diablonhn

Not true anymore. Wherever they have a monopoly in, they raise fares. Just look at OAK and SJC. Fares out of those airports were consistently lower compared to fares offered by other airlines in SFO. That was before Southwest moved into SFO. After Southwest and Gary moved in, OAK and SJC fares shot up and they are now more expensive than SFO.

bon95

this this this this

the silence says it all

ftnoob

It's the weekend, they aren't here.

And besides that, they are here for customer service issues, not to explain or rationalize management decisions.

nsx

Right. This would be exactly the kind of issue they are NOT supposed to comment on.

ftnoob

SWA's schedule extension this morning features some odd $4 increases in WGA fares. OAK-LAX is $89 through 05-Jan, than jumps to $93. AUS-DEN, which was $69 through most of August before jumping to $87 while last weeks sale was still in progress, and which became $91 when the tax & segment fee lapsed, once again shows up as $91 in January, 2012. Another route which sometimes priced as low as $109 in recent months now prices no lower than $113 in the newly-extended booking window.

texashoser

Not necessarily. They could simply quote what had already been released by management, but hadn't quite made it out to all the FT community.

They could have said something along the lines of "Southwest, along with many other airlines, made the decision to raise fares to increase profitability on routes." After all, this is something you'd get told by a CR rep in Dallas. And that's exactly what Gabe, Verity, and Whitney are.

That would at least ack what we were seeing. Now, do I expect them to defend or rationalize the logic behind the management decision? Of course not. THAT would be something they are not supposed to comment on.

expert7700

No, corporate resonse would be that they remain in full complaince with government requirement regarding the taxation change, and that their overall fares remain competitive to their existing pricing strategies.

Or if media pushed further, they would likely explain that one of the government's options for dealing with the temporary taxation issue was chosen. This method was chosen rather than raising costs excessively to raise fares to pay our top-notch IT and Web development teams extra for these changes.

gogreyhound

+1
And this is not the only market where it happened.

pinniped

I'm not sure I understand the outrage here.

For any given market, Southwest knows exactly what the demand curve looks like. They have mountains of data that tell them exactly how to price flights to sell the right number of seats and right mix of seats.

That demand curve is effectively based on the total price. We all know there are taxes and fees in airline tickets, but as a general rule we don't think about them. If I've decided that, say, MCI-DEN is worth $75 to me, then I occupy my own personal spot on the demand curve at $75 regardless of whether it's $50 base + $25 tax or $60 base + $15 tax. I buy $74 tickets. I refuse to buy $76 tickets. As long as the airline clearly reveals the TOTAL COST to me with no deception, I don't really care.

Now say the taxes drop by a bit. None of those demand curves really changed, so now the airline can collect more revenues for themselves and still serve their customers precisely the way they did before the taxes dropped. I don't see what's wrong with that; in fact, as a shareholder I'd be upset if they didn't collect those revenues. (Although the idea of marketing a "tax free day" has some value I suppose.)

If the tax were to really go away for good, then eventually competitive forces might push the fares slightly down...thus sharing the new benefit between passengers and airlines. But instantly...in one day...that isn't going to happen.

If it were me, I'd do exactly what WN did: grab the full 100% (or close to it) and see if any of my main competitors are starting to give some or all of it back.

nsx

Economist Greg Mankiw agrees with you.

SAT Lawyer

How about the fact that WN is falsely advertising $59 fares when it hiked them all to $63?

diablonhn

The outrage is that by raising fares to offset the lower taxes, they're giving the middle finger to their customers.

tusphotog

And Delta, US, AA, AS, UACO etc don't do the same? Ever look at ANC-JNU or FAI-ORD on AS?

lougord99

Of course they do. But one of the reasons we use to like this airline is that they did not play those games.

tusphotog

Sure they did. It may not be as exorbitantly expensive as some other airlines, but they've always played these games.