I would like to see WN add other items where they are not charging a 'fee' today. For example, flying AA, I saw a number of passengers buying snacks, sandwiches, etc. I see this as being a way to introduce additional revenue and not alienate customers.
When flying AA last week, I saw a lot of upset people paying baggage fees and very full overhead compartments. I can see WN keeping the first bag free but I believe as others, more fees are to come.
"Fly Southwest Airlines because we don’t charge for things that should be free like the first or second checked bag, window or aisle seats, snacks, water, curbside checkin, change flights or phone reservations."
Southwest believes that customers should not pay for things that should be free. There's a difference between "hidden" fees and fees. Some items are beyond the scope of what is included for all passengers, so yes there will be a charge for those items (3rd bag, overweight bag, pets and UM's).
Quote:
Originally Posted by dwebb
By the way, does anyone know where to find where last year's newspaper ads about the fees are? I think that the latest changes don't effect the fees that WN has been advertising.
Also, southwest.com/nohiddenfees now redirects to the homepage. Just sayin'.
This is the key point. I've long asserted WN would regret not going along with the other airline fees, as those fee dollars are 100% pure cash profit.
In any case where revenue=margin, you have consumer fraud.
I will never pay for something where margin $ and revenue $ are equal, because it is a sign of ignorance on my part and everyone else's part.
These carriers need to find ways to operate profitably, at least to the degree that grocery store chains are (2% to 3% margin), without defrauding and misleading customers. Grocery stores do not charge entrance fees and refrigeration surcharges to boost margin to 3.1%.
As the fraud grows within a given carrier, my flying with that carrier is inversely proportional.
As the fraud grows within a given carrier, my flying with that carrier is inversely proportional.
That's great, but at the end of the day, every airline -- and every business -- needs to make a buck to stay in business. Right now, WN (like most airlines) isn't making a buck, so new revenue sources need to be explored.
As I've said before, the problem WN how has is that they can offer $59 fares and that's pretty much all they get from the customer. The competition can then match these $59 fares and also collect "ancillary revenue." If WN's costs were bare bones, this MIGHT work, but considering that they pay their employees more than the competition, they need to find a way to increase per passenger spending. Very, very few low cost airlines in this world operate like WN for this reason.
Hence, the new initiatives. And they say there are many more coming. If you're a WN frequent flyer, be a little nervous, and hope they don't impact you.
My point is that, prior to "special charges" which in many but not all cases are unnecessary, many carriers now have a 2% to 3% margin or above.
I and most reasonably smart people will not fund, through nickels and dimes, an air carrier's pursuit of higher margins. They need to build margin only through efficiency improvements and MUCH smarter route planning...rather than competing against other carriers for route saturation.
The last major grocery store chain that went out was A&P Food Stores in 1983.
So, 3% is just fine for the airlines as well.
And, they need to get used to building health within that margin.
Just like the grocery stores do with their unions.
My point is that, prior to "special charges" which in many but not all cases are unnecessary, many carriers now have a 2% to 3% margin or above.
I and most reasonably smart people will not fund, through nickels and dimes, an air carrier's pursuit of higher margins. They need to build margin only through efficiency improvements and MUCH smarter route planning...rather than competing against other carriers for route saturation.
The last major grocery store chain that went out was A&P Food Stores in 1983.
So, 3% is just fine for the airlines as well.
And, they need to get used to building health within that margin.
Just like the grocery stores do with their unions.
Anne
I agree with your premise regarding acceptable margins and efficiency, but I think it is flawed somewhat in relation to airlines. If airlines did engage in smarter route planning, as opposed to "overstaturation" as you describe it, then fares would go way up due to the decreased competition along many routes. So they could drop their fees at that point since their expenses have been cut, but then the leisure traveler would likely be priced out of many markets. And while such an outcome is perfectly fine if that is what the market can bear, I suspect most of the gripes about fees are from leisure travelers as opposed to corporate travelers.
A grocery store doesn't have that luxury. Even only 2 major chains in a metro area is enough to foster competition. Plus, smaller neighborhood markets and farmers markets force competition with the larger grocers in town. If I don't like the price Safeway is charging, I can go to Fry's or Wal-Mart or a local market. If I don't like the price that US and WN are charging, and there are no other carriers serving my desired route, going "local" is not an option.
Also, southwest.com/nohiddenfees now redirects to the homepage. Just sayin'.
That's a very recent change. I pulled up that page in the past day or two (after seeing this thread). The fee comparison chart was already returning a 404 error when I was still able to look at the no hidden fees page; as of now the chart is still cached on Google's servers.
Also in the "just sayin'" category: The 26-May press release about celebrating 15 years at SNA lacks the "no hidden fees" verbiage found in the similar 15-May press release about celebrating 20 years at OAK.
$106.39. To analyze that question, this is Southwest's average fare revenue per passenger in the 4Q of 2008, from the Airports:USA Airline Financials package. So that means each passenger that switches to WN as a result of other carriers' fees represents 5.3 $20 baggage charges ($106.39 divided by $20). Apparently it won't take many such passengers to make up for what Southwest might otherwise gain from bag charges. If just 1,000 consumers a day - which is a drop in the Southwest enplanement bucket - are diverting to WN, it's almost $40 million a year in net new revenue, not to mention happy passengers.
This is an interesting equation. One point to note is the 5.3 bag fees are pure profit, the $106.39 is dangerously close to break-even, given WN is at essentially break-even +/- a few percent.
The recession has slammed the majors, yet WN load factors are nominally the same. That might have happened even without the baggage fees however.
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Quote:
Originally Posted by iahphx
So, if it matters to you, I don't think we're going to see a basic bag fee on WN. The one I wonder more about, though, is the lack of a change fee. Has WN ever communicated that this is a "core business strategy"? I don't recall hearing it. It definitely costs them money to let people switch their flights fee-free, not to mention the inability to collect change fees and such. Heck, this weekend, UA reversed their long-standing policy of letting customers hold internet reservations for 24 hours. If UA won't give their customers 24 hours, how much does WN's incredibly lenient rez policy cost the airline?
It probably pales in comparison to the people (like me) who will buy a tentatively scheduled trip on WN if at all possible to avoid getting the old eyeballs gouged out if it needs to be changed.
Quote:
Originally Posted by iahphx
As I've said before, the problem WN how has is that they can offer $59 fares and that's pretty much all they get from the customer. The competition can then match these $59 fares and also collect "ancillary revenue." If WN's costs were bare bones, this MIGHT work, but considering that they pay their employees more than the competition, they need to find a way to increase per passenger spending. Very, very few low cost airlines in this world operate like WN for this reason.
What they pay their employees is not particularly relevant. Their CASM, however, is. WN can offer lower fares than other carriers because their costs are lower to move that pax.
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Quote:
Originally Posted by uastarflyer
This is an interesting equation. One point to note is the 5.3 bag fees are pure profit, the $106.39 is dangerously close to break-even, given WN is at essentially break-even +/- a few percent.
The recession has slammed the majors, yet WN load factors are nominally the same. That might have happened even without the baggage fees however.
5.3 bag fees are not pure profit. It costs money to collect money, check-in times will be longer, and there is a "good-will" cost when customers defect to other airlines. A shift to carryons will lengthen boarding times & increase the inevitable gate-checking (how will those pax pay their bag fees?), etc.
I noted that such controls were like crack to an airline's revenue management team -- they would definitely tighten them over time. Sure enough, the capacity controls now resemble a lot of other airlines.
I don't agree with this assessment, and based on anecdotal comments here on FT I think many others here would disagree that their capacity controls "resemble a lot of other airlines". It's certainly harder to redeem than in the good old days, but I've found capacity controls to be less of a problem on WN than legacy carriers, and most importantly, I can still book an award ticket at any time without any fees and WN has shown a strong propensity to open up availability within a few weeks of flights, which is a huge positive compared to legacy carriers (which even if they open up flights closer to departure, you get dinged with close-in ticketing fees in most cases).
Quote:
Originally Posted by uastarflyer
This is the key point. I've long asserted WN would regret not going along with the other airline fees, as those fee dollars are 100% pure cash profit.
No fee is 100% pure profit, hyperbole has no place in a balanced discussion.
Quote:
Originally Posted by uastarflyer
Does anyone have any real data to validate? I'd think by end of summer we'd have a solid 9-12 months of data look-back to make an assessment.
To validate what, your hyperbolic claims? I can tell you your claim that any fee is "100% pure profit" is false.
Quote:
Originally Posted by dwebb
By the way, does anyone know where to find where last year's newspaper ads about the fees are? I think that the latest changes don't effect the fees that WN has been advertising.
As I posted over in the UM thread, this is a service I use 2-3 times a year with my daughter. It is hard to quantify the cost of added paperwork and time...but there is no denying that there is both when it comes to UM travel.
On Tuesday I will be picking up my daughter at PHX. That means I have to stand in line, take up an agents' time while she pulls up the PNR, check my ID, and prints me a security pass. Whereas a normal passenger on a R/T ticket usually checks in twice, an UM typically has 4 "check-ins" associated with the reservation (2 times for the drop-off, 2 times for the pick-up).
Sounds about right to me ... but then you say:
Quote:
Originally Posted by flg8rmatt
Am I disappointed in the fee? Yes, as on the level, I agree with you that it doesn't take significantly more work to get a UM on and off a plane. Certainly it is just as "cumbersome" to deal with a UM as it is for the airline to deal with a disabled person.
I do not agree with this at all. UM's take many times more work than your typical passenger to handle, and more most handicapped people even.
Quote:
Originally Posted by uastarflyer
This is an interesting equation. One point to note is the 5.3 bag fees are pure profit, the $106.39 is dangerously close to break-even, given WN is at essentially break-even +/- a few percent.
36 consecutive years of profitability is not "essentially break-even" in my book. Certainly they've faced some challenges the past few quarters, but I don't believe that streak is in serious jeopardy.
Quote:
Originally Posted by iahphx
That's great, but at the end of the day, every airline -- and every business -- needs to make a buck to stay in business. Right now, WN (like most airlines) isn't making a buck, so new revenue sources need to be explored.
I believe WN is making money right now.
Quote:
Originally Posted by NoPlaceLikeHome
My point is that, prior to "special charges" which in many but not all cases are unnecessary, many carriers now have a 2% to 3% margin or above.
Which carriers have demonstrated a positive margin for any sustained period of time?
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BTW, just anecdotally speaking, I got off the non-stop SEA-MCI flight a few hours ago, and the Southwest terminal at MCI was absolutely packed, it is the busiest I have ever seen it, which is especially surprising for a Sunday afternoon. Of course, it's impossible to say they're profitable because of that, but it certainly is an encouraging sight given WN's demonstrated ability to turn passengers into profit.
That's a very recent change. I pulled up that page in the past day or two (after seeing this thread). The fee comparison chart was already returning a 404 error when I was still able to look at the no hidden fees page; as of now the chart is still cached on Google's servers.
Also in the "just sayin'" category: The 26-May press release about celebrating 15 years at SNA lacks the "no hidden fees" verbiage found in the similar 15-May press release about celebrating 20 years at OAK.
Well, either they now felt somewhat hypocritical, or they're afraid they could get sued. Certainly if they advertised something like "US Airways charges hidden fees and we don't," they could be sued. There's nothing "hidden" about the other airlines' fees -- if there were, the DOT would fine the bejesus out of them. These fees are fully disclosed. Perhaps a better phrase would be "unexpected fees." Of course, you could now argue that everyone actually expects airlines to have bag fees! So perhaps the best advertising slogal would be the simplest: "Other airlines charge you to check your first and second bags -- we don't."
Quote:
Originally Posted by ClueByFour
It probably pales in comparison to the people (like me) who will buy a tentatively scheduled trip on WN if at all possible to avoid getting the old eyeballs gouged out if it needs to be changed.
Yeah, I know that old saw. But the percentage of people who actually KEEP THEIR PROMISE not to fly an airline that "screwed them" is low. Obviously, to do so is an emotional decision, and not a rational one. Most people will go back if the fare is low. Spirit's CEO famously got "in trouble" for saying this the other year, but it's a widely accepted truism in the industry.
5.3 bag fees are not pure profit. It costs money to collect money, check-in times will be longer, and there is a "good-will" cost when customers defect to other airlines. A shift to carryons will lengthen boarding times & increase the inevitable gate-checking (how will those pax pay their bag fees?), etc.
Pure profit? Hardly.
But when those variable costs exist solely as the result of the implementation of the silly "fees" they are called "symbiotic COGS" (costs that did not exist previously).
Implementing a fee in order to implement related variable costs makes no sense.
I do not agree with this at all. UM's take many times more work than your typical passenger to handle, and more most handicapped people even.
I disagree. I flew from PHX to CMH on WN and sat next to an UM. During the flight she received no more attention from the FAs than I did. The only extra treatment was her escort from the gate to the plane by the GA and the escort by the FA off the plane once we got to CMH.
GAs walk non-UM preboards down the jetway all the time. They arrange for wheelchairs at the destination. Nearly all of the extra work, IMO, is done by the agents at the ticket counter.
Now if there is a case of IRROPS for some reason, then of course, there is extra work involved all around.
It's hard to quantify how much such extra work is worth...and I do think $25 is fair, even if I do not like it. But I really don't think there a significant amount of extra work for a UM when compared with any other special needs pax.
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