But unless you're advocating that UA/AA/NW/DL/US/CO all go emulate Southwest by getting rid of aircraft type, international service, premium cabins, pre-assigned seat, etc., I'm not sure continuing to talk about how great Southwest's business model will be of any substance.
The legacy carriers need to do something to be profitable.
What is really scary about the legacy carriers is that over the past few years I've read countless stories quoting management from legacy carriers saying that to be profitable they need to increase international capacity and cut domestic capacity, and that's what they've been doing. Here we are now and they're all losing money again, yet WN is still making money and they have been adding domestic capacity and still have no international flights (which will likely not be the case in a few years however).
What really scares me is that I think the government will be forced to do something drastic by the legacies that will not be in the best interest of air travel consumers.
lets see what happens after Southwests brilliant fuel hedge comes off, me thinks may be a tad tough for them to keep the streak alive
As SK pointed out, you make the fairly common mistake of thinking that WN won't just keep hedging further and further out. In 2003-04, when WN's hedges ran to about 2008-09, many people said "by 2009, WN's hedges will be gone and it will pay the same as everyone else."
They were Wrong. Each quarter, WN hedges further and further out. That's why their hedges now run to 2012-13. And by 2013, WN will probably have hedges in place running to 2017-18 or so. It's a fluid process.
WN's 30+ year streak of profitable operations should be worthy of discussion amongst the interested parties, given the current pitiful financial condition of the "full service" carriers.
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Sorry, let me rephrase.
I am most bothered by those here who continue to want the perks they have enjoyed over the years, yet are blind to the fact that for a variety of reasons, Southwest's cost advantage is partially tied to the simple business model it has. You can't have your cake and eat it too.
Put another way, were Southwest to provide upgrades, premium cabins, international services, lounges, etc... all of which cost (and make) money for the legacies, I'm not necessarily sure that Southwest would be as successful.
Does this mean the legacy business model is broken? Perhaps - clearly at $130 a barrel, things need to change and fat needs to be trimmed. But I don't think we can blindly praise Southwest yet want everything that American or United provide to you as a customer, without letting go of some of the costly benefits of flying with a legacy.
__________________
The thing I miss about Air Force One is they don't lose my luggage. - President George Bush Sr.
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A simple solution to the baggage fee
I called my dear wife and we will now plan our 10 year anniversary trip to Europe, all on AA miles. Once my mileage account is drained, I shall join the folks at Southwest Airlines. I'm tired of the nickel and diming (along with truly HORRIBLE customer service) because these idiots cannot run a transportation business.
Watch them start charging $10 to fly you to the correct destination.
Goodbye legacy carriers.
__________________ "If it doesn't make dollars, then it doesn't make sense."
Boarding is a zoo now anyway but when they start enforcing this it will be insane. It seems that sometimes TSA is doing the carry on size policing, at least at LAX.
The decision to make 1 million miles before cutting off the travel looks like a better idea. It would suck to travel so much and get squeezed out.
As SK pointed out, you make the fairly common mistake of thinking that WN won't just keep hedging further and further out. In 2003-04, when WN's hedges ran to about 2008-09, many people said "by 2009, WN's hedges will be gone and it will pay the same as everyone else."
They were Wrong. Each quarter, WN hedges further and further out. That's why their hedges now run to 2012-13. And by 2013, WN will probably have hedges in place running to 2017-18 or so. It's a fluid process.
Sure, and WN will continue to win the hedging game if fuel continues its meteroic rise. The question has always been one of "chicken." WN made a good bet that oil will rise - but I think not even WN predicted HOW high it has been. But if oil prices do drop, then they might actually be paying more than its competitors at some point. But that's a big if.
__________________
The thing I miss about Air Force One is they don't lose my luggage. - President George Bush Sr.
I called my dear wife and we will now plan our 10 year anniversary trip to Europe, all on AA miles. Once my mileage account is drained, I shall join the folks at Southwest Airlines. I'm tired of the nickel and diming (along with truly HORRIBLE customer service) because these idiots cannot run a transportation business.
Watch them start charging $10 to fly you to the correct destination.
Goodbye legacy carriers.
And you shall also not fly to Europe again, I suppose.
__________________
The thing I miss about Air Force One is they don't lose my luggage. - President George Bush Sr.
Sure, and WN will continue to win the hedging game if fuel continues its meteroic rise. The question has always been one of "chicken." WN made a good bet that oil will rise - but I think not even WN predicted HOW high it has been. But if oil prices do drop, then they might actually be paying more than its competitors at some point. But that's a big if.
if oil prices drop, is like saying if lizards inhabit mars natively.
When the legacies were in trouble post-September 11, hedging was all but a pipedream because hedging requires money and credit, and all that good stuff. This was what WN was able to do while the legacies were not. It's not necessarily that the legacies did not WANT to hedge, they just needed to conserve cash during a very difficult period of time.
Amen.
Actually, AMR had hedges in place until very early in 2003 when its cash crunch finally required that it liquidate its hedges. Later that year, after it had extracted the massive wage concessions, it slowly began hedging again as its cash balance permitted.
A lot of people forget that oil dipped in January, 2007 to just above $50/bbl - not very many people accurately predicted at that time that a year later it would be about $100/bbl and that in 16 months it would be $130/bbl.
AMR stock hit a high of $41/share in Jan 2007 - the other legacies that had exited Ch 11 also saw their stock hit highs.
I am most bothered by those here who continue to want the perks they have enjoyed over the years, yet are blind to the fact that for a variety of reasons, Southwest's cost advantage is partially tied to the simple business model it has. You can't have your cake and eat it too.
Put another way, were Southwest to provide upgrades, premium cabins, international services, lounges, etc... all of which cost (and make) money for the legacies, I'm not necessarily sure that Southwest would be as successful.
Does this mean the legacy business model is broken? Perhaps - clearly at $130 a barrel, things need to change and fat needs to be trimmed. But I don't think we can blindly praise Southwest yet want everything that American or United provide to you as a customer, without letting go of some of the costly benefits of flying with a legacy.
I see people checking some crazy heavy bags and while -- by and large -- the worst offenders are already paying overweight fees, why should airlines risk bankruptcy while people check bags for free and others paying the same fare don't check at all? Those people should have to pay an extra 15 bucks so that I can continue to enjoy an airline that can afford to maintain its fleet and employ enough people to handle the demand for checked bags.
However this change will cause one effect that no one's mentioned so far. A couple with a 24-pound suitcase each will combine their stuff into one 48-pound suitcase.
A single traveler who previously checked a bag just because he had a bottle of bug spray or sunblock that was too big for TSA, and put most of his stuff inside the checked bag, will now buy his liquid at the destination and carry on a much larger bag.
Fewer checked bags overall but a greater number of bags at the 50-lb. limit for the baggage handlers. And increased headaches for the gate staff who has to reject carry-on's as too large, causing stress with management as the prior poster indicated. If it's not policed AA doesn't get their revenue, but, the GA's won't care any more than they do now.
"Welcome ladies and gentlemen to American flight so and so,with service from here to there. We are now boarding all rows." Sound familiar? They don't even consistently call the groups in order, why would they start consistently policing the carry-on policy?
Doesn't make me upset in the least to see AA struggle. They are paying for years of mismanaging their routes and not giving a hoot about customers and their concerns. That is the reason why I no longer fly them....ever.
