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WN CEO Warns Carrier’s Labor Costs Are Too High  
User currently offlineCO777DAL From United States of America, joined Feb 2007, 626 posts, RR: 0
Posted (2 years 11 months 3 weeks 2 days 16 hours ago) and read 17062 times:

My how things have changed for WN! I think they are a great airline and wish employees best of luck. I wonder what can of concession WN might eventually ask for and how this will effect the workforce?

"Southwest Airlines CEO Gary Kelly sent a message to his employees basically telling them what happened to American Airlines could happen to them. It all comes down to high costs."

Here is a link to the story with video.: http://www.myfoxdfw.com/dpp/money/so...erating-costs-120611#ixzz1foo4VC6D

Here is a link to a print version of the story
http://www.bizjournals.com/atlanta/n...st-ceo-warns-high-costs-are-a.html

[Edited 2011-12-06 20:14:43]

[Edited 2011-12-06 20:39:14]


Worked Hard. Flew Right. Farewell, Continental. Thanks for the memories.
158 replies: All unread, showing first 25:
 
User currently offlinedfwrevolution From United States of America, joined Jan 2010, 997 posts, RR: 51
Reply 1, posted (2 years 11 months 3 weeks 2 days 15 hours ago) and read 16914 times:

Quoting CO777DAL (Thread starter):
Southwest Airlines CEO Gary Kelly sent a message to his employees basically telling them what happened to American Airlines could happen to them.

I certainly didn't gather that sort of bluntness from the print version. Just seems like a message not to rest on their laurels (consistent profitability) now that all their major competitors have reorganized in Ch 11.

Quoting CO777DAL (Thread starter):
I wonder what can of concession WN might eventually ask for and how this will effect the workforce?

Probably more voluntary buy-out packages. Converting more options into 737-800s and adding an extra seat row to the 733/73G will help the numbers a bit.

The article also talks mostly of cost, but clearly WN is also looking for ways to add ancillary revenues. The WiFi roll-out is continuing and the Business Select/Early Bird check-in have been successes. I have no doubt they will add new adders in the future.


User currently offlineCO777DAL From United States of America, joined Feb 2007, 626 posts, RR: 0
Reply 2, posted (2 years 11 months 3 weeks 2 days 15 hours ago) and read 16894 times:

Quoting dfwrevolution (Reply 1):
I certainly didn't gather that sort of bluntness from the print version. Just seems like a message not to rest on their laurels (consistent profitability) now that all their major competitors have reorganized in Ch 11.

That was from the first paragraph of the linked news article video. Not my words.

[Edited 2011-12-06 20:37:56]


Worked Hard. Flew Right. Farewell, Continental. Thanks for the memories.
User currently offlinezippyjet From United States of America, joined Sep 2001, 5501 posts, RR: 13
Reply 3, posted (2 years 11 months 3 weeks 2 days 15 hours ago) and read 16847 times:

I hope that doesn't translate to: a purge of crewmembers with any kind of seniority especially those of us from FL being absorbed into the fold. I hear more positive things than negative. A few fellower A-Netters are WN crewmembers and sincerely believe in their company and feel we too will be welcomed and appreciated. But, as they say $$$ talks.
But in defense of GK. sometimes a little reality thrown in can keep one on their toes.



I'm Zippyjet & I approve of this message!
User currently offlineKcrwflyer From United States of America, joined May 2004, 3845 posts, RR: 7
Reply 4, posted (2 years 11 months 3 weeks 2 days 14 hours ago) and read 16604 times:

WN is just getting old; It's happened to every airline. They, like everyone else already has, will have to restructure sooner or later to survive.

User currently offlinejetblueguy22 From United States of America, joined Nov 2007, 2820 posts, RR: 4
Reply 5, posted (2 years 11 months 3 weeks 2 days 14 hours ago) and read 16558 times:
AIRLINERS.NET CREW
HEAD MODERATOR

Maybe some concessions can be made by both management and the unions now. Better to fix it now rather than end up like AA a few years down the road.
Blue



All of the opinions stated above are mine and do not represent Airliners.net or my employer unless otherwise stated.
User currently offlineplanemaker From Tuvalu, joined Aug 2003, 6347 posts, RR: 34
Reply 6, posted (2 years 11 months 3 weeks 2 days 11 hours ago) and read 16133 times:

Quoting Kcrwflyer (Reply 4):
WN is just getting old; It's happened to every airline. They, like everyone else already has, will have to restructure sooner or later to survive.

I wouldn't say that they are getting "old".

Now that majors have gone through Chap 11 and have caught up (or at least narrowed the cost gap) with WN, they can compete with WN on a more equal footing domestically yet have the advantage of an international network.

The problem is that there are still too many carriers... domestically and internationally (just look at the A4A lawsuit against ExIm financing for Air India). There will be an eventual shake out... it might be drawn out or it could happen fairly quickly.

Until there is further rationalization the industry will continue to be a race to the bottom.



Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4514 posts, RR: 34
Reply 7, posted (2 years 11 months 3 weeks 2 days 6 hours ago) and read 15698 times:

The only thing somewhat surprising to me about this story is that Kelly is speaking so bluntly so soon. I had figured a few years before this kind of talk. The basis of Southwest's business plan is being an LCC. That means lower costs than legacies. Yes, their product is terrific, and I look forward to being elite with them once FL is folded in. But the bottom line is fare discipline, which requires low costs. Without that, WN's business plan doesn't work long term.

Maybe Kelly is figuring the hard work should start sooner rather than later. It's something that's never fun, and we all wish minimal impact on all people employed by the airline. But costs need to be in order for the plan to work.

Quoting planemaker (Reply 6):
The problem is that there are still too many carriers... domestically and internationally

That's often stated at A.net, but I for one don't buy it. There is no "overcapacity." There are historical factors driving up costs at some carriers, and there is bad management at some. In addition, fares in North America have skyrocketed the past couple of years. More capacity slashing--plenty of which has already occurred in the USA, for instance--is not what's needed. Tough decisions by managements as well as unions, are the only "rationalization" needed. Much better that more people stay employed, too, rather than laid off!

Jim

[Edited 2011-12-07 06:24:53]


Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlinerdh3e From United States of America, joined Mar 2011, 1797 posts, RR: 3
Reply 8, posted (2 years 11 months 3 weeks 2 days 5 hours ago) and read 15640 times:

Quoting DCA-ROCguy (Reply 7):
Tough decisions by managements as well as unions, are the only "rationalization" needed. Much better that more people stay employed, too, rather than laid off!

Fully agree. The largest problems for airlines is that of the demographics of their employees and nothing more. I've advocated before for having a more balanced workforce age-wise because if you have more retirements then you can move people along and up a pay scale without having to increase the total budget for a particular workforce significantly.


User currently offlineKarlB737 From United States of America, joined Mar 2004, 3131 posts, RR: 10
Reply 9, posted (2 years 11 months 3 weeks 2 days 5 hours ago) and read 15571 times:

Quoting CO777DAL (Thread starter):
"It all comes down to high costs."

This isn't news. It has been known for a long time that WN's costs were high but what must be asked is who approved the costs along the way. The management did as they always do and then when it eventually becomes an issue as it always does eventually they point their finger at someone else.


User currently offlinePe@rson From United Kingdom, joined Jan 2001, 19244 posts, RR: 52
Reply 10, posted (2 years 11 months 3 weeks 2 days 5 hours ago) and read 15536 times:

Quoting DCA-ROCguy (Reply 7):
In addition, fares in North America have skyrocketed the past couple of years.

I agree, and I'm often surprised at the higher fares - even for 1-hour sectors, e.g. DAL-HOU, LAS-LAX - in the USA compared to Europe. For example, in mid-February, WN's cheapest one-way tax-inclusive fare for DAL-HOU is $59.70. In GBP, that's £38. Within seconds and for the same period, I found, purely for illustrative purposes, plentiful £20.99 one-way, tax-inclusive deals for £20.99 ($32.74) for STN-CIA (London-Rome) - a distance 4x greater than DAL-HOU. It's akin to Dallas-PHX. Granted, you would, if needed, have to add a checked bag fee and an almost-mandatory administration fee (of £6, $9.36).

Not necessarily fair to compare, but WN's average one-way fare in 2010 was about $135 against FR's $60 (which includes an average of just over $13 ancillary per passenger) - despite what appears to be a higher cost and higher tax environment in Western Europe vis-a-vis the USA. Yet since 2006 their collective net profits have been very similar - FR marginally ahead - despite FR have hundreds of fewer aircraft, and FR's average net profit margin in the period was over 10% compared to WN's under 4%.

Even easyJet, a self-positioned more upmarket LCC, has a far lower average one-way fare than WN at about $83 in 2010. And again within seconds and for the same mid-Feb. period, I found the 829 mile as-the-crow-flies distance for FCO-MAD (both busy, primary airports) for €25.99 ($34.78) one-way, tax-inclusive. (You'd have to add its card payment fee and any checked baggage - the key regarding the latter is to travel lightly! :P )

I recently read that NK's average fare, excluding ancillaries, was $82.

[Edited 2011-12-07 07:14:50]


"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17780 posts, RR: 46
Reply 11, posted (2 years 11 months 3 weeks 2 days 5 hours ago) and read 15538 times:

Quoting KarlB737 (Reply 9):
It has been known for a long time that WN's costs were high but what must be asked is who approved the costs along the way

Herb  
Quoting KarlB737 (Reply 9):
The management did as they always do and then when it eventually becomes an issue as it always does eventually they point their finger at someone else.

WN is famous for their labor relations, so I'm sure labor was proactive all along and will come to a sensible and rational solution that manages their voters to the new and ever-changing reality. Like they always do .

Quoting DCA-ROCguy (Reply 7):
Yes, their product is terrific

Compared to what? Other carriers have better products, better networks, and lower costs, so I'm not sure where WN's advantage is at this point.



E pur si muove -Galileo
User currently offlineairportugal310 From Tokelau, joined Apr 2004, 3680 posts, RR: 2
Reply 12, posted (2 years 11 months 3 weeks 2 days 5 hours ago) and read 15514 times:



"The labor cost's are too damn high!"



I sell airplanes and airplane accessories
User currently offlineavek00 From United States of America, joined Oct 2004, 4412 posts, RR: 19
Reply 13, posted (2 years 11 months 3 weeks 2 days 5 hours ago) and read 15458 times:

ROTFLMAO!!!! Good picture!


Live life to the fullest.
User currently offlineFlighty From United States of America, joined Apr 2007, 8702 posts, RR: 3
Reply 14, posted (2 years 11 months 3 weeks 2 days 5 hours ago) and read 15377 times:

Quoting KarlB737 (Reply 9):
The management did as they always do and then when it eventually becomes an issue as it always does eventually they point their finger at someone else.

I don't understand. In a real business such as mine, if you determine it is more profitable (over time...) to lay off people or cut their pay, you do it. Otherwise, it is just negotiating what people "deserve" as people. Inevitably, that is no longer a business conversation really.

"Business management" is like that. Airlines are far afield and are tackling more personal and social issues, not "management" of a business per se. IMO. A business manager doesn't have to have a consistent message to employees from one 20 year period to the next. When times change, an email goes out, people get hired/fired within the month, etc.


User currently onlineCubsrule From United States of America, joined May 2004, 23203 posts, RR: 20
Reply 15, posted (2 years 11 months 3 weeks 2 days 4 hours ago) and read 15318 times:

Quoting MaverickM11 (Reply 11):
Other carriers have better products, better networks, and lower costs, so I'm not sure where WN's advantage is at this point.

Better networks compared to what? WN has the best network in many (most?) of its cities, and that helps revenues.



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineHiFlyerAS From United States of America, joined Jul 2011, 1008 posts, RR: 2
Reply 16, posted (2 years 11 months 3 weeks 2 days 4 hours ago) and read 15215 times:

I've been waiting for this to happen. Paying the highest wages in the industry previously was offset by constant hiring of lower wage new-hires. Now that they've matured, the percentage of those new people on the books gets smaller and smaller as they've grown bigger and bigger. Their CASM has no where to go but up and they've likely already picked the low-hanging fruit when it comes to keeping their costs down. The only thing left somewhat under their control is their fuel-hedging program and labor costs. Unfortlunately, WN wages workrules have been the bar other work groups hope to reach so this will raise (acutally LOWER) the bar for everyone else, especially for work rules.

User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17780 posts, RR: 46
Reply 17, posted (2 years 11 months 3 weeks 2 days 4 hours ago) and read 15074 times:

Quoting Cubsrule (Reply 15):
Better networks compared to what? WN has the best network in many (most?) of its cities, and that helps revenues.

If you're staying within the lower 48, they're competitive, probably one of the better networks. But in a global industry, they're missing a huge piece of the puzzle, to say nothing of the domestic regional feed they don't/can't get.



E pur si muove -Galileo
User currently onlineCubsrule From United States of America, joined May 2004, 23203 posts, RR: 20
Reply 18, posted (2 years 11 months 3 weeks 2 days 4 hours ago) and read 15063 times:

Quoting MaverickM11 (Reply 17):
But in a global industry, they're missing a huge piece of the puzzle, to say nothing of the domestic regional feed they don't/can't get.

Sure, but is that necessarily a bad thing? They are leaving revenue on the table in exchange for lower costs. That may be good or it may not - we can't just assert that their network is "inferior" in any objective sense (besides measures like longhaul ASMs or number of cities served).



I can't decide whether I miss the tulip or the bowling shoe more
User currently offlineADent From United States of America, joined Dec 2006, 1397 posts, RR: 2
Reply 19, posted (2 years 11 months 3 weeks 2 days 3 hours ago) and read 14952 times:

It is just the way business, particularly airlines, work in the US.

Older companies had high legacy costs. Esp pensions, retiree health, and experienced employees high on the pay scales.

Eventually the legacies all went bankrupt and jettison the retiree costs, and limit the salaries.

Now WN has the highest pilot pay in the industry and many senior employees. I heard they don't have the traditional pensions like the legacies??

So how do they cut costs? Other airlines seem to end up resorting to bankruptcy, but what can WN do? How much more productivity can they get out of their employees?


User currently offlinelucky777 From , joined Dec 1969, posts, RR:
Reply 20, posted (2 years 11 months 3 weeks 2 days 3 hours ago) and read 14899 times:

Well, there's literally a goldmine of addition ancillary revenue just waiting to be picked if/when LUV drops the stupid BAGS FLY FREE gimmick. My guess is, if they are preparing to go to labor for some givebacks, they had better make sure they've done all they can on the ancillary side first, which surely is what their employees will tell them.

User currently offlineHPRamper From United States of America, joined May 2005, 4098 posts, RR: 8
Reply 21, posted (2 years 11 months 3 weeks 2 days 3 hours ago) and read 14874 times:

Quoting Cubsrule (Reply 15):
Better networks compared to what? WN has the best network in many (most?) of its cities, and that helps revenues.

Sure, if you only want to travel to the biggest cities in the country. And in almost any WN market other than the superstations, you'll usually only get five or six nonstop destinations, and that's mainly to the superstations. 30 flights is fine until you notice that 20 of them go to DEN, LAS or MDW.


User currently offlineUGA777 From United States of America, joined Jan 2001, 143 posts, RR: 0
Reply 22, posted (2 years 11 months 3 weeks 2 days 3 hours ago) and read 14837 times:

I believe the biggest problem with the industry is the fuel costs. There has been a dramtic increase in the last 10-12 years and this industry is heavily affected by those costs. I understand some of the labor costs were out of line and management needed to make some internal changes in the overall cost structure, but it is hard for any fuel dependent company to make money given the circumstances of the last decade. Heck, I can't believe how much it costs to fill up my car each week.

User currently offlinejetblueguy22 From United States of America, joined Nov 2007, 2820 posts, RR: 4
Reply 23, posted (2 years 11 months 3 weeks 2 days 3 hours ago) and read 14829 times:
AIRLINERS.NET CREW
HEAD MODERATOR

Quoting HPRamper (Reply 21):
Sure, if you only want to travel to the biggest cities in the country.

Well there are reasons why they are big cities, people want to go there. Chances are more people are going to want to go to Chicago than Devils Lake, ND.

Quoting lucky777 (Reply 20):
Well, there's literally a goldmine of addition ancillary revenue just waiting to be picked if/when LUV drops the stupid BAGS FLY FREE gimmick.

I'm not sure they are going to drop it. That seems to be a core thing that they offer, it seems like nearly all their commercial revolve around no bag fees.
Blue



All of the opinions stated above are mine and do not represent Airliners.net or my employer unless otherwise stated.
User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17780 posts, RR: 46
Reply 24, posted (2 years 11 months 3 weeks 2 days 3 hours ago) and read 14825 times:

Quoting Cubsrule (Reply 18):
Sure, but is that necessarily a bad thing? They are leaving revenue on the table in exchange for lower costs.

It's not a bad thing when you have low costs, which they arguably no longer have.

Quoting Cubsrule (Reply 18):
we can't just assert that their network is "inferior" in any objective sense (besides measures like longhaul ASMs or number of cities served).

I think the quality of the network is very much questionable, when you're in CMH and can fly to just about anywhere on earth via one of the legacies, or anywhere in the lower 48 on WN via a similar number of stops, WN is at a disadvantage. There's not much in the WN network that gives them a revenue advantage, other than the high frequency shorthaul stuff. If that's the only thing you fly, WN is your carrier, otherwise plenty of other carriers offer much better networks.

Quoting lucky777 (Reply 20):
Well, there's literally a goldmine of addition ancillary revenue just waiting to be picked if/when LUV drops the stupid BAGS FLY FREE gimmick.

They're in no hurry to drop FL's fees.



E pur si muove -Galileo
25 Post contains links tozairport : Before Mr. Kelly starts complaining to his employees about labor costs being too high, maybe he should look in the mirror first. His pay has more than
26 Cubsrule : I doubt WN's is anyone's single carrier. But in many or most WN cities - hublets like BNA and STL but also smaller operations like AUS or MCI, WN has
27 DCA-ROCguy : A top 50 A.net argument that never ends. Depends upon your travel needs. I'll take the value of WN and FL's products and their great benefits for my
28 John : There will probably be many that disagree with me here, but BAG FEES are certainly on the horizon for WN and whether or not they choose to admit the f
29 Kcrwflyer : False. WN can't get you to any small cities and believe it or not, they do actually matter..especially to businesses. Good luck charging $500 dollars
30 Cubsrule : They do matter. But they have less demand. For any given trip from City X to CRW, how many trips to ORD/MDW will occur? For many if not most business
31 Post contains images MaverickM11 : The financials did suggest... I totally disagree--I think they get zero real benefit from it, but that's a whole 'nother thread. Why not drop it now?
32 Cubsrule : So WN gets no premium for having the only nonstop in a market? If you look at markets like SAT-BNA or STL-BOS, it sure looks like they do.
33 steex : In addition to your point, it's also not as though the other carriers are flush with flights to those smaller stations. We can't knock WN for the the
34 Flighty : WN offers a different kind of network that hangs on maybe different fundamental demand. So far as the unique network structure goes, WN has monopoly
35 planemaker : It is often stated on A.net because it is stated by every airline industry economist and analyst. When the industry starts making a consistent and co
36 ScottB : Southwest wouldn't charge $500 for a non-stop one-hour flight because that's not the way they do business. In virtually every non-hub network carrier
37 Pe@rson : Obviously. However, FR's average one-way fare, ancillaries inclusive, was $60 in 2010. In comparison, WN's average one-way fare was around $135 in th
38 peanuts : Big DUH! What makes WN somehow "immune" to economic realities? Absolutely nothing. When your perception vs. reality "gap" in different aspects of you
39 IrishAyes : Costs and Revenues are two different principles here, folks. Getting rid of the 'No Bags Fee' campaign does not help them with their labor costs. Hen
40 EA CO AS : We'll agree to disagree, as I see it as a marketing disadvantage that leaves roughly $500 million in ancillary revenue on the table annually for no r
41 lucky777 : So you would rather they go to the employees and seek benefit reductions all in the interest of keeping a "marketing advantage"? The biggest, fattest
42 DeltaMD90 : Not to call you out since you may be right, but does anyone have any figures on how much WN would "probably" get with bag fees and how many extra fli
43 GSPSPOT : So, for the average flyer, what would be the relative advantages of flying WN??
44 DCA-ROCguy : WN is still operating FL as its own entity. FL policies apply. Apparently said analysts don't understand the social and political dynamics, as well a
45 SSTeve : I like flying on WN because I don't have to be involved in the struggle with 140 rollaboards and 30 gate checks.
46 IrishAyes : I think its a bit more subjective of an opinion, taking into account not only what you want from your typical flying experience, but also what you're
47 DCA-ROCguy : What proof is there that WN is "leaving money on the table?" Being the largest airline to have no baggage fees likely has more than some financial be
48 MaverickM11 : Of course they do. But clearly they're not getting a premium in PIT, BOS, LGA, IAD, etc.. Those 600+ airplanes can't all be operating monopoly servic
49 DCA-ROCguy : See my reply 47. If WN wants to reduce labor costs, and preserve a good corporate culture, executives will need to share in the pain. My suggestion,
50 AADC10 : This seems like a negotiating ploy. The CEO has to make these kinds of declarations in the wake of the AMR bankruptcy to try to get a better deal in c
51 PI767 : First, I don't see his statement as "complaining." I see it as him stating a fact and being honest with the company's employees. Second, unlike some
52 Cubsrule : Well, no. But I'd argue that with its greater emphasis on local passengers than the legacies and larger aircraft in many city pairs, WN is well-equip
53 GSPSPOT : I follow you there, and for the most part agree. But most of that is intangible - it doesn't come to mind for most folks when they're searching fligh
54 OzarkD9S : Other things. We may soon see the day when WN offers a biz class option. They have Business Select fares with some perks (early boarding, extra Rapid
55 GizmoNC : From Dallas News Airline Blog: SWA CFO Laura Wright made the following statement concerning AA bankrupcy and GK Letter: "At Southwest Airlines, we com
56 swatpamike : WN and TWU555, the union that represents ramp agents and operations agents, have been in middle of contract negotiations for almost 6 months. At the
57 EA CO AS : There has been no noticeable book-away from fee-charging carriers or market-share shift to WN. This is both specific and measurable. The data is publ
58 planemaker : Being a listed company has nothing to do with "social and political dynamics". You've completely miss the point... it is not about "consistently high
59 Post contains links rdh3e : To be fair, this isn't salaries. That's probably total compensation which has more to do with Bonuses given by the board then it does salary. For exa
60 Cubsrule : On which data are you relying to make this statement?
61 Post contains links atrude777 : They don't have to be FROM other carriers. They can be from Cars, Trains and Buses. People who would drive or take the train to avoid airlines that D
62 commavia : As many have seen coming for quite some time, the Southwest business model that worked for thirty years fundamentally doesn't exist anymore. Southwest
63 Post contains images MaverickM11 : Who cares about market share? Best case scenario is WN is getting those passengers on their average margin, which is heading in the opposite directio
64 atrude777 : The a.netters who keep saying that WN isn't getting it because of the no bag fees. Market Share means people are spending money on the airline. Absol
65 Pu : If there was equal demand to "anywhere on earth" than you would be right. What counts is that WN meets the strongest demand: in most cases better tha
66 Jerseyguy : They are some of the highest paid workers in the industry. It was nice while it lasted but its now time to come back down to reality. But I'm sure yo
67 PI767 : I don't agree with that. From what I hear of many Southwest employees is: "The next time contract negotiations come around, we know that we are the h
68 FlyPNS1 : The one big fallacy is that all the legacies will keep their low costs. With big profits being reported, employees at UA and DL are going to be lookin
69 mcdu : Honestly you don't see the hypocrisy of the adverts bashing bag fees while operating a company that has bag fees? That is absolutely absurd policy an
70 AAIL86 : A very interesting point. I suppose it has something to do with the fact that FR is sweatshop posing as an airline, and WN is a very profitable carri
71 Cubsrule : How, specifically, has WN "never had great success" with business travelers? Who do you think the 40 daily DAL-HOU flights in the early days were mea
72 MaverickM11 : WN has let go of entire regions because the market share cost them more to have it than not. DL once was the share leader in the Northeast to Florida
73 Cubsrule : Is WN copying it? WN seems to use it for markets like TUS-GEG or SMF-STL that will never be large enough to support a nonstop. But WN simultaneously
74 Jerseyguy : Its not just not asking for a raise, its also accepting a paycut. As far as quality of life issues, alot of what you described will likely cost money
75 Cubsrule : But you missed his point. Some of the quality of life issues cost nothing to accomplish. If you have 30 pilots on reserve, you can tell them all that
76 GSPSPOT : Isn't this a bit contradictory? On the one hand, you mention WN going into previously-nontraditional type markets as a factor that increases costs, b
77 FLALEFTY : One reason WN pays so well is that their contracts ask for greater productivity from their employees. Lose these productivity rules without a compens
78 Pu : They're not. Far lass then half of WN's passengers connect. Compare that to 80%+ with legacies. Is WN growing its connecting traffic? Sure. But they
79 Silver1SWA : See reply 56. BINGO! Right now, SA)">WN doesn't see it as having a lot to gain by introducing bag fees, but instead that they have a lot to lose.
80 ScottB : While AS has very visibly caused WN to drop a number of markets from SEA & GEG, they haven't exactly been kicking WN everywhere. AS has dropped W
81 MaverickM11 : It's both. WN wants to go after higher yielding customers; those customers want access to high yield destinations, which are often in places that are
82 Tdan : May not be a positive quality of life issue, but if WN could operate some redeyes it would increase utilization (albeit from an already high level) a
83 GizmoNC : Not sure the current reservations system that WN is using is capable of redeye's. When TWA was at its peak in STL there was redeye's from the west coa
84 Post contains images Pe@rson : Yet if you look at their profits, they're very similar - with FR ahead - but FR's profit margin is considerably greater. All this is magnified by the
85 AAIL86 : Well, sweatshops can be very profitable...that's the whole point, see the clothing industry as an example. So FR's extremely competitive labor costs,
86 Pe@rson : There is an easyJet cabin crew member that frequently posts on A.net, and you will find that he has often said, despite not liking FR, that FR's cabi
87 peanuts : If that is the case than WN's "high productivity" on a per-employee basis may very well be threatened. If not, on the other hand, productivity remain
88 Post contains images commavia : I think that's the key. Again, as many people saw coming years ago, the past decade - which started out looking disastrous for the legacy carriers an
89 KarlB737 : The point I was making above in my reply 9 is clearly stated better by Commavia in his reply 62: So now is has caught up with them................
90 HPRamper : Failing models lose money. Last I checked, most airlines were making money using this failing model that has existed for decades. It's a preference.
91 Pu : The legacy airlines have lost billions and billions more than their occasional meager profits. A terrible, consistent loss-making industry like no ot
92 Cubsrule : If a hub is large enough, it's not inherently high cost. Running 10 flights a day out of a given gate, 5 to A and 5 to B, is not cheaper or more expe
93 Pu : I agree with you that this can be theoretically true, it's just rarely achieved in reality. It's a bit like the A380 having the lowest CASM, which ma
94 FlyPNS1 : Not necessarily. I think in the eyes of most consumers WN is still quite different from legacies. Much of this may be perception more than reality, b
95 GSPSPOT : That will change quickly if they cross that delicate "line", wherever it may happen to be. Consumers will only go along for so long.
96 GSPSPOT : I believe they're correct on that latter point for a great many flyers.
97 FlyPNS1 : Agreed. Which is exactly why I think WN keeps things like "Bags Fly Free" and "No Change Fees." It may cause them to leave a little revenue on the ta
98 Pu : You may be right, in which case we should all rejoice because it means some people prefer a p2p flight and some people prefer a connection if it give
99 Cubsrule : First class? Maybe. But if I can avoid sitting in an airport somewhere on a connection - even if I'm in the Kris Lounge - I'm skipping that connectio
100 GSPSPOT : Exactly. No one's right, no one's wrong, it's just a matter of priorities.
101 Flighty : Yes, hub model is inherently superior, cheaper, more efficient than for example, a WN model. However, when you have 5 competitors, your pricing power
102 T5towbar : [ Damn Right. Everybody is looking for "some" or "all" of what we lost. Just like the airline business. Fatten up for winter, because they will be ask
103 peanuts : Again, what makes WN "exclusive" or "immune" to all this? Absolutely nothing. The playing field (especially after AA comes out of bankruptcy) is leve
104 Post contains links lightsaber : The free 'word of mouth' on the bags must be worth $200M to $300M in free word of mouth advertising. The lack of bag fees also has customers checking
105 EA CO AS : You're talking about the "Southwest Effect" which is where additional traffic that hadn't been there previously (cars, buses, trains, or simply didn'
106 atrude777 : You're wrongfully assuming those same passengers will keep flocking to SWA, WN does not think those passengers will stay. I know what the Southwest E
107 MaverickM11 : I think that's honestly the inability of their res system to handle it.
108 atrude777 : cubsrule has brought this up many times but no one has answered it. If this is true, then why was WN able to change the 3rd Bag from Free to Chargeabl
109 Post contains images EA CO AS : If you were an investor, would YOU be happy with stock performance like this over the past 5 years? Yeah, probably not. While any publicly traded com
110 Post contains images Silver1SWA : Southwest has done their homework. They continue to do their homework. Alex is right, they believe they will LOSE customers if they introduce bag fee
111 peanuts : If WN's "success" hinges partly on "no bag fees" I foresee some rough years ahead for them. Just a hunch, nothing more nothing less...
112 Silver1SWA : I didn't say their success depends on it. It gives them an advantage in a tough competitive environment and right now, that's a benefit that they bel
113 FlyPNS1 : No, but I wouldn't be very happy with the performance of UA, DL or AA's stock either. And at least WN still pays a dividend, something unheard of at
114 T5towbar : WN obviously done their studies and they know that their "Bags Fly Free" works. They have their ads all over the place and it sells their product. Th
115 Post contains images planemaker : Good response. I can't figure out why he didn't post the other airline's stock performance.
116 Post contains images EA CO AS : Fair enough - and since we're looking at a non-traditional non-fee carrier with a rabidly loyal customer base, it's only fair to compare them to anot
117 par13del : Unfortunately for WN no, the legacy carriers used Chpt.11 to not only reduce their employee cost but other cost as well. Now that WN has the highest
118 planemaker : It isn't fair at all!! The airlines are not even remotely similar... other than that they both fly aircraft. Even without knowing anything about the
119 Post contains images EA CO AS : You're not actually stomping your feet while you type this, are you? Like it or not, they're both far more similar - in many, many ways - than they a
120 planemaker : They are not similar... and that would be abundantly obvious even to any casual observer. I can't believe that you are actually trying to sell this o
121 rdh3e : Care to explain? Please? No more huffing and puffing generalities. Specifics on why you believe it's an unfair comparison please.
122 planemaker : What "huffing and puffing"??? Furthermore, I shouldn't be the one providing specifics... EA CO AS should since he is "trying" to make the assertion.
123 PI767 : I don't understand all of these comments about how WN's computer system "can't handle" redeyes. I mean, WN has flights that depart late in the evening
124 Post contains images par13del : As with the baggage fees I think there has to be some sort of technical reason why these common place everyday things are not done by WN, I'm still w
125 2175301 : I don't know a single person that can reliably pick which stock will do better than others in the future.... Thus, comparing the past performance of o
126 atrude777 : There isn't a technical reason? WN already tried and tested assigned seats, Passengers voted, NO. So WN is doing what the passengers asked, open seat
127 peanuts : They have to. They have no other choice with that. It was a key part of their business plan 40 years ago: quick turnarounds. It's what made the numbe
128 2175301 : Quoting 2175301 (Reply 127): A key part of WN strategy is to be able to turn an aircraft fast. Get em on and get em off fast. Actually I do not see th
129 EA CO AS : Actually, only "casual" observers would fail to see the similarities between them. I guess that's the difference between someone who is actually part
130 MoltenRock : I usually always book my parents airfare, and in the past two years they always have had me book them on Southwest simply because of the bag fees bein
131 XT6Wagon : The reason WN doesn't do redeyes is it would LOWER aircraft utilization. Currently they run aircraft on short hops from early morning to late at nigh
132 par13del : Ever consider the possibility that after so many years of profitability that folks just want to see WN "get theirs"? The airline industry has takes a
133 HPRamper : I think that's a key statement and is quite valid. Many people root for the underdog no matter the situation.
134 HiFlyerAS : I think it's a matter of the company's culture because you don't need from 11pm to 6am to do cleaning and maintenance on every single airplane in the
135 Mcdu : During the years of lower wages than other carriers and fuel hedging on the plus side to WN they used the low fares they used that leverage to underc
136 peanuts : I beg to differ. You have to throw investor sentiment into the equation as well as competitive pressures. WN started as an individual "thinker" in th
137 Silver1SWA : I know you have been "patiently" awaiting the opportunity to burst out of your seat in excitement over this, but I still think you are a little too e
138 Post contains images DCA-ROCguy : Many of us have been saying for some time that WN's cost structure needs addressing. It's to be expected as a large carrier matures, and market condi
139 Cubsrule : When, exactly, was WN paying 737 pilots of equal seniority less than 737/32x pilots at other carriers? Maybe so, but who is the underdog? Certainly n
140 FlyPNS1 : The really sad thing about you wishing ill will on WN employees, is that if they take cuts and lower their costs, it will only create a new round of
141 WNCrew : Sad AND childish... especially for people who are supposed "professionals". I haven't EVER me a WN employee who wished ill-will on any other airline
142 Post contains images Pu : Just keep on with the proven core beliefs and you'll continue to be fine. The resentment and ill temper of the competitors does much more to hurt the
143 MoltenRock : Wow! Bitter, much? Agreed! I don't think he was being childish at all, but rather stating the obvious. WN still dictates how much other airlines can
144 Cubsrule : Is the problem the bankruptcy laws or the or the idiot investors who keep financing airline exits? An 11 becomes a 7 quickly with no financing. Well
145 HPRamper : Late-purchase fares are one of the big differences between the legacies and WN. But they fill the planes regardless. Does it piss people off? Yes. Do
146 Cubsrule : Yes, but undoubtedly in smaller numbers. CHI-SDF is 50 percent bigger than CHI-CVG, despite the Cincinnati MSA having 800,000 more people and a much
147 Mcdu : From startup through the mid late 80's WN paid lower wages than the legacy carriers. They filled their pilots with stock options and those of that ge
148 Cubsrule : Great. What was going on with legacy narrowbody wages in that time period? I think this is basically fantasy. The unions, by virtue of their huge num
149 southloopswa : I couldn't agree more... I could say the same thing about almost every airline crew I've encountered on hotel vans over the years. (not all crews are
150 MaverickM11 : I hear that, but at the same time, the legacies essentially had to undo up to six decades of regulation from one day to the next--and they're still u
151 steveswa737 : I have had the pleasure of sharing many crew vans with Pilots from lots of airlines. I can tell you that they are all pretty much the same. Everythin
152 Post contains images peanuts : LOL. No we can't. This is WN we are talking about and the roles have reversed. They're the ones with a chip on their shoulder now. Not the humbled, h
153 peanuts : WN pride is OK but a little more humbleness is in order as well. To this day, I still don't need a passport to fly anywhere on the WN routemap. Most o
154 PI767 : And yet the combined number of domestic and international destinations served individually by AS, B6 and NK do not add up to the number of domestic d
155 MaverickM11 : AS serves quite a few more destinations than WN (not including FL). B6 is pretty close as well. Once WN trims FL back, chances are AS will still be c
156 NZ1 : Hi Everyone, Can I kindly ask that we all stick to the topic, and cease with the insults and personal attacks on other users. Numerous posts have been
157 DCA-ROCguy : Nothing in this discussion suggests that WN "has a chip on their shoulder." One poster (many of whose posts have been deleted) got annoyed with peopl
158 Post contains links MaverickM11 : Good article on the situation: http://seekingalpha.com/article/3133...west-airlines-stock-will-lag-peers "Last quarter, pro forma PRASM (the key airli
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