Southwest LCC model sees threat
11-30-2005, 04:33 PM
#11
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I think the one underlying reason that makes SWA a true LCC is that the top cap on fares, the last minute wlk up fares, are only 299.00 plus taxes. The post above shows that. All of those fares are within $18. I do not have a clue what you pay on F9 for a last minute purchase, but my friends in Denver tell me that they are high. They welcome SWA for their last minute business travel but say that they will stick with F9 when they can plan ahead.
12-01-2005, 03:51 AM
#12
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Originally Posted by Sir James
I remember very well when Southwest was the redheaded stepchild and was looked down upon. Now that this has been upended and they're sitting on top, it's fun to watch people snipe away at the little LUV airline.
12-01-2005, 04:31 AM
#13
Gets Weekends Off
Joined APC: Sep 2005
Position: Any, usually behind the wing
Posts: 382
Bill,
There are a lot of similarities and differences both between SWA and Wal-Mart.
Similarities:
Low Price-typically, although not always
Friendly and prompt inflight service
Tremendous Market Power (not necessarily a good thing for some- and I'm no fan of Wal-Mart)
Differences:
SWA's decent pay for workers (best compensated flight crew for 737 A/C).
SWA wants to keep employees, not turn them over so they can avoid paying benefits.
Without naming the guilty legacy carrier- I've seen a Senior Flight attendant do a quick coffee service on a 1/3 full A/C and then sit across the aisle and open up a newspaper- she was done for the flight. Too bad if I wanted any more coffee, it was clear she didn't care. On another, different, carrier- I had a First Class upgrade (through luck, not Frequent Flyer miles) and was approached by the F/A once. I thought, "Wow, why would I want to fly this airline when this is what you get in First?"
Since frequent flyer miles can be difficult to redeem and you're only getting a soda and snack anyway, friendly employees are probably the major differentiating factor for a lot of people. The "cattle-call" line up bothers some, but other than that the seats are the same, if not better.
I'll finish with this- I don't think I've ever had to push any call button on SWA to ask for anything. The cabin crew are continually walking up and down the aisle making sure you have what you want. That's why I continue to shop there.
There are a lot of similarities and differences both between SWA and Wal-Mart.
Similarities:
Low Price-typically, although not always
Friendly and prompt inflight service
Tremendous Market Power (not necessarily a good thing for some- and I'm no fan of Wal-Mart)
Differences:
SWA's decent pay for workers (best compensated flight crew for 737 A/C).
SWA wants to keep employees, not turn them over so they can avoid paying benefits.
Without naming the guilty legacy carrier- I've seen a Senior Flight attendant do a quick coffee service on a 1/3 full A/C and then sit across the aisle and open up a newspaper- she was done for the flight. Too bad if I wanted any more coffee, it was clear she didn't care. On another, different, carrier- I had a First Class upgrade (through luck, not Frequent Flyer miles) and was approached by the F/A once. I thought, "Wow, why would I want to fly this airline when this is what you get in First?"
Since frequent flyer miles can be difficult to redeem and you're only getting a soda and snack anyway, friendly employees are probably the major differentiating factor for a lot of people. The "cattle-call" line up bothers some, but other than that the seats are the same, if not better.
I'll finish with this- I don't think I've ever had to push any call button on SWA to ask for anything. The cabin crew are continually walking up and down the aisle making sure you have what you want. That's why I continue to shop there.
12-01-2005, 06:23 AM
#14
Gets Weekends Off
Joined APC: Apr 2005
Position: 767ER capt
Posts: 1,190
The biggest advantage the upstart carriers have is young, enthusiastic employees, who still enjoy their job. Too many F/As and CSAs no longer enjoy their work, but are staying for their pension. This may change with the disappearance of the pension and other incentives to long-term employment.
I see the future successful carrier having F/As on 5 yr. contracts, part-time gate agents, and ramp agents that work for a subcontractor. In a few years, we'll all be LCCs. The question will be whether we can make the public perceive us as LCCs.
I see the future successful carrier having F/As on 5 yr. contracts, part-time gate agents, and ramp agents that work for a subcontractor. In a few years, we'll all be LCCs. The question will be whether we can make the public perceive us as LCCs.
12-01-2005, 06:49 AM
#15
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Joined APC: Jun 2005
Position: B737, Capt.
Posts: 384
Originally Posted by CVG767A
. The question will be whether we can make the public perceive us as LCCs.
12-01-2005, 07:13 AM
#16
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the REAL trick is to charge what the seats cost to produce plus a profit, something our harvard mba management can't seem to do.
"Differences:
SWA's decent pay for workers (best compensated flight crew for 737 A/C).
SWA wants to keep employees, not turn them over so they can avoid paying benefits."
this would certainly argue that it's not labor that's the problem, wouldn't it?
"Differences:
SWA's decent pay for workers (best compensated flight crew for 737 A/C).
SWA wants to keep employees, not turn them over so they can avoid paying benefits."
this would certainly argue that it's not labor that's the problem, wouldn't it?
Last edited by Kill Bill; 12-01-2005 at 07:15 AM.
12-01-2005, 01:37 PM
#17
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Joined APC: May 2005
Position: B777/CA retired
Posts: 1,483
SWA guys - chill! I do not think for one minute that SWA will not stay successful. I do think, as do some other people, that there are a shrinking number of markets to sustain a 10% yearly growth pattern that you have had for the last 20 years. Other airlines will not be as stupid as UsAir was in BWI. Look at Chicago. You guys do fantastic with MDW and UAL and AA are successful out of ORD, but how many markets can support more focus cities?
Someone mentioned LYH. I used to fly into there with the original Piedmont (Henson). The mainline ran a jet into there from BWI to CLT via CHO and RDU but that was when yields for mainline were 30cents/mile. And that was 1 or 2 flights a day. We went in there with turboprops and flew 4 to 5 times a day nonstop to CLT and BWI and had the same yield and made lots of money. SWA could do the same but not in nonstop markets. The smaller cities like SYR, GSO, ILM that used to have jet service don't any more because you can't make money at today's yields. It costs a lot to run a station. SWA gets full use out of their cities and gates and that keeps costs low. They run more flights per gate than anyone else. It is hard to do that in the smaller markets.
SWA will still grow because there are still nodes to connect in their present system and there are some more cities that will support 8 or more flights a day. But my point was that the supply of available cities is shrinking and at some point you can't grow at a compound rate of 10% per year. Will that happen in the next 2 to 3 years? No, of course not. But if you are a new hire at SWA 3 years from now do you still think you will see a 5 year upgrade? I don't, but then I'm just a jet jock!
I always look forward to having SWA guys on my airplane. We have CASS now so you are always welcome up front again.
Opinions are like butt holes, everyone's got one and they usually stink.
Someone mentioned LYH. I used to fly into there with the original Piedmont (Henson). The mainline ran a jet into there from BWI to CLT via CHO and RDU but that was when yields for mainline were 30cents/mile. And that was 1 or 2 flights a day. We went in there with turboprops and flew 4 to 5 times a day nonstop to CLT and BWI and had the same yield and made lots of money. SWA could do the same but not in nonstop markets. The smaller cities like SYR, GSO, ILM that used to have jet service don't any more because you can't make money at today's yields. It costs a lot to run a station. SWA gets full use out of their cities and gates and that keeps costs low. They run more flights per gate than anyone else. It is hard to do that in the smaller markets.
SWA will still grow because there are still nodes to connect in their present system and there are some more cities that will support 8 or more flights a day. But my point was that the supply of available cities is shrinking and at some point you can't grow at a compound rate of 10% per year. Will that happen in the next 2 to 3 years? No, of course not. But if you are a new hire at SWA 3 years from now do you still think you will see a 5 year upgrade? I don't, but then I'm just a jet jock!
I always look forward to having SWA guys on my airplane. We have CASS now so you are always welcome up front again.
Opinions are like butt holes, everyone's got one and they usually stink.
12-01-2005, 05:16 PM
#18
Don't want to participate
Joined APC: Jul 2005
Position: 737 Left Seat
Posts: 1,016
Cactus - You are correct about upgrades. Current upgrade is about 6.5 years, as we didn't grow at 10% for a couple of years past 9/11.
I can see where you are coming from with the comments on fuel hedging gradually going away through 2009 (as the newpapers and analysts have pointed out), but it's really not accurate to say we wouldn't be making money without them. I disagree that Southwest will have to make big changes to make money in this environment. There will always be adjustments, such as productivity agreements, but I don't see that as coming after the employees. If Southwest is able to continue to make at least small profits while others are losing money, I don't see how that is a threat to their financial model. When the industry turns around, I don't think that the rest of the industry is going to be content with their post-bankruptcy wage scales. If it doesn't turn around, I don't know how much more the competition can cut from their wage scales in order to be competitive with Southwest's costs.
The other thing is that Southwest isn't really running out of cities to serve. Southwest serves only 4 out of the busiest 10 airports in the Northeast.
I don't commute, but honestly, I can't tell you how much I appreciate your sharing your jumpseat with commuters. I did catch a jumpseat on America West LAS - MCO one night, and they were great to me. I'll be happy to have you on my jumpseat when my 6.5 years is up!
I can see where you are coming from with the comments on fuel hedging gradually going away through 2009 (as the newpapers and analysts have pointed out), but it's really not accurate to say we wouldn't be making money without them. I disagree that Southwest will have to make big changes to make money in this environment. There will always be adjustments, such as productivity agreements, but I don't see that as coming after the employees. If Southwest is able to continue to make at least small profits while others are losing money, I don't see how that is a threat to their financial model. When the industry turns around, I don't think that the rest of the industry is going to be content with their post-bankruptcy wage scales. If it doesn't turn around, I don't know how much more the competition can cut from their wage scales in order to be competitive with Southwest's costs.
The other thing is that Southwest isn't really running out of cities to serve. Southwest serves only 4 out of the busiest 10 airports in the Northeast.
I don't commute, but honestly, I can't tell you how much I appreciate your sharing your jumpseat with commuters. I did catch a jumpseat on America West LAS - MCO one night, and they were great to me. I'll be happy to have you on my jumpseat when my 6.5 years is up!
12-03-2005, 05:56 PM
#20
Gets Weekends Off
Joined APC: Feb 2005
Position: B737 Captain
Posts: 323
Still Chillin'
Shooooot Cactus.......Thaat's all you got' to say!.......we're chillin' like a villain. Like Sr. Barco said.......thanks MUCHO for all the killer hook-ups wrt the jumpseat. I wish you guys nothing but the best. 
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