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Southwest Low Fares Vs. "Major" US Carriers

Thu Dec 27, 2001 4:36 pm

I've noticed that, especially these days, the major carriers are matching Southwest's dirt cheap $30 one way fares on a number of routes. For example, AA is offering SJC-LAX for $30 alongside WN, NW and AA matches WN's $30 sale for STL-DTW. These are just examples, I am certain there are others.

How can this last? I mean, obviously carriers like NW/AA need the traffic so they take the loss as they don't have the efficiences of WN. But on the other hand, why do people still fly WN as the major carriers offers perks like frequent flier miles, upgrades, lounge access, advance seat selection (a perk depending on who you talk to). Sun Country shed its low cost scheduled service because NW was matching and most people flew NW instead. How is this balance (losing money vs. eliminating low fare compeition) acheived and can this sustain (will the majors stop matching sometime or will WN lose market share)?

It'd be interesting to hear your thoughts.


RE: Southwest Low Fares Vs. "Major" US C

Thu Dec 27, 2001 10:18 pm

Many Southwest passengers are saavy enough to know that they can spend as little as $400-500 to earn a free roundtrip ticket. Why bother with AA from SJC-LAX?

The perks mentioned just "don't fly" with the more cost conscious consumers that enter airports today.

If it's about putting people's butts in airplane seats (which is what Wall Street cares about) than the "majors" must emulate Southwest if they are to survive...not the other way around.
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RE: Southwest Low Fares Vs. "Major" US Carriers

Thu Dec 27, 2001 10:21 pm

This is an oft-discussed topic; the short answer is that, absent a fundamental shift inthe cost structure of the "majors" (you know, the traditional carriers, the top five or six of which, combined, are worth a billion or so less than Southwest by itself), they cannot match WN's fares and survive.

Of course, when the majors "match" WN's fares, they do so on a limited, advanced-purchase and capacity-controlled basis, as opposed to WN's simple and predictable fare structure, which always in cludes a rational walk-up fare.

WN does have a frequent flyer program, and it is simple, easy and generous. Southwest's "lounge" is at the destination (bear with me)- their substantial frequency on most routes assures that you'll spend the time you would have spent at the airline club, waiting for your flight, at your destination with your family or settling in at the hotel of your choice.

That's luxury, Southwest style.
...three miles from BRONS, clear for the ILS one five approach...
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RE: Southwest Low Fares Vs. "Major" US Carriers

Fri Dec 28, 2001 1:23 am

Just a clarification- Southwest is a major airline. According to the U.S. D.O.T., Southwest is now the 6th largest domestic carrier, based on RPM’s.
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RE: Southwest Low Fares Vs. "Major" US Carriers

Fri Dec 28, 2001 1:25 am

It's funny that you bring up the question of "Southwest losing its market share."

It's the other way around. Since the tragedies of 11Sep WN has seen its domestic market share increase dramatically....from 7% to 9% of all RPMS flown in the United States.

It is especially true that on short flights, one would be hard pressed to define Southwest's service as "inferior." On the contrary, as millions of short haul travelers will attest.....on short routes, like Dallas-Houston, Los Angeles-Oakland, Fort Lauderdale-Tampa, Phoenix-Las Vegas, KC-Chicago...Southwest probably sets the standard for onboard service.

Boarding is quick and efficient. The all-coach layout has more legroom than any carrier's, except for American's MRTC. The planes leave promptly. The FAs are up and serving shortly after takeoff. No "fast break" or limited beverage service.....unless you are in nasty weather, you can expect a full beverage service. Dallas-Houston is 50 minutes block, about 37 minutes enroute. How many carriers have you been on where on a leg like that you were offered a 2nd round of drinks?

The other carriers cannot keep up the prices, but the matching of Southwest fares is nothing new. American and Delta have done it, particularly in the Texas markets, for years. It has not prevented Southwest from having market shares in their intra Texas markets in the 65-80 percent range. American, a couple of yrs back, decided to go whole hog with MD80 service, matching fares, and extra AAdvantage miles when they attempted a Dallas Love Field to Austin service. They ran 14 RTs a day, laid them right on top of Southwest's, and even bid an outrageously low fare to win the state government employee contract. All that accomplished was putting less than a 10% dent in Southwest's market share on that particular route.

If other airlines intend to continue to exist...what they had best do is learn to quit denigrating the Southwest concept...quit pretending that somehow they (the other airlines) offer a product of higher quality...and figure out how to turn their companies into clones of Southwest as quick as they can.

RE: Southwest Low Fares Vs. "Major" US Carriers

Fri Dec 28, 2001 1:48 am

TxAgKuwait said: "How many carriers have you been on where on a leg like that you were offered a 2nd round of drinks?"

They have never ever served a second round of drinks on any flight I have been on. Even on HOU-PHX flights.
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RE: Southwest Low Fares Vs. "Major" US Carriers

Fri Dec 28, 2001 3:30 am

I'll agree with others here that with the cutbacks in service by the "full-service" major airlines, they really offer little more, or even less service than Southwest. Case in point: I flew Delta BOS-DFW on 12/21. In-flight service in coach consisted of four small cookies and a cup of soda (or your non-alcoholic beverage of choice). That's it, for a flight blocked at 4 hours 14 minutes. Even on Southwest you'd get more food - as strange as that may seem! What did advance seat assignments get me? A seat on a full plane towards the back of the aircraft - and on one flight with a 2-year-old kicking the back of my seat.

Southwest's Rapid Rewards frequent flyer program is extremely generous - you can earn a free round-trip ticket after just four round-trip itineraries booked through their website. That even includes four round-trips booked on those promotional $30 fares.

Airport lounges are only available to you if you've shelled out the several hundred dollars a year required for a membership. Of course, don't forget that dozens of lounges have been closed post-9/11 as a cost-cutting measure.

And while upgrades to first class are a nice thing, do they really matter much on short-haul flights where you'll likely only be on the plane for fewer than two hours?
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RE: Southwest Low Fares Vs. "Major" US Carriers

Fri Dec 28, 2001 4:33 am

I think Southwest is just as bad as the other airlines... I was recently searching for tickets for an upcoming trip to Salt Lake... here are the fares

United $384.00
American $384.00
Continental $384.00
Northwest $384.00
Delta $425.00
America West $396.00
Frontier $215.50 (the one I will probably end up buying)
Southwest $400.50

thats freaking outrageous, we all know UA AA CO NW DL etc provice more service on a flight than Southwest, so why do southwest tickets cost more??? It really is outrageous i think...

twa902 chicago
life wasn't worth the balance, or the crumpled paper it was written on
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RE: Southwest Low Fares Vs. "Major" US Carriers

Fri Dec 28, 2001 4:59 am

I just looked at advance-purchase fares on Southwest for Chicago-Salt Lake; I was able to find a round-trip fare of $217.50. It all depends on when you're flying and if the heavily discounted fares have sold out yet.

I looked at last-minute round-trip fares on ORD/MDW-SLC; Frontier wants $851.50 while Southwest wants $605.50. Well, you can't book that itinerary on Southwest until Sunday since the flights are all sold out - so someone's finding value flying with them.

You won't get more service on Delta. Anything under 1500 (1750?) miles is cookies and beverages now.

Topic Author
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RE: Southwest Low Fares Vs. "Major" US Carriers

Fri Dec 28, 2001 5:11 am

Thanks for all your comments.

I didn't mean to sound like I was saying Southwest was inferior, sorry if that was what it came off as.

I didn't know what else to use except "major" for the other carriers. I know Southwest is right up there in size compared to the other guys. I guess I should say something like Non-Southwest Carriers.

I forgot about WN's Rapid Rewards program. I guess they are more generous for short hauls. I guess the main "perk" that I thought the other carriers had is pretty much the frequent flier program. More miles on them helps you along to a free overseas trip if you fly that often... or maybe people have credit cards that earn them miles (does Southwest have a partnership like that?). And well, if you fly the other carriers more on short hauls, you could still qualify for elite status on the number of flights taken and get upgrades on long haul.

But thanks for all of your response. From what I've read, it looks like Southwest has countered the FF perks with on-time service and good customer service.
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The Southwest Knockers.....

Fri Dec 28, 2001 5:14 am

Don't people just love to knock Southwest....

They are SO SUCCESSFUL because of several reasons.

The RIGHT company/financial structure.

The RiGHT staff with attitude plus.

The RIGHT fleet (737s only) .

The other Airlines are going to have to radically change there structure and fleets to survive.

The market is changing to a point where loyalty to an airline is gone and price alone is more important.

It happened in supermarkets... no frills cheap is the rage.

Unless the majors change the will probably go under.
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RE: Southwest Low Fares Vs. "Major" US Carriers

Fri Dec 28, 2001 9:15 am

Yes, WN does have a FF credit card arrangement. Also, MCI long distance.
...three miles from BRONS, clear for the ILS one five approach...
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How The Years Have Turned The Tables!

Fri Dec 28, 2001 10:10 am

Those who fail to learn from the past are condemned to repeat it  Laugh out loud

In an attempt to improve low loads factors between SAT & DAL, on Jan 22, 1973 SWA cut it's fare in half, to $13. No restrictions, any seat any flight. On Feb 1st Braniff launched it's counter attack by slashing their fare between DAL & HOU. Full page newspaper ads announced that Braniff pax could fly from Dallas to Houston for only $13 to "get acquainted with the airline".

Braniff had struck what appeared to be a lethal blow. While Dallas-Houston was a small part of Braniff operations, it was fledgling Southwests only moneymaker. Losing the Love-Hobby market to Braniff would mean the end for tiny Southwest. With very low cash reserves, matching Braniffs fares would bankrupt Southwest Airlines.

The rebuttal was to be Southwests most famous ad:

"Nobdoy's going to shoot Southwest out of the air for a lousy $13"

...the headline of a two page spread that ran in the Dallas and Houston papers. It explained how Braniff was trying to put Southwest out of business, then went on to say that SWA would not only match Braniffs fare, it would offer every passenger a choice:

the $13 fare
a regular $26 ticket and a complimentary fifth of Chivas Regal, Crown Royal or Smirnoff Vodka!

The business travellers loved it. They could write the $26 off, and keep the free liquor. For that two month period it's said that Southwest became the largest distributor of Chivas Regal, Crown Royal & Smirnoff in Texas!

Breaking the story as a David & Goliath duel in which the little guy didn't stand a chance, they media played a critical role in helping SWA capture the hearts (and pocketbooks) of travelers all over Texas. To Braniffs dismay, 76% of SWAs pax paid the $26 and took the liquor.

The Braniff plan had backfired, and Southwest had, once again, outsmarted a more powerful competitor. Braniff terminated DAL-HOU service in 1975.

from the great little book "Nuts: Southwest Airlines Crazy Recipe for Business & Personal Success" by K & J Friedberg.

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RE: Southwest Low Fares Vs. "Major" US Carriers

Fri Dec 28, 2001 12:33 pm

I think WN's business model is the very reason why it will be successful in the long run.

Think about it: they have parlayed their low-cost image into a major positive for the airline. They don't have inflight meals, but that substantially cuts costs of operation for WN. They don't have premium class seating, just more generous all-Economy class seating. They have carefully worked out extremely efficient use of everything at the airline, including the use of a single airplane type (Boeing 737 variants), efficient turnaround at the gate, etc.

Look at JetBlue here in the USA and Ryanair and EasyJet in Europe: they have all borrowed heavily from the Southwest model to be major successes.

RE: The Southwest Knockers.....

Fri Dec 28, 2001 12:38 pm

I know it sounds weird but when I look at their airfares compared to NW, CO, and HP they always have the highest ones, and they have the dirtiest interior aircraft I have ever seen.

RE: Southwest Low Fares Vs. "Major" US Carriers

Fri Dec 28, 2001 8:21 pm

That's because they lowered the fare for that route and then sold out of the lower fare classes when they had a lower fare than the majors. Also, many times the majors lower their fares to WN levels when Southwest sets up shop.
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RE: Southwest Low Fares Vs. "Major" US Carriers

Sat Dec 29, 2001 5:32 am


You might care to explain why the average fare from Detroit to Chicago (ORD/MDW) is $88 (233 miles) while the average fare from Detroit to Milwaukee is $263 (238 miles). Or why Detroit-Washington is $262 (401 miles) while Detroit-St. Louis is $84 (440 miles).

That can't have ANYTHING to do with competition from Southwest, could it???
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RE: Southwest Low Fares Vs. "Major" US Carriers

Sat Dec 29, 2001 5:43 am

My choice goes to Jet Blue. They fly all the routs my father needs, so if he flies to NYC I can go with him due to JB's inexpensive ticket prices from Syracuse.
And those PVT's are amazing.
Sorry for bringing in another airline.

-Peace In-
Brooklyn, Queens, Manhattan, Staten, Uptown, what now? Lets make it happen.
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RE: Southwest Low Fares Vs. "Major" US Carriers

Sat Dec 29, 2001 5:50 am

But no one really knows if JetBlue is making money. They do not divulge financial results.

A comparison is not even possible. One has a fleet of a dozen planes...the other several hundred.

Once JetBlue has had their IPO and reached that kind of synergy, then I think you can say it's a success. Right now they are just a boutique airline like Frontier or Midwest Express (meaning a small fleet and a limited number of cities served).

RE: Southwest Low Fares Vs. "Major" US Carriers

Sat Dec 29, 2001 6:21 am

Correction: B6 has 20 planes, not a dozen. And they already have reported a profit for the first 6 months of 2001 that had a margin of about 8%. Operating profit or net, that's still better than what many of the majors were reporting.
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RE: Southwest Low Fares Vs. "Major" US Carriers

Sat Dec 29, 2001 6:26 am

Well, I just took advantage of WN's $30 OAK-SAN fares ($72 r/t after all taxes and fees) because I am going to be in the Bay Area and that is damn cheap! I'm leaving Oakland at 6:30AM on February 22nd and returning same day at 9:20PM! Same day on a different airline such as AA is $164...and I have to connect in LAX, same thing with UA, $170 and connect in LAX! And those prices don't include the taxes and airport fees!

I think people choose WN because they are a lot lighter on the wallet and the frequency of flights!

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RE: Southwest Low Fares Vs. "Major" US Carriers

Sat Dec 29, 2001 6:39 am

JetBlue lost 14 million in 2000, courtesy of the FAA. They *DO* report data to them, just to let you know.. they just don't release :: everything ::

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