Southwest to ‘trim headcount’ after growth in costs

[Capn Butthead]

How about we get rid of the VP of Toilet paper and the director of GO water fountains. Get rid of all of the bad middle management that we have. They are so out of touch and costing us millions....ie the moron that redesigned the flight attendant drink cart...at a cost of millions of dollars, and now they're spending millions of dollars to pull them out. Morons

 

[Dan Roman]

I must say it's refreshing that this didn't turn into some SWA bashfest. No one wants to see anyone lose a job anywhere. I think it's safe to say any merger is going to make some jobs redundant. Hardly a sign of anything ominous or indication of any trouble.

 

[GIZMONC]

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.

 

[jonjuan]

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.

Why do you think they already haven't do so if the "math" is just so darn easy? What are the unintended consequences?

 

[Lear70]

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.

 

[jonjuan]

The "free" bag policy is a smart way to train the consumer. Many consumers believe they are paying less overall by not having to pony up "exorbitant rip off fees" which seems a lot like a "penalty" when they check in. It's a great marketing ploy. Not only do most believe SWA has the lowest fares, they don't like the fees at check in when it's too late to do anything about them. SWA will lose gained "bags fly free" gained marketshare if they start charging for bags.

 

[humveedriver]

From an operational stand point, checking bags at SWA easily trims 10-15 minutes off of the boarding process. While SWA is certainly entering new markets that require longer turn times, they still have an extensive network that relies on quick turn around times. The boarding process at AirTran evolved after the baggage fees were introduced, as more customers brought baggage on board the aircraft, creating log jams at security and in the aisle. Gate agents now ask for volunteer bag checking for free (lost revenue, and customers catch on quickly) and the enforce tagging at the gate after the first 100 or so pax, in order to get an on time departure. Something SWA is doing that could lead to more bags in the cabin and potentially charging for checked bags, is the new evolve interior. Particularly on the classics it is impossible to load a standard 22 inch bag wheels first in the overhead. The new interiors allow this. Can't remember if the NG without evolve has the big or little overhead space. SWA mentioned in the 3rd quarter results that some (@100) classics are going to get the new SWA interiors. So looks like those A/C will be around for awhile. Hopefully one 2nd order effect of the larger overhead space with the evolve interior will be an improvement on SWA's Mis-handled bag report card.

 

[JT12345]

From an operational stand point, checking bags at SWA easily trims 10-15 minutes off of the boarding process.

+1 this

Utilization is what makes SWA great. Getting an extra leg out of those planes that other carriers just have not done. I have seen them turn 80% full airplane around with 2 wheelchairs in 16 minutes door open to door shut.

Their culture and their employee contracts motivate the employees to increase utilization.

I don't think anyone can deny SWA utilization on here.

I work like that now. I am just not being rewarded short term for it in my paycheck. If you don't think this affects you long term no matter who you work for you have never been furloughed yet. And if you are always milking it then you can not take anything away from the company.

 

[funnyman12]

Airtran can charge for bags, turn a full 737 in 25 minutes with only 1 gate agent. Sometimes that same gate agent drives the tug. I think SW has learned that Airtran was a lean machine. Problem is management is salivating at the potential costs savings. Now management has the carrot of a b scale. Oh an the Airtran b-scale hurts SWAPA more than us getting SW rates last year. Just like naybe ALPA sgould have looked at the history of SW acquisitions, SWAPA should have looked at the history of allowing a b-scale. Shame on us....

 

[thrasher]

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.