![]() Both eventually relented - WestJet in late 2014, and JetBlue last year. Both WestJet and JetBlue waited several years before charging for luggage, with executives fearing fees would alienate core customers. Each brought in new aircraft types, and both recently have added a premium cabin - JetBlue, with a lie-flat business class for longer flights, and WestJet with premium economy.Īnalysts don’t expect Southwest to add a new aircraft or business class, but they do look to WestJet and JetBlue to prove how a low-cost airline can add fees without harming its brand.īag fees are the best example. More than Southwest, however, both airlines have evolved. Like Southwest, both started with single aircraft type – the Boeing 737 for WestJet and the Airbus A320 for JetBlue – and each is fiercely protective of its brand and operating model. Many airlines have copied Southwest to build low-fare, low-cost carriers, including Canada’s WestJet Airlines and JetBlue Airways. It’s not sustainable.” Resistance to Fees To think that you can simply ignore that and say, ‘We’re only going to focus on the shareholders,’ doesn’t work. ![]() “We care about our people and then in turn we care about our customers,” Kelly said. Kelly was not amused, suggesting Southwest would stick with what has worked. But during a time of industry crisis, and I would suggest that’s what current revenue trends imply, most companies would consider revisiting their sort of priority order, at least in the short run.” And that’s certainly fine when all is right with the world, and it certainly worked well under Herb. “The impression is that passengers come first, then labor unions, and then shareholders. Morgan analyst Jamie Baker said on Southwest’s July earnings call. “The impression that investors have is that your priorities at the moment might be somewhat out of order,” J.P. Many believe Southwest would not lose customers if it more aggressively chased revenue or slashed flights during slow periods to better match capacity with demand. Several analysts seem to suggest the airline is too enamored with its past success, asking why CEO Gary Kelly, a Kelleher acolyte who joined the company in 1986, has been so protective of the airline’s brand. But Southwest has made fewer tweaks to satisfy investors than other U.S. ![]() But like every other airline, Southwest says business is not as strong as a year or two ago. Analysts hate it when airlines report lower revenues, and they usually recommend carriers take strong actions to respond. It earned $820 million in net income in the second quarter, with an operating margin of 23.7 percent. Travelers don’t like the extra charges, but there’s little indication they’re avoiding American, Delta and United, all of which keep reporting major profits. Southwest’s competitors have added fees or raised prices for nearly all extras, from checked baggage to advanced seat assignments to ticket changes. Kelleher ensured Southwest would succeed its way - by levying few fees, having no hubs, and prioritizing its customers and employees, along with shareholders.īut times change, and several analysts are aggressively questioning why Southwest has refused to follow its competitors in instituting new revenue-producing schemes. Now 85, Kelleher was one of Southwest’s founders, and he led the airline in some form from the mid-1960s, before its first flight, until to 2008, when he retired as chairman. Though its paint job and route structure have changed, Southwest remains at its heart Herb Kelleher’s airline. Southwest is even adding international routes, mostly to Mexico and the Caribbean. airports, such as New York LaGuardia, Philadelphia, and Los Angeles, rather than at the outlying airports like Manchester, New Hampshire that it once preferred. Even in the past 10 years, change has come fast, with the airline focused mostly at the largest U.S. Southwest has grown markedly since the 1970s, morphing from a small, quirky, Texas-centric airline into the nation’s largest domestic carrier. carrier.īut while there’s no indication Southwest’s streak will end, some analysts are expressing frustration, saying the airline could earn more if stopped clinging to strategies that worked best decades ago. For 43 consecutive years, Southwest Airlines has made money, making it by far the most consistently profitable U.S.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |