Southwest’s Plan for “New Ways to Generate Revenue” Has Frequent Fliers Worried
Jennifer Billock February 12, 2019
Southwest Airlines is considering ways to boost revenue, generating curiosity among investors by saying that new avenues are “under construction;” however, the airline continues to avoid charges for bags, changing reservations, and assigning seats—which has the air industry wondering what will change.
At a recent meeting with investors, Southwest Airlines chief executive officer got everyone’s attention when he mentioned the airline is working on new ways to generate revenue. CEO Gary Kelly continues to skip fees other airlines accumulate for luggage, seats, and reservation changes—telling investors there are “better opportunities that fit our brand,” the Los Angeles Times reported—so now the industry is buzzing with ideas for what might change.
One optional new income stream could be customers paying more for better perks, including priority screening or getting their bags off the luggage carousel first. Another option is introducing a new fare class above the airline’s current Business Select offer; think a limited amount of seats with business class amenities like guaranteed access to the front four rows and dedicated spots in the overhead bins.
Southwest also does not plan to institute a basic economy class, but one way the airline could increase revenue is by reducing benefits in the cheaper fares, like not being able to use a cancelled ticket toward another flight.
The biggest concern in all this is the potential to alienate loyal customers.
“As long as Southwest offers these as add-ons and the consumer sees they are appealing, and Southwest doesn’t take anything from its core value proposition, they have a reasonable chance of success,” Henry Harteveldt, founder of Atmosphere Research Group, told the Los Angeles Times.
[Image: Flickr/D Coetzee]
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It already ticks me off that if I cancel a flight I lose the (now) $20 and + early bird fee. What next? Probably only one free checked bag, that would be my best guess.
hyho61, the term "Low Cost Carrier" refers to low OPERATING costs, not low FARES. It's an airline industry created term to classify airlines by operating business model. By its business model, Southwest still is a Low Cost Carrier, even though in many cases it's been many years since they were a low FARE carrier in most markets (ie, the days of the so-called "Southwest Effect" where Southwest coming into a market would lower fares across that market).
Key thing: eliminate the ability for Non-Business Select users to sit in Row 1 and Exit Row. I'm all for blocking rows. As a business select customer, many times, I board (with like an A4 boarding pass) only to find the first row full of pre-boarders. It significantly negates my reason to spend more money.
Southwest is certainly not a low cost carrier, it is now on an average on par or more expensive than UA, AA or DL. What it does have is the no change fees which is the biggest draw especially for business customers and no bags fee which some do find it attractive.
I would pay them to drop the camp counsellor chumminess and cornball jokes. Also, I would pay for a higher, better class onboard. Absolutely. The airline is way too egalitarian which is fine if you are budget conscious, but if you can afford it, it's not that great.