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Well, Gary Kelly made the big announcement that everyones been waiting for, and so far I don't see anything earth-shattering.
Following is the newswire release in part:
"Given the slowing U.S. economy and fuel cost pressures, we are taking these steps to adjust our capacity growth rate, which will help to restore profit growth," Kelly said. "If we find that conditions change, we will reevaluate our growth plans for future periods. In this economic environment, we simply need to take less risk and grow more slowly."
"For both fourth quarter 2007 and full year 2008, we currently plan to grow available seat miles (ASMs) year-over-year by approximately six percent, or about two percentage points less than previously reported. We also plan to implement a variety of revenue-enhancing initiatives by the end of 2007 that set the stage for continued profitability into the future," he said.
During fourth quarter 2007, Kelly said Southwest plans to:
* Slow its available seat mile (ASM) growth to approximately six percent
* Enhance its low-fare structure
* Enhance its Rapid Rewards frequent flyer program
* Launch a new advertising campaign
* Unveil a new boarding/seating method
"We are very excited about major revenue initiatives that are scheduled for implementation by the end of this year. In all, we are targeting more than $1 billion in incremental revenue over the next few years to overcome higher fuel costs and reach our financial targets," Kelly said.
New boarding/seating method? What can they do that's better than just putting everyone on like cattle? Making them all start at the back to lower the wing loading?
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New boarding/seating method? What can they do that's better than just putting everyone on like cattle? Making them all start at the back to lower the wing loading?
I believe they were considering a new revenue generation idea that they would sell some reserved seats. This would be boarding group "A." Or, they were considering charging more for an "A" group boarding pass.
I've heard GK say many times they are working on revenue generation as hard as cost containment.
I believe they were considering a new revenue generation idea that they would sell some reserved seats. This would be boarding group "A." Or, they were considering charging more for an "A" group boarding pass.
I've heard GK say many times they are working on revenue generation as hard as cost containment.
I heard this from a gate agent in HOU, so take it with a grain of salt:
There were some experiments done in California involving reserved seats. However, this killed SWA's on-time performance on the legs that they tried this on, since it's pretty well impossible to turn a 737 in 20 minutes if all of your less-than-genius passengers are in the back of the plane wondering why they can't find seat 3B.
I definitely think SWA could make some money if they sold A group boarding passes for another 10 or 15 bucks, since I know passengers would pay the extra money.
A gate agent? Common reasoning would say that if it was indeed a failure then they wouldn't send out a company wide letter saying they were going to be initializing it.
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Notice no mention of paycuts. So far G.K. has been true to his word about that.
Regarding assigned seating, they did the experiment out of SAN over the course of several months. They never told anyone the results so I assume it wasn't a great success.
Slowing to 6% from 8% growth. So, does this mean SWA will only add 25-28 A/C a year instead of 32-37? Will they now only add about 180 departures a year instead of 240? If I have read SWA's previous statements correctly, they target 4-8% growth depending on market conditions. This looks like they are right where they want to be (just a routine business adjustment). I agree Onfinal, not much to this. Although, the whole boarding process thing could eventually be significant.
They may take a page from the Ryan Air playbook - charge for online check in (gets the boarding number early) or charge for "priority" seating. Of course Ryan Air also charges for baggage, using a credit card, and a variety of other little things. I don't know for sure how it works - our two knot heads get us on early anyway.
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SWA announcement in, but not much to it.
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