoy]

Their slogan needs to be changed to "Bags Fly Free (under 50pds)! It's a great marketing tool though. I fly to CMH out of SEA and alas one of my bags weighs more than 50pds and I get charged $50.00 for it. Still a great bargan vs the other airlines. SW service is still topnotch as I fly them and AK as much as I can when I need to travel. :beer:

 

[crxpilot]

DSM to LAS. Oct 31

Allegiant $110.80 plus bag ($25-35). Total. $135.80-$145.80. Nonstop

Southwest $139 no nonstops, gonna get an extra 3-4 hour tour of chicago midway for +/- $5

 

[tzskipper]

Don't let 'em fool you....

If nothing else, SW is brilliant at marketing... Note that SW collected more fees in 2011 than USAir.

http://www.travelweekly.com/Travel-News/Airline-News/Airlines-collect-$22-6-billion-in-ancillary-revenue-in-2011/

"United Continental collected the most: $5 billion, nearly twice what Delta collected, about $2.5 billion. American followed with $2 billion. Southwest collected $1.14 billion, US Airways collected roughly $1 billion and Alaska Airlines collected nearly $600 million."

S

 

[ATLplt]

If nothing else, SW is brilliant at marketing... Note that SW collected more fees in 2011 than USAir.

http://www.travelweekly.com/Travel-News/Airline-News/Airlines-collect-$22-6-billion-in-ancillary-revenue-in-2011/

"United Continental collected the most: $5 billion, nearly twice what Delta collected, about $2.5 billion. American followed with $2 billion. Southwest collected $1.14 billion, US Airways collected roughly $1 billion and Alaska Airlines collected nearly $600 million."

S

I'm thinking a lot of that was from AirTran's change and bag fees, business class upgrades, wifi, etc... but I could be wrong.

 

[BILL LUMBERG]

Ah, good ole' Marketing.

Southwest sets the market price...AKA " the Southwest effect" and charges an honest price that already has their costs and fees associated with it.

Airline "X" comes in with their brilliant ploy...Charge less for the ticket and hit the customer with baggage fees at the airport if they aren't savvy enough to read the fine print/fees schedule. This BTW is a large part of the traveling public. The folks who fly once every 2-3 years or so.

Great, they captured that segment of the customers for THAT flight.

Most people then realize ( when they get hit with the baggage fees) that the actual price was the same or very close to what they would have paid on SWA...and they feel as if they have been lied to.

They are NOT return customers. Ever. Next time, they pay to fly SWA and learn that not only was the price almost exactly the same, the service, people, and product are just that much better.

Those folks tell Milly and Bob down the street ALL about their experience with the two different airlines...and the following year when they go to see the new grandkid in Des Moines, I wonder who they are calling to book their flight?

The airlines that play the baggage fee game don't REALLY recognize ANY additional revenue(s) over what SWA did or does on the same flights or in the same markets.

They just move the Peas around among the Walnut shells in the accounting office and slap each other on the back while they blow smoke up each others arses and gloat over the "additional revenues" their brilliant bag fee plan has showed....in the "TPS Reports".



Meanwhile, back at the Ranch in DFW, the SWA people sit and smile and say " Hey, Thanks for a great Marketing gimmick. WE can do just the opposite, garner the same revenue ( in every market where we set the price anyway ) AND make people think we're the Good Guys who aren't trying to rip you off."

"Bags Fly Free. "

Perfect.

I'd bet my remaining testicle....that SWA NEVER plays the baggage fee game.

EVER.


YKW





.

Ya know.....the same can be said about Cattle car seating. They feel lied to and never return......ever!!!

 

[Whine Lover]

True....some people just can't stand the thought of not having their seat assigned.

But, it really doesn't bother most folks.


And, speaking of cattle cars..I flew Spirit ONCE....man, those seats must have about a 20 inch pitch, and they do NOT have a recline function.

Unbelievable. But, the krappy seat was assigned and they did charge my company for my carry-on bag.


" Mesa Sucks? " I have a new contender....



WL


P.S. - "Spirit's A320 aircraft feature seats with no recline and 28" of seat pitch - the least amount of space of all US domestic carriers."

Okay. But , it feels like 20" without the recline! ( SWA is 32-33" )

 

[easydoesit]

Some of the bigwigs had JUST flown back in from Dallas as we were finishing recurrent ground yesterday and they stopped by class. Of course, that's the first question I asked, what the heck does he mean by that?

The answer was pretty simple: there is a LOT of overlap in ground operations personnel throughout the entire system now, especially in cities where we both had a lot of presence but may trim back slightly and re-deploy the assets other places, for instance, MCO-BWI where we overlap quite a bit of traffic and don't need to.

The big spotlight is on Dallas... with the training center personnel combined, schedulers, dispatchers, I.T. (although a LOT of our I.T. people have been bailing since they're non-unionized which is unfortunate since our I.T. dept has been pretty decent, all things considered), and other office administration, the overhead from all that is quite a bit higher than it really needs to be.

As a result, as more departments are incorporated to Dallas, those who don't want to make the move and resign will not be replaced. Additionally, people in Dallas who resign will not be replaced and if it shorts a department, they may offer incentives for people to switch from personnel-heavy departments into those that were deficient, thereby "lowering the total head count".

With SWA still quite profitable from a yearly Net income perspective and that only improving as we connect the dots via code share next year, continue combining operations, and reducing overhead as mentioned above, that profit is only going to improve, barring further increase in oil prices or a further downturn in the economy. (did anyone else appreciate his comments aimed at the Presidential election regarding the worsening economy? got a chuckle out of me...)

Therefore, with profits in a livable range and only improving, no one should be worried about furloughs. We also asked how the they intended on getting all of us through training by 1/1/15, and they stated that they can train 1,096 pilots per year. I then asked how they planned on doing that when the most they had ever taken in one month was 48 and which we heard was running the sims non-stop between those and recurrent people and stressing the check airman program. They simply said those were the numbers the training dept said they could handle.

We also asked what the exact fleet numbers were over the next two years, including the 717's being sub-leased to Delta. We are sub-leasing 88 717's to Delta. SWA is taking delivery of 36 replacement aircraft this year, 20 next year, and 30 in 2014, bringing the hull numbers to 86 replacement 737's by 1/1/15, which coincides with "flat" fleet growth. In addition, attrition will drive around 300 retirements in 2013 and 2014 which corresponds to about 1,000 total SWA pilot upgrades in the 3 year period of the transition, or about 1/3 of the pre-merger SWA F/O's, over half of those upgrades were not planned before the acquisition.

After that, the list will "normalize" over a 2-3 year period, re-upgrading all our displaced CA's that can hold it by seniority (which by 2017 is close to 450), and then (2017-2018) the fleet will be re-evaluated (retirements/replacements of aircraft). They also said they are starting to put the new seats in the -300's, indicating that the airplane will be around at least as long as it takes to recoup that investment (5-7 years is what we heard before on that).

All this in the FWIW files.

What happened to the 717's that weren't going over until 2015? So what you are saying Lear, is that they plan on having all of us over to the SWA side by the end of 2014? Is that what the bigwigs said?

 

[Lear70]

What happened to the 717's that weren't going over until 2015? So what you are saying Lear, is that they plan on having all of us over to the SWA side by the end of 2014? Is that what the bigwigs said?

Yup. That's what they said. I still don't see how, but I just fly 'em.

 

[GIZMONC]

The only fees that SWA collects are oversized bags, third bag , um fees, pet fees and early bird boarding. Now on the FL side they collect baggage fees, seat fees, pet fees and UM fees. For the most part SWA only gets early bird on A16-30 and partial of B so it is not that many so max would be 300.00 per flight that is a far cry from bag fees. I think the reference from travelweekly was way off. I have found that many of these writers do NOT do their homework when they write articles like that.

 

[Bringupthebird]

If Southwest decides to sell it's tix on Travelocity, etc, then they will charge for bags. That's the only reason other airlines do it. They want to pop up as the lowest price and then add the bags etc,. later on.

If you've spent millions being the Official Airline of Everything so that you can drive business to Southwest.com, then you can charge whatever you like, provided no one comparison shops.

BTW, Southwest was the initiator of 5 of the last 7 fare increases. I suppose that's in preparation for a big fare sale.

 

[Secret Squirrel]

Did the SWAPA contract qualify for a raise this year?