Southwest to ‘trim headcount’ after growth in costs

[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.

 

[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: