NeilGoBlue

Here is the whole article:

http://online.wsj.com/article/SB125189459486379397.html


Southwest Airlines Finds a New Fee

By MIKE ESTERL

Southwest Airlines Co. introduced a priority-boarding fee, the giant discount carrier's latest baby step toward special levies as it struggles to stay profitable amid a sharp industry downturn.

The Dallas-based airline, which flies more passengers within the U.S. than any other carrier, said customers can move up the queue at its gates for a $10 fee starting Thursday. Unlike most other airlines, Southwest doesn't have assigned seating.

The optional charge announced Wednesday is part of a balancing act by Southwest, which ran an advertising campaign for much of the past year with the motto "no hidden fees." But the carrier also is eager to boost revenue, which slumped 7.9% to $4.97 billion in the first half.

Southwest has resisted charging customers for checking in their first or second bags. Most airlines began introducing such fees last year, generating hundreds of millions of dollars in revenue. In recent weeks, several rivals have increased those fees, which typically range from $15 to $30 for each checked bag on domestic flights.

But in June, Southwest began offering customers the option of bringing small pets on board for a $75 fee. At the same time, it also introduced a $25 fee for unaccompanied minors and doubled the fee to $50 for checking a third or overweight bag.

Johnnyman7

Internally, I bet the SW executives debated this change extensively. In my mind, it really dilutes their branding. Up until this point, they've labeled themselves as the "no-fee" budget airline. Say what you will, but if my wife and I cant sit next to each other on a 4-hour flight w/o paying this EarlyBird charge, it most definitely constitutes a "mandatory" fee in my mind. In fact, I'd rather travel a different airline that charges for baggage than deal with that scenario. SW just became alot less attractive to me.

I find their seat-reserving policy (or rather their lack thereof) quite insulting. Since when past the 3rd grade has seat-reserving ever been acceptable? I'm half-tempted as a 6'1'' male to sit in a "saved" seat next flight I have just to test the (lack of) policy. Like some weird social experiment....

pshuang

But the traveler in the position of considering the $69 WGA fare probably isn't whom WN was counting on for BS to bring in incremental revenue. WN is shooting for the traveler either booking last minute or booking farther in advance but feeling that he or she needs the refundability/changeability and thus would have been booking the $164 full non-BS fare before BS was introduced. At that point, the incremental $15 to buy up to BS is relatively palatable.

Before today's introduction of EB, would you really seriously have considered buying the $179 BS fare instead of the $69 WGA fare, spending an extra $110 for the extra RR credit, "free" drink", and early boarding? If not very likely, then the positive expected value of the possibility that you might decide to spend $10 on EB to go with your $69 WGA is only offset by a very small negative expected value for the elimination of the low probability that you might have been willing to spend $179 for the BS fare.

(Wow, that was a tough English sentence. Anybody have nightmares being asked to diagram crazy sentences like that?)

pshuang

Or put it differently, it's a net revenue wash for WN if on a flight that previously had 10 people buying BS and 100 other passengers, now that EB exists, 4 of those 10 formerly BS passengers now only buy the full fare ticket (negative 4*$15 = negative $60) because they perceive the value of BS as having been eroded; but out of the 100 other passengers, 6 people decide to bite on buying EB (positive 6*$10 = positive $60). But if even one of those formerly BS passengers down-fares not just to the $164 full fare ticket but to the $69 WGA fare instead, then WN has a net revenue reduction unless a total of an additional 10 people (including perhaps himself or herself) decide to buy EB. My belief is that given what causes people to buy BS fares, virtually nobody will be downfaring to a deeply discounted WGA fare, only to the full fare, and therefore WN doesn't need very many people to bite on EB to offset the small impact on people specifically not buying BS because EB exists.

InkUnderNails

I am an A-lister so I do not think this applies to me. However, when my wife travels with me, I have to hold her a seat. I would gladly pay $10 to allow her to board with me and avoid the OLCI and seat saving.

arizonawildcat

On a flight that has say, a 70% load or less, you could always sit in the middle seat of an empty row during boarding until she gets on the plane. Works especially well in the Southwest Secret First Class rows.

InkUnderNails

Which is holding a seat. Everyone knows that a person sitting alone in a middle seat has staked a claim on that row. It is effective and both is and appears rude. I do not want to be rude even if everyone else is. As a somewhat overweight, but not two-seat overweight, man this will appear even more rude than it actuallly is.

What SW should do: allow one companion to board with a-lister. A BS can always buy two BS places. I can not buy a second a-list place.

normalone

I guess I'm just not understanding how this makes sense for anyone who is free to check themselves in at T-24. I understand paying to the extra $$ if you are going to be in a position where you can't access the internet at the precise right moment. But if paying the money checks you in at exactly T-24 and just being on your computer (for no extra charge) also allows you to check in at exactly T-24 I wouldn't think paying the extra money for what may amount to just a few numbers difference in boarding position would be worth it.

Or maybe I'm completely underestimating how many people will blindly pay the $10 because they are so used to extra fees for everything else.

MoreMilesPlease

EB checks you in automatically 36 hours prior to the flight. So if you're sitting at your computer checking in 24 hours before, you are now behind the Business, A-List, and Early Bird travelers.

normalone

I understood that - (even if they were checking in the EBs at T-24 they would still be ahead of people sitting at their computers) - I'm just saying that unless you are making the assumption that a ton of people on your flight are paying the fee (enough to make a significant difference in the available seats) there would be no reason for those individuals who have internet access at T-24 to pay.

irabk

Checking in at T-24 for a flight that has connecting passengers departing before you puts you behind all of those passengers for boarding passes. For example, traveling east from LAS, boarding in LAS, the best i have done is A45. The pax departing SAN, LAS, SFO, connecting in LAS get their BP two hours before me.

Now I can jump in front of them for $10. Well worth it.

normalone

If they also buy EB aren't they back in front of you?

isles1

I am all for this option. The only thing about WN that was a hassle was trying to check-in at that 24-hour mark. I've killed time sitting in hotel business centers and pulling myself away from vacation time to mess with my phone for mobile check-in. @ $10 p/p o/w, this is a bargain from my standpoint.

There were third-party services (before WN shut them down) that would do the above process for you for $5, and I am sure many WN pax used that service. The EB check-in, as discussed above, puts you ahead of connecting pax (assuming they too are not EB) by checking you in early, and avoids having to mess around with the T-24 check-in.

I already signed up for EB for both legs of my December trip. The piece of mind that this is taken care of way in advance is well worth it to me. Obviously, if you do not care if you are A-xx or B-xx, then save your $10. We all know that boarding early has its advantages to some people.

I am not too concerned about a lot of people using this service, as many will view it as just another fee and avoid it for that reason. Also, many leisure pax or first-time WN pax still seem unaware of the T-24 mark, and will continue to be the ones holding the high-Bs and C passes.

JerryFF

For me it comes down to the value of $10. When I think what our family spends (translate, "wastes") $10 on in many cases and compare that to the value of 1) getting a lower boarding number, and 2) maybe even more important, not having to hassle about T-24, it is well worth it.

For me the issue is not just whether I have access to the internet at T-24, it's the issue of having to remember T-24 and sitting around watching the clock and the seconds tick off to try to get it as close to T-24 as possible.

AUS2008

Haven't seen this brought up yet (forgive me if I missed it)...
But what if you PAY the $10 for your better boarding position and then there is the *lovely* TSA gate search that pulls you out of line and you lose your boarding order anyway? This has happened to me as a (previous) A-lister in the past, and I was none too happy to miss out on getting my exit row window with my A 16 spot.