Cargojon

If the total fare savings was $400 for five pax, and each of the pax checked one bag round-trip @ $50 r/t, that would be $250 spent in baggage fees for the family of five. They're still saving $150.

num1bearsfan

In the end it won't make much of a difference.. Either it works or it doesn't, and with little to no detriment to WN (save for maybe the wasted marketing expenses).

If in the end, the market shows that they simply do not pay attention to extra fees then Southwest will add them too, and then probably lower fares to compensate, or not,.. The question is, how stupid is the typical American traveler? If people are willing to pay more when they don't need to, in this capitalistic world, any company will be more than willing to take that extra cash off of your hands..

My prediction though, is that the no fee campaign is going to be successful. There's going to be a short period where people "aren't gunna get it" and opt for the low fares on the legacies in favor of Southwest "because it's the same price", but I think eventually people are going to catch on, but it may take some time. In the end, the airlines charging for the fees will sort of be villanized by pop culture for nickel and diming, and the sentiment will be contagious as are most popular consensus opinions to the degree that people simply adopt the opinions themselves due simply to the fact that it's the popular opinion. In the end it'll be well known that Southwest is the airline that doesn't nickle and dime, and people will appreciate it.

nsx

This is precisely how Southwest can earn brand equity that will endure a decade or more. I hope the bean counters properly value it.

Every brand needs an accompanying image. Historically, Southwest has been the "no frills" airline. Now every airline is "no frills". Southwest is poised to become and needs to become the "no fees" airline.

But I'll bet the folks at Dallas figured all this out 6 months ago... They're smarter than I am.

loboclone

Not so in my market, Wn is higher on some routes by as much as $140 RT. I am on F9 3 out of 4 weeks this month and I am saving money. How about ABQ-OMA-ABQ for $207.30, Wn was $340. Used to never look but with this economy I look at UA, US, F9 and then WN. Yes in that order, I used to be UA and WN only depending on where I was going but F9 is really getting my business now.

BTW I pay no luggage fees with elite status on any airline.

SDCA

Since you know you will be traveling 3 out of 4 weeks this month, you already know when you can travel and book it in advance.

But for someone who travels at the last minute, this is what i have found on F9 and WN from ABQ-OMA-ABQ:

ABQ-OMA-ABQ on F9 for 10/25-10/28 $184 Stops in DEN

on SW same date $280 Stops in DEN

$96 savings on F9
--------------------------------------------------------------
For 9/25-9/28 on F9 $686

on SW $540

$146 savings on SW

As far as who has the lower fares, it could swing both ways depends on when one book their ticket.

SW High

Yes if they take only one bag. But, the family of 5 takes at least two bags each and sometimes 3. These were vacation trips for 10 to 14 days.

The point I tried to make is that the add on charges were not considered by these fairly intelligent and cost conscious people. If they won't compare "apples to apples", WN might as well match these high luggage prices that seems to becoming accepted, and drop the basic fare somewhat to be price competitive, yet making more in profits. Just don't nickel and dime the little stuff.

iahphx

Well, you might not like them, but the August traffic numbers STRONGLY suggest that, at least so far, WN has received no benefit from their "no fees" pricing structure.

Here's the relevant portion from their traffic release: "Southwest Airlines Co. (NYSE: LUV) announced today that the Company flew 6.6 billion revenue passenger miles (RPMs) in August 2008, a 5.2 percent decrease from the 7.0 billion RPMs flown in August 2007. Available seat miles (ASMs) increased 1.5 percent to 8.9 billion from the August 2007 level of 8.7 billion. The load factor for the month was 74.6 percent, compared to 80.0 percent for the same period last year."

Basically, WN added seats, but they flew a lot fewer people than the year before. Ouch. No wonder at the end of August they announced a surprising 6% reduction in their winter flying. http://www.smartertravel.com/blogs/t...tml?id=2655334

At the same time, fee-spouting US Airways reported a record August load factor, on slightly diminished capacity: "US Airways Group, Inc. (NYSE: LCC) today reported August and year-to-date 2008 traffic results. Mainline revenue passenger miles (RPMs) for the month were 5.7 billion, down 0.5 percent from August 2007. Capacity was 6.7 billion available seat miles (ASMs), down 1.3 percent versus August 2007. Passenger load factor for the month of August was a record 85.8 percent, up 0.7 points versus August 2007."

No doubt this is why the WSJ said that WN has so far seen no traffic gain from avoiding fees. Indeed, the only way WN's traffic numbers aren't bad is if they jacked up fares in August and were willing to trade fuller planes for higher yields. (JetBlue has had some success in this strategy in recent years.) But if that's the case, WN may be saving their customers baggage fees, but are charging them much higher up-front costs for their tickets. Not exactly a consumer benefit.

Beckles

WN historically decreases the number of flights in the winter. The year-over-year decrease for the winter period (after the new year) is 4%.

In the end what matters will come on October 16, 2008 when WN either announces their umpteenth consecutive quarter of profitability despite the horrid market conditions or they announce their first loss in as many quarters. My LUV shares have been doing very well lately, but I honestly don't expect the announcement on October 16 to be all that great.

ClueByFour

No, they don't. I suppose you can continue to repeat it (strongly, even!) and then cite statistics which don't even come close to backing it up, and someone might believe it.

Let's take your statement about August: fees have been in place for less than two months, during a period where the bulk of air travel is purchased weeks (if not months) in advance. That's one heck of a strong indicator.

So in an era of rising airfare, the only airline adding capacity had a lower load factor.

In other news, the sun rose in the east this morning and set in the west, and 2+2 does indeed leave you with 4.

What you fail to mention is that LCC's express ASMs were up a whopping %9.2, whereas it's express load factor was down %1.5. LCC's consolidated system ASMs were down %1, it's consolidated load factor only went up %0.6. So, ASMs are dropping faster than load factor is rising. How could that be?

Now, this does not take into account the fact that LCC has been taking capacity out of it's system for 3.5 years now.

Which is entirely possible--they are "the bar." Given that they derive a higher % of "fuller fare" flyers than just about anyone else, and thus have always historically been able to make money at a much lower load factor than anyone else, it's foolish (or self serving) to suggest that their strategy is "bad."

Curious: during this decade, how has LUV's treatment of their consumers stacked up against, say, LCC's when viewed from a financial result perspective?

nsx

I fly twice a week. I've seen emptier flights intra-California over the past year than any time since October 2001. The early morning flights were even empty during the summer months, something I've never seen. This MIGHT be due to a slump in consulting businesses. But whatever the cause, Southwest has not cut flights fast enough to keep loads up to historical levels.

Southwest virtually owns the intra-California air travel market, so I doubt that fees or lack thereof have anything to do with what I've seen. But I expect the quarterly numbers to be bad until people get used to the new price levels, whatever they turn out to be.

ETManning

Me too( at least partially) and I've been a SW hold-out for years. The no fee policy was the final (good) straw. Also their improvements in the whole boarding scheme have helped immensely.

GrizShel

Southwest.s ad campaign is spot on for me, I am really irritated by all of the add-on nuisance fees. I think in the coming months many consumers, like me, will take a closer look at Southwest.

Southwest's FF program does not do anything for me, but, it appears that my current primary carrier airline (NW, soon to be merged into Delta) reward program is on a path that might make it even as useless for me as Rapid Rewards is. Unfortunately, Southwest does not fly to enough of the places that I go to at all or conveniently enough to ever be my only major carrier.

The bottom line is that I'll start flying Southwest again if it is cheaper (when comparing all-in costs) and more convenient than the alternatives. I pretty much started ignoring WN as an alternative when they started pricing out as more expensive than NW or Delta >95% of the time for me.

Finally, WN not being searchable by any outside travel agents means there is a significant amount of inertia that must be overcome for folks to start using them more. I stopped even searching Southwest.com as an alternative for some of my trips 2 or 3 years ago because it was becoming such a waste of time. It reached a point where their lower fares were way too severely capacity and time controlled for them to be of any use to me.

Southwest has caught my attention once again, but they have yet to win me over.

iahphx

Yeah, there's no question that WN has gotten far more aggressive in its pricing structure during the past year. I mean, if you're a Ding subscriber (or were one), it doesn't take a mathematics genius to figure it out. Ditto for Rapid Rewards members, who have faced ever increasing capacity controls.

All this may be good for their business. Flyertalkers tend to have this perspective that what's good for them is good for the airline they fly. This is not necessarily the case. Flyertalkers want the most frequent flyer benefits and, when they're travelling on their own dime, usually want the lowest fares. There is increasing understanding in the industry that loyal customers are not necessarily the best customers. The less price sensitive traveller who needs to get where he's going ASAP and isn't terribly focused on maximizing the benefits from his/her frequent flyer account is the best customer. In other words, the guy buying Business Select fares and redeeming Freedom Awards is their kind of customer! If you're not one of these, don't make the mistake of thinking you're that "special" (although WN will ALWAYS tell you you are).

As far as the "no fees" promo goes, there's no free lunch. WN isn't launching this promo because they are a kind and benevolent organization (even though they may be). They're doing it for business reasons. There is logically a good niche to be had as the customer-friendly, fee-free airline. Just because it hasn't worked yet doesn't mean it's necessarily a bad idea. But pax aren't going to get something for nothing. WN's costs have crept closer to those of competing airlines, so it's not like they can be happy charging everyone 50 bucks less than the competition. They're going to have to charge higher prices, and hope you won't notice because you're not going to get "fee'd" to death. We'll see how it goes.

irabk

Anecdotal input.

My sister was to meet us in LAS, she traveling from NYC, we from BDL. I commented she price SWA, she demurred, as she would have to traveled to ISP, too much of a trek. She booked an award on United, and was very put off by the baggage charges, which she missed, by booking a week before the cutoff.

She asked how she could avoid them in the future, as she must check one, maybe two bags for a long weekend. I told her, SWA.

Her reply? Hmmm.

The non SWA travelers are putting SWA on the radar screen. Once burned, by a checked luggage fee, twice shy.

This will not be a short term strategy. It must be a long term plan to be effective. FT'ers & status holders know the ins and outs, and avoid the fees, where possible. It's those occasional travelers that will explode when hit with the hidden fees, and the ha-ha SWA commercials will become gospel, pointed out to all that will listen, after they get stuck paying to check luggage, drink a soda, and check in at the curb.

Beckles

Another myth I've seen posted here on FT about WN that seems to have no basis in reality.

The BTS just released their 2nd quarter financial results for the airlines ( http://www.bts.gov/press_releases/20.../bts045_08.pdf ).

Let's see how WN's costs compare to the legacy carriers (American, United, Delta, Continental, Northwest, US Airways, and Alaska. 2nd Quarter 2008 data does not include Alaska).

Whehter you include or exclude fuel, WN continues to maintain and even build on its cost advantage over the legacy carriers.