Southwest Airlines turns 40

We recently bought stock in Southwest Airlines.  Boy they just do things right.  Avoiding baggage fees.  Lower costs.  And most of all its the people who work for them.  Just fly with some one else and you will know what I mean.  The New York Times article from last week tries it best to balance and find fault with the airline.  But even the problems don't seem like they are insurmountable. 

 My favorite quote:


But here, too, Southwest sensed an opportunity to showcase its difference. While baggage fees generated roughly $1.7 billion for the industry in the first half of the year, Southwest drew the line. It made its “Bags Fly Free” policy a centerpiece of its advertising and marketing campaign. 

“A lot of people have been trying to pickpocket and nickel-and-dime their customers,” says Kevin Krone, the company’s head of marketing. “We don’t think it’s right.”

The policy turned out to be a good business move.

Southwest’s revenue rose by $1.6 billion in the first nine months of 2010, compared with that period in 2007, even as its capacity declined by 1 percent. Part of that growth in sales, Southwest believes, came from new customers fleeing bag fees. Mr. Kelly calls his rivals’ approach “a gift.”

The policy yielded another advantage. It allowed Southwest to subtly shift the focus away from its fares. Although it still offers low fares to many destinations, Southwest doesn’t always have the lowest fares every day on every flight, says Bob McAdoo, an airline analyst at Avondale Partners. 

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Roughing it

From the Consumerist:

Like something from a '70s disaster movie, 3,300 passengers on board the Carnival Splendor found themselves stuck out to sea off the coast of Mexico after a fire in the engine room.
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Sticker Shock

From the New York Times online:

...and others have been discovering in recent months, airfares in most of the world are on the rise as the global economy picks up and demand for air travel climbs, particularly for business trips. Airlines, meanwhile, have been reluctant to add more flights to meet that growing demand. That is increasing pressure on ticket prices and making for packed planes and longer standby lines as the year-end travel season approaches. 

This has been a boon, of course, for an industry that is expected to roar back into profit this year, to the tune of $8.9 billion. That comes after airlines collectively lost nearly $26 billion during the previous two years, according to the International Air Transport Association, an airline industry group. Many of the world’s leading airlines are reporting that the three-month period ended Sept. 30 was one of their most profitable quarters in years. 

The degree of sticker shock varies significantly by region and by class of seat, with fares on some routes still at or below those of a year ago, despite some large increases in traffic.




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