n471wn
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Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 4:57 am

WN had by any measurement a lousy March both in Load Factor and RPM.....I am a 35 year SWA flyer and huge fan (not an employee) but I must say to look at those numbers in comparison to Air Tran and Jet Blue and even Continental, ought to be to them alarming. What has happpened? Well there are a number of related factors but two come to mind:

1) SWA was always assumed to have the lowest fares in a market---in facts folks like me who take 100 flights a year never even looked at other airlines unless SWA did not fly there. Then one day I booked 2 months in advance a R/T from OAK to MSY and the ticket came to $480. I then looked on Orbitz and got the same one-stop service for less than $300. For the first time in my life, I cancelled a SWA flight for another carrier on the basis of price.

2) I would have to say that this "slow down" by SWA in adding cities has been a mistake. Look at Jet Blue and Air Tran who are adding destinations and growing much more and achieving higher load factors. It is simply amazing to me that SWA has not cut a deal with MSP to go into the Humphrey Terminal---that market is a field waiting to be harvested and other markets like it. SWA has now connected enough of their dots and needs more dots. Where is Herb when we need him?
 
InnocuousFox
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 5:09 am

The slowdown in adding "dots" may be a function of not enough equipment. You can only add new planes so fast and in order to serve a "dot" right, you have to have a decent number of initial flights to cover your set-up costs.
Dave Mark - Intrinsic Algorithm - Reducing the world to mathematical equations!
 
jbmitt
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 5:11 am

Hello..

WN has always had the industry lowest load factor and RPM. Their model allows it, look at reports from previous years. As for price, it is well known that they aren't always the cheapest, however, their prices are predictable. People fly them wanting consistency, and for loyalty. There reward program is one of the easiest and quickest to accomplish.
 
PVD757
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 5:26 am

yes, but I'd bet that $480.00 fare would be there 5 days in advance whereas the other carriers would be pricing out at about a grand...

WN has some things they need to watch out for, but I don't think rethinking thier route map is one of them. I also think they have lots of dots to connect. DEN, IAD, and PIT come to the top of my list of cities where WN has ample dots to add. What about STL & MCI to some east and west coast destinations to allow for more one-stop access to DAL? If WN wanted to, they could push NK aside and lay on a bunch of flights at DTW too. I will partially agree that WN needs to connect some dots that aren't served at all versus adding the umpteenth frequency between BUR and LAS or where-ever. MSY could probably use a few more flights as well. SFO is coming on-line this fall which should provide service to the obvious culprits: LAX, SEA, MDW, PHX, LAS just to start, then they can look at BWI, PHL, HOU, etc. The better they can connect thier system with each other the stronger the smaller stations (like PVD) will perform since there will be new options created by other markets' new flights.

As for MSP, I'm surprised they are not there yet either. The southeast is still a huge hole in thier map too, but where will they go - ATL would be tough, CLT has little room. NYC is the glaring hole - but again how do they get in? I'd like to see some more codeshare action from TZ - they seem to be dormant as of late...
 
alphascan
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 5:29 am

Recently, WN has begun to change the strategy that has made it the leader in the domestic industry. At DEN, they are for the first time, adding flights and destinations faster than the marketplace is filling them. Hence, terrible load factors and very low yields vs. the competition. Mr. Kelly was quoted within the past month as saying WN "has not yet grown into the new flights added at DEN", but that does not explain load factors in the low 50s to low 60s for all of the inital DEN markets except HOU, a market with no direct competion.
"To he who only has a hammer in his toolbelt, every problem looks like a nail."
 
SkyexRamper
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 5:31 am

Were you booking the lowest possible fares figuring one way fares and some of their other discounted options? Or were you booking full refundable anytime fares?
Good Luck to all Skyway Pilots! It's been great working with you!
 
n471wn
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 5:50 am

SkyexRamper asks:

Were you booking the lowest possible fares figuring one way fares and some of their other discounted options? Or were you booking full refundable anytime fares?

Great question and I ALWAYS book the lowest fare offered since I can always spend the "credit" money when I have to cancel as I fly them so much and I love their no penalty---it just amazes me that other carriers get people to cough up the $100 for a change and SWA charges not one dime!! No that was the lowest fare at the time and no sales were going on.
 
AADC10
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 5:52 am

WN's edge over competitors is eroding and they are running out of profitable new destinations. However, as the legacies move away from bankruptcy, merge or vanish, fares will rise and WN will go back to its usual place as the cheapest flight.

Their load factors are always low, not just because of the new flight to DEN. They will operate even during off hours as long as the flight is still profitable. Fuel is starting to hurt that as the hedges unwind but the WN model depends the aircraft operating as many hours as possible.

The one thing that I think they should consider is overnight transcons. WN has traditionally only operated during the day-evening and performed maintenance overnight, but then again they did not traditionally fly transcons either. I would think that they have enough aircraft to rotate a few for overnight operations.
 
unitedMSY
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 6:24 am

They're doing just fine the way they are, I like their route network. I fly them once a week JAN-MDW-JAN because:

a.) I do not have to connect, I can actually fly n/s between small cities. It helps for non-rev, and its cheap as rev
b.) MDW is not the most dysfunctional airport in the world like ORD
c.) They're always on-time
d.) They're actually friendly
e.) Their boarding process is quick
f.) We get fed on the planes
 
alphascan
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 6:44 am

Quoting AADC10 (Reply 7):
However, as the legacies move away from bankruptcy, merge or vanish, fares will rise and WN will go back to its usual place as the cheapest flight.

As the legacies emerge from Chapter 11 and/or renegotiate their contracts, their costs will be substantially lower than the old days. WNs wages will be amongst the highest in the industry. All the more pressure for WN as their (very astute) fuel hedges expire over the next 21 months.

Quoting AADC10 (Reply 7):
Their load factors are always low, not just because of the new flight to DEN.

Agreed. However, their DEN routes load factors are much, much lower than system average at an airport with some of the highest costs in the nation. Additionally, when initiating service to DEN 15 months ago, WN signed some insanely expensive, long term local market TV sports sponsorship contracts for a carrier that even today only has less than 5% of the market.
"To he who only has a hammer in his toolbelt, every problem looks like a nail."
 
Cubsrule
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 6:50 am

Quoting N471WN (Thread starter):
Look at Jet Blue and Air Tran who are adding destinations and growing much more and achieving higher load factors

Is AirTran growing? They've added several cities, but they've also cut routes in many of their larger markets, such as MDW and DFW.

Quoting PVD757 (Reply 3):
If WN wanted to, they could push NK aside and lay on a bunch of flights at DTW too.

I'm not sure what the problem is, but WN has always been small in Detroit. Whether that's due to NW, NK, or some combination thereof I'm not sure. WN does seem to avoid clashing with NW for some reason, which may have something to with NW's propensity to respond to 'encroachment' with enormous capacity additions and price cuts. Having said that, though, the need to grow may force WN's hand at some point.

Quoting PVD757 (Reply 3):
The southeast is still a huge hole in their map too, but where will they go - ATL would be tough, CLT has little room.

CLT would make room, just as they did for B6. Jerry Orr tells the Observer at least 4 times a year that he badly wants WN. I don't think he's lying.
I can't decide whether I miss the tulip or the bowling shoe more
 
dutchjet
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 6:56 am

Quoting N471WN (Thread starter):
SWA was always assumed to have the lowest fares in a market

As you learned, that is no longer a valid assumption. Even the big, bad legacy carriers offer some very attractive fares on many routes, even those that dont compete with LCCs, and Southwest is not necessarily the best deal. So much depends on inventory and the exact date that you book and will fly.....but all carriers are competiting head to head now. Also consider that many of the legacies have lowered their costs to the levels once reserved for the LCCs, so they too can offer sharp fares and make money.

Quoting N471WN (Thread starter):
2) I would have to say that this "slow down" by SWA in adding cities has been a mistake. Look at Jet Blue and Air Tran who are adding destinations and growing much more and achieving higher load factors

I am not sure that I agree here....JetBlue and AirTran are also having trouble with their respective expasnions. AirTran has come and gone from many of its new routes and seems to be having trouble on routes that bypass its ATL hub....AirTran has postponed some new aircraft deliveries as well. Some of JetBlue's newest routes out of JFK have not really taken off and at some point in the very near future, JetBlue must look beyond its NYC and BOS strongholds for route development purposes as they have a lot of new airplanes on order that must be put to work....JetBlue has also slowed down the its aircraft deleveries and sold a handful of airplanes to keep its growth under control.

The big issue facing all of the LCCs is the renew strength of the legacies......in the past, when Southwest or JetBlue would enter a route, the legacies would scramble, match fares, loose interest and then drop the route leaving it wide open for the LCC to dominate the market. Thats no longer the case, the legacies are fighting and protecting their markets. For example, when Southwest enetered the PHL market, many thought it was the beginning of the end of US's huge hub operation at that airport.....well US is alive and well and doing quite well at PHL.

Southwest is a little slower to enter new markets for several reasons - under their business plan, they generally like to open a city with atleast 12 to 16 flights per day to atleast 5 or 6 destinations, unlike Air Tran or JetBlue that will open a city with a single route and a single flight. Thus, new cities are added slower and more research is done, I dont think that Southwest is behind the curve, its just more difficult to find new markets where service can be added and profits can be make. MSP is a big market that WN has yet to enter.....as you point out.

Quoting N471WN (Thread starter):
WN had by any measurement a lousy March both in Load Factor and RPM.....I am a 35 year SWA flyer and huge fan (not an employee) but I must say to look at those numbers in comparison to Air Tran and Jet Blue and even Continental, ought to be to them alarming

I wound not be concerned with Southwest's low load factors, one of the interesting aspects of Southwest's operating model is that they generally produce mediocre load factors (lhigh 60s and low 70s is as good as it gets) but since so many of their segments are shorthaul and because they offer frequent service between most city pairs, low load factors are the result. Southwest usually comes up with good financial results even with lower load factors than some of their competitors. As for CO's results, they were outstanding (March....usually not a great month and Easter was NOT in March this year, was simply amazing) but CO runs a very different operation that Southwest, so its difficult to compare just one statistic.

In summary, Southwest will do just fine in the future, but your very astute points are proof that nothing is simple and even an established LCC such as Southwest has many issue to contend with, its not easy, especially with the legacy carriers rebounding.
 
luvfa
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 7:40 am

While our load factors are low our yields are high particularly on the short-haul routes. We are able to achieve this due to our convenient schedules. Example: customer in LAX has business trip to PHX. Rather than booking the $59 advanced ticket, he books the full-fare $99 because he knows if his meeting ends early, (or later), he has the flexibility to change flights. More than a few frequent flyers have told me this!
 
DesertAir
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 7:46 am

Southwest is a godsend here in Tucson, They have multiple flights for connecting and are usually on time. An additional flight to San Diego would be appreciated.
 
airlineecon
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 8:21 am

Its pretty darn tough for southwest to connect the dots and create new dots becuase many of those routes already have competition. (I'm just speculating on this point, maybe when they expanded more quickly there was lots of competition)

Southwest's competition can predict southwests behavior better than any of us. Whenever there is a threat of southwest entry, they slash fares long before southwest even announces service, and certainly before flights start. That makes it difficult to connect dots and create new ones.
 
Tango-Bravo
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 9:31 am

Quoting N471WN (Thread starter):
Look at Jet Blue and Air Tran who are adding destinations and growing much more and achieving higher load factors.

So what? Have their profits compared favorably with WN's? (not last time I checked) Moreover, it seems that FL, in particular, has a habit of dropping a city for every new one they add (or nearly so) while B6 has shown a similar tendency, albeit to a lesser degree.
 
bigjku
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 9:56 am

Knowing little about the business of Airlines and how they compete and merge I have a question.

Would any of the big legacy carriers ever try to merge with Southwest? Basically adopt Southwest model for the domestic market and use their current model for the international?

I am sure its a dumb idea but was just curious.
 
i15846375
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 10:08 am

funny you should mention WN fares, just booked chicago to MCO, flying out on Air Tran and returning on American, beat the price that WN gave me by almost a hundred dollars, and that was for a late June flight. Even the flight out of GYY was cheaper, but the times were not good for me. Sometimes it pays to do your homework and look around, but WN still wins in most of the markets out of Chicago, I still miss ATA though, a lot!
 
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lightsaber
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 10:12 am

Quoting InnocuousFox (Reply 1):
and in order to serve a "dot" right, you have to have a decent number of initial flights to cover your set-up costs.

 checkmark 
WN only opens "dots" with 10+ flights/day.

As to them needing to change strategy? Maybe. As others have noted WN is a business and thus profits are what really matter. I have no doubt they'll continue to do well.

Quoting Luvfa (Reply 12):
he books the full-fare $99 because he knows if his meeting ends early, (or later), he has the flexibility to change flights. More than a few frequent flyers have told me this!

In a heartbeat. WN's problem is lack of aircraft. That's a classy type of problem to have!  bigthumbsup  They need more cities and better connectivity through their hubs.

Let's put it this way... they'll be very tough to beat once they can hub in Dallas.  Wink


Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
Iloveboeing
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 10:18 am

Quoting Lightsaber (Reply 18):
Let's put it this way... they'll be very tough to beat once they can hub in Dallas.

Maybe WN could move to DFW and build a massive hub out of there to compete with AA. I'm not being anti-Love Field or anything, but there are some advantages that WN could get out of DFW. DFW's sheer size allows plenty of room for expansion, just like DEN, and they could draw on traffic from both Dallas and Fort Worth. DFW did say they would build WN their own terminal and free rent. Maybe they could take advantage of that.

I've been through DFW a few times on AA recently and it has drastically improved from how it used to be, especially with the Skylink. It could be an awesome base for WN.
 
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lightsaber
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 10:24 am

Quoting Iloveboeing (Reply 19):
I've been through DFW a few times on AA recently and it has drastically improved from how it used to be, especially with the Skylink. It could be an awesome base for WN.

Maybe... but AA would have a huge allergic reaction to WN entering "their turf." I'm not a fan of split opperations (no connectivity).

But WN does need a larger "mid-America" hub. Until the Northeast/midwest is filled out more, a hub up there doesn't make sense.

Its all good. Competition is an excellent thing.  Smile

Lightsaber
"They did not know it was impossible, so they did it!" - Mark Twain
 
Iloveboeing
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 10:27 am

Quoting Lightsaber (Reply 20):
Maybe... but AA would have a huge allergic reaction to WN entering "their turf." I'm not a fan of split opperations (no connectivity).

Yeah, there would definately be a huge fare war at DFW. The consumers would win, though. Here's a farfetched idea.......build an underground high-speed train link between DFW and DAL (all inside security). This could allow connections. It's only about 8 miles from DFW to DAL, right? That would be cool!
 
ConcordeBoy
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 10:35 am

Quoting N471WN (Thread starter):
SWA was always assumed to have the lowest fares in a marke



Quoting Dutchjet (Reply 11):
As you learned, that is no longer a valid assumption.

...nor was it ever.

Even in the 1999-2001 era, during record fatcat profits for the Legacies and my time as a po'-ass college student... I could always find better fares to the West Coast, New York, Florida, and Texas on the likes of DL and CO than I could on WN, given a few days prior research/booking. Always.
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
usair330
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 10:37 am

Quoting Dutchjet (Reply 11):
. For example, when Southwest enetered the PHL market, many thought it was the beginning of the end of US's huge hub operation at that airport.....well US is alive and well and doing quite well at PHL.

You're right US is alive but WN still has a big effect in PHL. We don't loose as many bags as US and the people I work with actually enjoy there job and we take pride in what we do. We currently have 8 gates at PHL and we're not done yet.      

[Edited 2007-04-06 03:38:39]
 
mtnwest1979
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 10:47 am

Quoting I15846375 (Reply 17):
funny you should mention WN fares, just booked chicago to MCO, flying out on Air Tran and returning on American, beat the price that WN gave me by almost a hundred dollars, and that was for a late June flight. Even the flight out of GYY was cheaper, but the times were not good for me. Sometimes it pays to do your homework and look around, but WN still wins in most of the markets out of Chicago, I still miss ATA though, a lot!

But what is the penalty if you have to change, or not go at all?
"If it ain't broke, don't fix it!"
 
TSS
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 11:39 am

Quoting Iloveboeing (Reply 19):
Maybe WN could move to DFW and build a massive hub out of there to compete with AA.



Quoting Iloveboeing (Reply 19):
DFW did say they would build WN their own terminal and free rent.

Terminal F, or maybe Terminal G?

Quoting Iloveboeing (Reply 21):
Yeah, there would definately be a huge fare war at DFW. The consumers would win, though.

Exactly. Big grin

Quoting Lightsaber (Reply 18):
WN's problem is lack of aircraft. That's a classy type of problem to have!

Indeed it is, and that explains why there are no flights on WN headed West from BHM before 12:30 pm: Not lack of market...lack of aircraft.
Able to kill active threads stone dead with a single post!
 
Tango-Bravo
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 12:28 pm

Quoting ConcordeBoy (Reply 22):
Even in the 1999-2001 era, during record fatcat profits for the Legacies and my time as a po'-ass college student... I could always find better fares to the West Coast, New York, Florida, and Texas on the likes of DL and CO than I could on WN, given a few days prior research/booking. Always

And who remained profitable during the years 2001-2005 while the legacies were posting annual losses in 9 figures (ie hundreds of million$) and billion$ collectively? And whose market cap was more than that of all the U.S. legacies combined during these years?
 
SANFan
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 1:25 pm

Quoting N471WN (Thread starter):
SWA was always assumed to have the lowest fares in a market

Not by me. Ever. It's not at all unusual to find cheaper (or equal) fares to WN; it's always been that way. As many have said, however, what do changes or cancellations cost you on the "other" guys? What does last-minute travel cost on the "other guys"? The WN model is working perfectly as designed and I don't think it will change but maybe the "other guys" will...

Quoting N471WN (Thread starter):
I would have to say that this "slow down" by SWA in adding cities has been a mistake.

I couldn't disagree more. I think it's long overdue for WN to be taking a breather (both effort-wise and financial) from opening new stations and concentrate on connecting their 63 dots! They are receiving new a/c at about the same rate as last year (about 35-40) but this year, except for the surprise addition of SFO, all those planes are being used to beef up existing stations; that's Southwest's bread-and-butter: P-2-P service where none or little exists!

I don't think it out of line to suppose that every single city WN serves (all 63) could support a minimum of at least one new route and probably at least one additional flight on a route that is already served. (If WN can't grow a city I don't think they'd still be there.) This would never happen if they keep pouring all there new a/c into new stations.

One other point that has been discussed in other threads is that this year's expansion has, so far anyway, shunned the usual "non-hub" Super-cities like PHX, LAS, BWI and MDW; that makes it even better -- WN is growing OTHER smaller cities by connecting them with OTHER smaller cities! Perfect!

Quoting DesertAir (Reply 13):
Southwest is a godsend here in Tucson, They have multiple flights for connecting and are usually on time. An additional flight to San Diego would be appreciated.

(As one on the other end of your request, DesertAir, I agree completely.) I know that in SAN, there are several new routes that we would love to see WN fly; RNO and HOU were 2 of the top choices and guess what? Last month saw SAN-RNO start and June will see SAN-HOU start; would that have happened if WN opened 3 new stations this year? I doubt it. There are other cities that SAN would like to see new service to (SLC, DEN, PHL, MSY, ORF, STL, MCO) or added frequency to (TUS, HOU, ABQ, ELP, SMF.) Will we see any of these? Maybe. This would be a very good year for it to happen. I'm still very optimistic about SAN's chances for more -- even in addition to the assumed SFO flights! I've got all my fingers, toes and eyes crossed  Wink .

How about your city? What new service would you think WN could successfully add? The usual discussions of adding MSP, ATL and CLT can, I think, be delayed until at least 2008!

bb
 
flyboy7974
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 1:27 pm

Correction about BHM, there's a 930am to DAL, a 1005am to HOU, a 735am to STL, and a 910am to BNA with connections westward. SWA wouldn't operate a station where there couldn't be flighs such as this, westward to all points, until 1230pm. (bur)

In relation to topic title, I do somewhat agree. I helped open the BUR station for SWA back on 4/16/90, we had 6 flights to LAS and 10 flights to OAK. A look at schedules for those markets now show BUR-LAS at 13 flights and BUR-OAK at 16 flights, due to lack of any other competition mostly (1 HP Express flight to LAS), but SWA philosophy during that time was to compete with the automobile and make flying fun again to get people back in the air. These were the days that created the "Southwest Effect." That term now is misused greatly from its origin. Back in that time, if we were to nonrev, I knew to get to DAL I would spend all day flying and probably have 3 or 4 stops enroute, it's not like that anymore. SWA today you can fly nonstop cross country and instead of creating markets and market share, the SWA of today now opens markets to defend territory and compete with the "Big Boys." While I do think SWA does well, overall their mission statement of 15 years ago or so has completely changed as has the commercial industry as a whole, so SWA stays proactive to meeting the demands of the changing market.

While most people associate SWA and always lower fares, erroneous. The last four trips I've booked clients on, SWA has been more than competitors on every segment, and the differences weren't close at all. In addition, looking now at the Airport Hub Profiles for: UA at LAX, UA at SFO, HP/US at PHX, DL at SLC, CO at CLE, and I have all the others for the recent quarter if anybody wants, I'm surprised at all those airlines, and when comparing Top 20 markets for O&D versus Top 20 markets per yield, almost every top market regarding yield for all of those major airlines are markets where they directly compete with SWA. This surprises me greatly because so many believe that SWA obviously drops fares for the flying public, and while we'd think that would mean yield as well, it doesn't, If anybody wants specific numbers on any airline/hub, get to me.

On a completely different note, with these hub profiles, one number that completely blows my mind, the UA Hub Profile for SFO. I cannot believe for SFO what UA's highest market is when reviewing yield and it sits 17th out of 20 for O&D pax for SFO/UA at 42.79 cents and has 6.4 average daily departures through this period, any guesses? Retrospect, their number one market for O&D is obviously LAX at 371 daily pax each way with average fare of $123.07 and yield at 36.09 cents/mile, plus an added estimated 1,183 transfering pax for a total of 1,554 pax each day on the SFO-LAX route, and still, the highest yielding route has total pax just about 1/5 of those numbers. Okay, well, the answer for anybody wondering, look back up at the end of the first paragraph and in parenthesis, you'll see the city code in lowercase letters.
 
EXMEMWIDGET
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 2:29 pm

Quoting UnitedMSY (Reply 8):
f.) We get fed on the planes

Huh? What do they feed you on SW?
 
TSS
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 3:04 pm

Quoting Flyboy7974 (Reply 28):
Correction about BHM, there's a 930am to DAL, a 1005am to HOU, a 735am to STL, and a 910am to BNA with connections westward. SWA wouldn't operate a station where there couldn't be flighs such as this, westward to all points, until 1230pm.

My apologies; I didn't specify Saturday as my day of choice. According to the WN website, the first flight West out of BHM on Saturdays departs at 12:30 pm.
Able to kill active threads stone dead with a single post!
 
MSYtristar
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 3:07 pm

Quoting N471WN (Thread starter):
Then one day I booked 2 months in advance a R/T from OAK to MSY and the ticket came to $480.

Well, I can sort of explain this specific route. WN has far fewer connections in that market now than what they did a couple of years ago. They even flew OAK-MSY nonstop, and you could usually get reasonable deals since they were competing with UA in the SFO metro to MSY market, Now, however, no one does SFO/OAK-MSY nonstop, so the airlines can generally charge what they want.
 
twambassador
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 6:11 pm

I have always wondered why WN moved into DEN. This totally goes against their business model of serving under-served airports and creating new markets. DEN now is dealing with overcapacity with UA and Frontier already fighting it out there. Neither wants to give up any market share to WN. Frontier has the most to loose here but they also have a very loyal customer base in the Rocky Mountain region and are known for their low fares as well. WN is not offering anything unique here other than their reputation for having low fares. It will be interesting to see how this pans out after the peak summer season. WN will give it their all but if they are loosing money they will put out of the market.
Up Up And Away...
 
SANFan
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 7:06 pm

Quoting TWAmbassador (Reply 32):
WN will give it their all but if they are loosing money they will put out of the market.

I don't agree with you at all TWA'. I've mentioned before in the on-going DEN/WN discussion that Denver is not only an originating point but also a destination, right? The people all over the U.S. that fly WN all the time (for whatever reason be it fares, frequency, wonderful snacks...) can now fly them to DEN and can even connect there if necessary. People seem to think that the Denver locals would rather fly F9 or UA (hometown, ff loyalty, wonderful snacks...) and that may very well be (and probably is) correct. But what about people who live in SLC, TPA, OAK, BWI, PVD, PHX, etc., and like to fly WN. And how about someone flying from TPA to SLC or OAK? They now have another (connection) option.

DEN was a gaping hole in WN's coverage of the U.S. and now it's getting coverage. I cannot fault WN in the least for this move and I think they will do fine at Denver Intl. There could very well be some service adjustments there, as there have been in PHL, but WN is just doing its usual aggressive growth at a chosen city and let's not count them out just yet.

I've said it before: I think there is room at DEN for all 3 of the unique operations of UA, F9 and WN.

And BTW, does anyone really think that WN would EVER pull out of Denver AGAIN? No way. They will adjust their operation (if necessary) in order to make it fit, but pull out again -- never!

Happy Easter everyone!

bb
 
swatpamike
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 7:14 pm

Hello All

Quoting I15846375 (Reply 17):
funny you should mention WN fares, just booked chicago to MCO, flying out on Air Tran and returning on American, beat the price that WN gave me by almost a hundred dollars, and that was for a late June flight.

Working in MCO for WN most flights are going to be booked way in advanced in the April-August time frame if you are talking about Thursday-Sunday.

Quoting Lightsaber (Reply 18):
In a heartbeat. WN's problem is lack of aircraft. That's a classy type of problem to have! They need more cities and better connectivity through their hubs.

There are plenty of 737-700 avalable. And most have winglets, they are just painted the wrong color. Green and white.

I have advocated for the last 2 years that we should buy Air Tran. The 737-700 would be integrated into the WN system to add flights to newer station. The Air Tran company would live on flying the 717 based around ATL.

This would open cities up to WN such as CLT, MSP, LGA, EWR, ATL, MKE and more.

Cheers

swatpamike
 
jetfuel
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 11:12 pm

I am happy to pay more to fly Southwest. I feel like a customer and not a piece of cargo. I always feel they appreciate my custom and have never let me down.... The only exception is probably Co or UA (and thats only for the cockpit coms anyway)
Where's the passion gone out of the airline industry? The smell of jetfuel and the romance of taking a flight....
 
itsnotfinals
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RE: Southwest Needs To Rethink Their Route Strategy

Fri Apr 06, 2007 11:47 pm

Quoting EXMEMWIDGET (Reply 29):
Huh? What do they feed you on SW?

On flights over 3 hours you get a snack pack that other airlines sell for $3. typically you get peanuts, and a snack pack.
Speedbird 178 Heavy, FINAL runway 27L
 
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drerx7
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 12:00 am

Quoting Alphascan (Reply 4):
inital DEN markets except HOU, a market with no direct competion.

I don't know how valid that is though, IAH is just across town so I would still consider it a market with heavy competition. There is just a large demand for Houston - Denver traffic look over at IAH, you have UA and CO with some 757s as well as F9. So, WN, CO, UA, F9 on Houston-Denver runs I think that may be the most competition from any route from Houston?
Third Coast born, means I'm Texas raised
 
richierich
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 12:02 am

Quoting AADC10 (Reply 7):
WN's edge over competitors is eroding and they are running out of profitable new destinations. However, as the legacies move away from bankruptcy, merge or vanish, fares will rise and WN will go back to its usual place as the cheapest flight.

Their load factors are always low, not just because of the new flight to DEN. They will operate even during off hours as long as the flight is still profitable. Fuel is starting to hurt that as the hedges unwind but the WN model depends the aircraft operating as many hours as possible.

The one thing that I think they should consider is overnight transcons. WN has traditionally only operated during the day-evening and performed maintenance overnight, but then again they did not traditionally fly transcons either. I would think that they have enough aircraft to rotate a few for overnight operations.

I agree with your whole, well thought out post. Good job!

Quoting Cubsrule (Reply 10):
Is AirTran growing? They've added several cities, but they've also cut routes in many of their larger markets, such as MDW and DFW.

While FL is cutting some cities and adding others, they are also growing. They are still accepting new aircraft, right? Those planes have to go somewhere...

Quoting Tango-Bravo (Reply 15):
So what? Have their profits compared favorably with WN's? (not last time I checked) Moreover, it seems that FL, in particular, has a habit of dropping a city for every new one they add (or nearly so) while B6 has shown a similar tendency, albeit to a lesser degree.

Again, while FL seems to be playing the "airport shuffle", they are actually growing, albeit at a small rate. However, JetBlue is growing considerably despite recent aircraft sales and the Feb. problems. AFAIK, B6 has only cut two cities (is this right?): ATL and SDQ - the latter of which is coming back at some point this year. Based on a percentage, B6 is still growing at a faster rate than WN but that is because Southwest is already enormous.

Quoting Swatpamike (Reply 34):
I have advocated for the last 2 years that we should buy Air Tran. The 737-700 would be integrated into the WN system to add flights to newer station. The Air Tran company would live on flying the 717 based around ATL.

This would open cities up to WN such as CLT, MSP, LGA, EWR, ATL, MKE and more.

Wow - sounds easy, right? Do you know what a merger of that scale would involve? Not to mention the thousands of people who would inevitably lose their jobs... it sounds great on paper but it would actually be a very complicated mess.
Let's remember that in an airline merger or purchase, having a consistent fleet type is NOT the be-all and end-all requirement (think how BA purchased BCAL and Dan-Air in the late 1980s/early 1990s..). If having a common fleet type had been the sole consideration, neither of these would have gone through. And what is stopping WN entering the markets you listed above on their own?
None shall pass!!!!
 
masseybrown
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 12:07 am

Quoting Cubsrule (Reply 10):
Is AirTran growing?

Yes. March year-over-year numbers RPM up 22.2%, capacity up 22.9%.
 
ConcordeBoy
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 12:42 am

Quoting Tango-Bravo (Reply 26):
And who remained profitable during the years 2001-2005 while the legacies were posting annual losses in 9 figures (ie hundreds of million$) and billion$ collectively? And whose market cap was more than that of all the U.S. legacies combined during these years?

Here's a better question:
who'd care about any of that when searching for the lowest fare on any particular day?

Quoting Drerx7 (Reply 37):
So, WN, CO, UA, F9 on Houston-Denver runs I think that may be the most competition from any route from Houston?

Chicago may disagree
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
richierich
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 12:50 am

Quoting MasseyBrown (Reply 39):
Yes. March year-over-year numbers RPM up 22.2%, capacity up 22.9%.

If that's accurate, then that is hardly "small" growth as I had indicated in a previous post!
None shall pass!!!!
 
jetdeltamsy
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 1:29 am

Quoting N471WN (Thread starter):
SWA was always assumed to have the lowest fares in a market---

Absolutely not true. Legacy carriers frequently undercut Southwest. I wil grant you that legacy carriers don't bring prices down to LCC levels until Southwest enters a market,but once it does the legacy carriers vigorously compete and frequently offer lower fares than Southwest.

Quoting N471WN (Thread starter):
SWA has now connected enough of their dots and needs more dots.

Where do you get your expertise? I'd say Southwest has proven its methods by 30 years of profitability. They prudenly add capacity where it earns money...not for the sake of "connecting more dots".

You don't know what you're talking about.
Tired of airline bankruptcies....EA/PA/TW and finally DL.
 
ScottB
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 2:01 am

Quoting N471WN (Thread starter):
WN had by any measurement a lousy March both in Load Factor and RPM.....I am a 35 year SWA flyer and huge fan (not an employee) but I must say to look at those numbers in comparison to Air Tran and Jet Blue and even Continental, ought to be to them alarming. What has happpened?

Well, first of all, I'm not entirely sure I agree that their March load factor was lousy. Yes, it was down 2.2 points year-over-year, but March 2006 was an all-time record for WN in March. Both AirTran and jetBlue posted load factor declines in March as well; 1.0 points for B6 and 0.4 points for FL. Continental had a phenomenal March, with records posted in almost all areas. WN's March loads were in-line with March 2004 & March 2005, which saw loads of 73.6% and 73.7% respectively. I'd be more inclined to categorize last March as outstanding and this March as normal for WN.

Quoting N471WN (Thread starter):
SWA was always assumed to have the lowest fares in a market---in facts folks like me who take 100 flights a year never even looked at other airlines unless SWA did not fly there. Then one day I booked 2 months in advance a R/T from OAK to MSY and the ticket came to $480. I then looked on Orbitz and got the same one-stop service for less than $300.

I don't assume that WN always has the lowest fares in a market -- they often do not. More to the point, WN can often be considerably more expensive in connecting markets; I believe this is because they try to deemphasize connecting traffic. In your OAK-MSY example, they'd probably just as soon have the competition fighting over $300 round-trip connecting itineraries. They'd make more money by flying two different passengers on $250 round-trips on PHX-OAK and PHX-MSY.

My assumption is that WN will typically be a reasonably-priced fare, even if it's booked at the last minute. Business travelers must think so, too, since well over 30% of their tickets are sold at full fare. Southwest often has some attractive special fares, but you have to keep your eyes open for them (this is true of most airlines).

Quoting N471WN (Thread starter):
2) I would have to say that this "slow down" by SWA in adding cities has been a mistake. Look at Jet Blue and Air Tran who are adding destinations and growing much more and achieving higher load factors.

But neither JetBlue nor AirTran will be profitable this quarter. Southwest will, aided in part by its fuel hedges.

While it's exciting to see Southwest add new cities, it seems (to me) that the lack of new cities being added is an affirmation that the existing network is healthy and able to sustain significant growth from within. Several of the cities added since 2004, namely PHL, PIT, DEN, and IAD, could certainly support additional new non-stop flying. MSY also needs to be built back up, and the changes in the restrictions on DAL means they have growth opportunities there, too. It is far more cost effective for Southwest to "connect the dots" in the existing network than it is for them to go to the expense of opening up a new city.

Quoting Alphascan (Reply 4):
At DEN, they are for the first time, adding flights and destinations faster than the marketplace is filling them. Hence, terrible load factors and very low yields vs. the competition. Mr. Kelly was quoted within the past month as saying WN "has not yet grown into the new flights added at DEN", but that does not explain load factors in the low 50s to low 60s for all of the inital DEN markets except HOU, a market with no direct competion.

As best as I can tell, WN's revenue load factor for February 2007 at DEN was 64.8% (based on DIA's statistics and assuming 32 daily departures and arrivals with 137-seat 737's). That's only 2 points below their system average for February. What their yields are versus the competition matters less than how their yields compare to their costs. In all fairness, I would be shocked if DEN were profitable for WN right now, but it's an investment in a market that has great potential.

Quoting Iloveboeing (Reply 19):
Maybe WN could move to DFW and build a massive hub out of there to compete with AA. I'm not being anti-Love Field or anything, but there are some advantages that WN could get out of DFW. DFW's sheer size allows plenty of room for expansion, just like DEN, and they could draw on traffic from both Dallas and Fort Worth. DFW did say they would build WN their own terminal and free rent.

That "free rent" offer from DFW came with a big "* Limited time only. Certain terms and conditions may apply. See DFW Airport Board for more details" attached to it. After the rent holiday, they'd be stuck with helping to pay for the SkyLink train (useless to Southwest and its customers) and the massive white elephant Terminal D. Moreover, the "sheer size" of DFW makes for far longer taxi-in/out times than at DAL, which makes the operation less efficient.

Quoting Swatpamike (Reply 34):
There are plenty of 737-700 avalable. And most have winglets, they are just painted the wrong color. Green and white.

I have advocated for the last 2 years that we should buy Air Tran. The 737-700 would be integrated into the WN system to add flights to newer station.

After the bumpy ride due to the Morris merger, I have a feeling that buying another airline is way down on Southwest's list of desirable things to do. Speaking specifically to AirTran, the price that WN would pay for buying AirTran is probably quite a bit higher than what they'd pay for 40 new 737's fresh from the factory. And they'd also end up with around $3.5 billion in long-term lease obligations and another $1.3 billion in long-term debt.
 
Tango-Bravo
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 2:56 am

Quoting ConcordeBoy (Reply 40):
Here's a better question:
who'd care about any of that when searching for the lowest fare on any particular day?

Certainly not airline customers to whom "all that matters is price." However, IIRC, the subject of this topic is the suggestion that the business plan of WN is somehow broke and needs to be fixed. I will venture to guess that WN will take continued consistent profitability over trying to please all of the people all of the time by offering the lowest fares all of the time. Nonetheless, it seems like WN has plenty of takers for their sometimes higher fares.

Perhaps there are more people than the legacies would like to admit who appreciate the WN no-nonsense difference, even if WN's fares are sometimes higher. Some possibilities that come to mind:

"No gouge" walkup fares

No "in your face" caste system -- to WN, everyone is a valued customer

WN earns their customers' loyalty rather making it their policy to buy customer "loyalty" ala the legacies

Employees who actually seem to enjoy their work -- in no small part because they are free from the endless layers of legacy-style convolution and therefore able to focus all of their energy on consistently serving all of their customers with a genuine smile

In contrast to the legacies, because WN does not overpromise, they consistently deliver and frequently overdeliver on the service customers have paid them to provide
 
swatpamike
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 3:16 am

Hello All

Quoting Richierich (Reply 38):
And what is stopping WN entering the markets you listed above on their own?

 scratchchin  The lack of extra planes, I think.

Quoting ScottB (Reply 43):
Speaking specifically to AirTran, the price that WN would pay for buying AirTran is probably quite a bit higher than what they'd pay for 40 new 737's fresh from the factory

You are correct BUT how soon could WN acquire these extra 40 737's???? Time is money also.

Consolidation will happen even in the LCC side of the industry. I just think it is time for us to connect some more dots.

And I don't think that Air Tran would go away completely. They would still fly, as a separate company, with 717's.

One more think that makes me think that something is in the work is the fact that over the last 2 years WN has bought back almost 40 million shares of it own stock. Maybe a little more leverage for a takeover??

Just one rampers opinion.

Cheers

swatpamike
 
ConcordeBoy
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 3:35 am

Quoting Tango-Bravo (Reply 44):
No "in your face" caste system -

Ever heard of anyone avoiding WN due to lack of premium classes and lounges?
...contrast that to the number of people who've vocally patronized them particularly for that reason per se.

Quoting Tango-Bravo (Reply 44):
In contrast to the legacies, because WN does not overpromise, they consistently deliver and frequently overdeliver on the service customers have paid them to provide

A subjective value at best.
Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
 
JAAlbert
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 4:38 am

I agree that SWA is not always the cheapest. I recently flew to Nashville from San Diego and my airfare with AA was much cheaper than that offered by SWA (I did have to stop in DFW, but that gave me the chance to check out Terminal D)

I often fly SWA between San Diego and Tucson and everyone of the flights offered are typically stuffed to the gills.
 
MSYtristar
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 4:41 am

Quoting ScottB (Reply 43):
but it's an investment in a market that has great potential.

That is questionable at best considering UA's and F9's large presence at the airport. If the airport was underserved in some way, or if F9 was half as big as it is from DIA, I would agree that WN could do very well there. But when you have two hub airlines and a possible 3rd in WN down the road, the market will be stretched pretty thin...regardless of the the city's growth.
 
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TVNWZ
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RE: Southwest Needs To Rethink Their Route Strategy

Sat Apr 07, 2007 5:58 am

Quoting Alphascan (Reply 9):
As the legacies emerge from Chapter 11 and/or renegotiate their contracts, their costs will be substantially lower than the old days. WNs wages will be amongst the highest in the industry. All the more pressure for WN as their (very astute) fuel hedges expire over the next 21 months.

They are hedged for several years out at various percentages. They have continued hedging as prices remained volatile, but at a higher price. Those hedging percentages should increase as time goes on since it is a part of their business model and they have the cash to do it.

From WN's First Quarter earning report:

"Our fourth quarter 2006 unit costs (economic) increased 3.0 percent due to higher jet fuel prices. Even with a superb fuel hedging position and $118 million in fourth quarter 2006 cash hedging gains, our jet fuel costs per gallon (economic) increased 28 percent from a year ago to $1.56, as expected. We are benefiting from the recent decline in energy prices and are now 100 percent hedged (economic) for first quarter 2007, capped at an average crude-equivalent price of approximately $50 per barrel (compared to over 75 percent hedged at approximately $36 per barrel for first quarter 2006).

"Based on this hedge position and today's market prices, we are forecasting our first quarter 2007 jet fuel costs per gallon (economic) to be in the $1.65 to $1.70 range. We are nearly 95 percent hedged (economic) for the remainder of 2007 at approximately $50 per barrel; 65 percent in 2008 at approximately $49 per barrel; over 50 percent in 2009 at approximately $51 per barrel; over 25 percent in 2010 at $63 per barrel; approximately 15 percent in 2011 at $64 per barrel, and 15 percent in 2012 at $63 per barrel."

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