kerflumexed

Heads Up that GK will be interviewed on the Closing Bell segment during the 4pm Eastern hour. Teaser said he will discuss how SWA can expand in today's market.

The segment will probably be posted later on the CNBC website.

Beckles

I was only half paying attention to it here at work, the only thing I heard of any note was that he said June revenues are not showing any improvement ... of course, as long as they don't get worse than May, that would probably be a good thing.

kerflumexed

Here is the link to the video:

Gary Kelly CNBC Interview 38th birthday

Highlights:

It is our people, cultural - the way we treat like family
Company has been a winner - employees have prospered
Over 540 airplanes
Industry and SWA in a transformative stage
Business today is Terrible
Corp America shrinking in terms of business travel
Terrible operating environment
No improvement in June, things not getting better
09 difficult, some recovery in 10

From the Airport Business Blog on his talk in Philly to airport execs this week...

airportbusiness.com southwest-ceo-gary-kelly/

Snippet: He says there are three hot buttons on his priority list: 1) attaining optimum flight paths via the NextGen air traffic management system, now under development; 2) finding viable alternative fuels for use in airliners; and 3) a fleet of more efficient aircraft than are in existence today.

Kelly says Southwest is the first airline to commit to installing the necessary equipment to make the carrier�s 737 fleet compatible with NextGen - a significant issue. He calls for a national energy policy that is �climate friendly� and reduces U.S. dependence on foreign oil. And, he wants aircraft manufacturers to advance their efforts to find new airframe and engine technologies. While the OEMs have made great strides on that score over the past two decades, says Kelly, there have been few significant advancements in recent years. �That was then and this is now,� he says. End snippet.


I thought the CNBC thingie was bland. His priorities listed above from the Philly speech are pretty far off in the future. I haven't studied RNP much, but the FAA isn't going to change it's approaches just to accommodate SWA. RNP benefited Alaska because they were flying into difficult airports like Juneau. RNP benefit are far out there.

SWA does need dynamic pricing which they are working on. The Kelly interview did not address the teaser. Then again we know how they are going to serve new markets - by cutting and eliminating service to low profit markets. As an aside, AA just cut the NerdBird nonstops betweeen AUS and SJC. I wonder if wifii implementation will be slowed down.

Connected1

"Dynamic pricing" in what sense?

dwebb

I was at Gary's Philly speech - he said WN will start implementing RNP in the 4th quarter of this year through 2013. He also said a test DAL-HOU flight saved on fuel by about 6%.

tusphotog

Why would this affect the WiFi roll out? AA and WN didn't compete on this route, did they? (I know WN does OAK-AUS).

I do agree that the CNBC was a bit bland. I thought they'd try and focus more on WN's recent quarterly losses and if WN was going to do anything to get more revenue.

nsx

The computer reads your mind. As soon as you decide to purchase a ticket but before you do so, it increases the price.

kerflumexed

My crude stab at this -- SWA revenue pricing and analysis is not current. They still have discrete fare buckets iso a fare that is quoted online based on current bookings for a specific flight. IOW, SWA is behind the market leaders when it comes to revenue management systems.

To take this one step further, airlines that price a la carte can track who buys what, who looks at what, and they can use this to adjust pricing including add on prices.

A good example, so I have heard, is Capital One's Card Lab where customers can pick and choose what they want in a credit card package. They gain remarkable information from the way prospects use the website.

A good dynamic model would enable the airline to automatically adjust fees and fees for a particular city pair and for a specific time of day (flight) to maximize revenue.

In the 90's, USAir had the premier operations research department. I don't know if Wolfe and Rakesh killed this off or if it ended up at Am West.

kerflumexed

Unrelated comments on my part, the synapses misfired as they often do here in the Austin heat. I haven't heard an update on WiFi so I was wondering if they might drag this out.

Connected1

Ok, I think I get it. Did Kelly mention this on CNBC or was this announced elsewhere?

Beckles

Just about every time I buy a ticket on WN the fares are different for taking different flights, I'm pretty sure the different fares aren't randomly assigned. For example, look at HOU-DAL for one week from today (June 25). Do you think it's just a coincidence that the 4:00 PM, 5:00 PM, and 6:00 PM flights have higher fares than other flights earlier and later in the day? There is no need to be discrete down to the dollar, looking at that route they are currently offering six different fares for that day ranging from $98 to $144 ($98, $107, $114, $122, $129, and $144), some of which offer more features ($129 being full fare, allowing refunds and stand-by, and $144 being Biz Select). They've even sold out of Biz Select on the 5:00 PM flight for the day already, that's at least $225 in incremental revenue with minimal cost (the cost of one free adult beverage and .25 extra RR credits).

I'm just scratching my head on why on earth you would be claiming WN (or any other airline for that matter) is not doing this.

BigTex

I belive Southwest is converting over to a Lufthansa Systems revenue management model later this year. LH Systems offer a dynamic Pricing module, and that must be what they're referring to.

http://www.lhsystems.com/resource/do...micpricing.pdf

That would be very interesting.

toomanybooks

To make sure I understand this, do you mean that because I fly to CLE, BWI, and MCO a fair amount from MDW, WN would be charging me more on average to those destinations than it would other people?

My demand to those destinations is higher, so it might make some business sense, but it would be highly annoying. Remember the media pasting Coke took when it programmed its machines to charge more on hot days?

I recollect Amazon getting whacked for this, too, but can't recall the details.

ftnoob

That would not be new.

Joking aside, it has long felt like doing numerous searches on a particular route often triggers fare bucket size contraction by yield management. (There are scripts on the fare search page that submit data to an analytic tool, but I don't exactly how that data is used.)

I'd never heard of dynamic pricing for airfares before it was mentioned in this thread, but I'm pretty sure what you are seeing is just inventory/lack of inventory in the various WGA fare buckets. If you view an expanded bucket display (dwebb's blog is hosting a higher res version of one I captured during day 4 of the mystery sale and posted on another thread), you can see that all flights on a route have the same fare buckets. My guess is YM currently can vary the size of the fare bucket for each flight; as fare buckets sell out the "new and improved" consolidated fare display tends to make it look like fares were set differently for each flight. Business Select and Anytime fares, however, are always the same for each flight. Perhaps the new model is needed to allow those to be changed on a flight-by-flight basis, as well as to make WGA pricing more flexible.

(The screen shot linked above was made for a specific purpose and isn't the best one for illustrating this effect; I can create another one for a specific fare quote if you are interested. I looked at HOU-DAL for one week away and found the same WGA/Anytime/BS fares for all 27 flights, so that specific example didn't work for me.)

Beckles

Availability in different fare buckets + different fare buckets is dynamic pricing. The availability in different fare buckets is not random, it is based on many factors including day of the week, week of the year (i.e., Easter week vs. Monday holiday week vs. non-holiday week), time of day, previous bookings on the flight, and whether the flights is booked on Southwest.com or not (i.e., booking channel). That is dynamic pricing.