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gaystudpilot
Posts: 272
Joined: Sat Dec 08, 2007 10:55 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 2:52 am

wnflyguy wrote:
gaystudpilot wrote:
wnflyguy wrote:
As for WN buying anyone? This is not the right time because this pandemic fallout going to give WN a lot of organic growth opportunities for a easy 2 to 3 yrs.

Flyguy


Agree re WN not acquiring another airline.

However, how is WN going to go after “a lot of growth opportunities”? Where are these growth opportunities? As traffic comes back, what is WN going to give up to serve all these opportunities? Where are the aircraft coming from? What in the pre-COVID-19 network gets left behind so that these new opportunities can be served?

I do not buy into this “We were flying when no one else was, so now come fly with us” strategy that people on here are touting. WN will be opportunistic in frequencies and new routes just like any good competitive company should be. If they see a competitor underserving a market they will go after it as long as it doesn’t displace another one. And they will have an eye to the future. They are not going to go into a market selling $39 fares if they know the market in two years will not be able to achieve higher fare price points. WN is no longer the company it was. Low fares are a teaser; it wants to offer just as many seats at those low price points as it has to to 1) support the brand image and 2) fill any seats it statistically believes would otherwise go out empty. Ultimately, WN wants to attract higher fare Y customers just like their competitors and since they give up revenue on change and baggage fees they have even more incentive to tightly manage that revenue stream (as well as the cost side).

WN’s focus on maintaining a simple business model and relentless cost efficiency will position itself to take advantage of unique opportunities. But the notion that WN is going to take over and put everyone else out of business is just nonsense.


I think WN with the covid 19 recovery will follow something along the lines of hurricane Katrina aftermath. Instead of building up MSY. They grew it gradually with used extra aircraft to expand other market opportunities.

Flyguy


Much easier to redeploy aircraft serving one market within a network to replace lost revenue by building up existing markets with frequency or entering a new market or two than attempting that with every market within your network. The scale and complexity and risks are completely different.

I’m not suggesting WN will not try to capitalize on some opportunities. That’s just smart. But it will not be done on a large scale as some in here suggest.
 
gaystudpilot
Posts: 272
Joined: Sat Dec 08, 2007 10:55 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 2:56 am

:arrow: The real world of network planning and revenue management are a lot different from laying on the floor and building airports with Lego’s.
 
32andBelow
Posts: 5033
Joined: Mon Sep 03, 2012 2:54 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 2:56 am

gaystudpilot wrote:
lightsaber wrote:
gaystudpilot wrote:


With what? What gives in return?

You ask with what. For WN, they'll have the MAX to grow with. Southwest is deploying more of their fleet to seed the market.

What gives is the competitions balance sheet. Now is not the time to be a high cost provider as leisure comes back first.

Lightsaber


Point missed. What gives within WN network?

Any *new* opportunities to take advantage of current market conditions compete with returning other portions of the network as demand increases. Since the MAX is still grounded, at some point the analysis is threeway among *new* opportunities, returning routes/frequencies and, don’t forget, plans WN already had for growth.

So, if WN wants to take advantage of *new* opportunities, eventually something will have to give within its network. Unless you think those grounded MAX’s are going to suddenly return to the skies.

Doesn’t it make sense that they can scale down their core routes, start new routes, and then bringing everything up together with the Max’s over the next 2-5 years as it all grows?
 
gaystudpilot
Posts: 272
Joined: Sat Dec 08, 2007 10:55 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 3:04 am

32andBelow wrote:
gaystudpilot wrote:
lightsaber wrote:
You ask with what. For WN, they'll have the MAX to grow with. Southwest is deploying more of their fleet to seed the market.

What gives is the competitions balance sheet. Now is not the time to be a high cost provider as leisure comes back first.

Lightsaber


Point missed. What gives within WN network?

Any *new* opportunities to take advantage of current market conditions compete with returning other portions of the network as demand increases. Since the MAX is still grounded, at some point the analysis is threeway among *new* opportunities, returning routes/frequencies and, don’t forget, plans WN already had for growth.

So, if WN wants to take advantage of *new* opportunities, eventually something will have to give within its network. Unless you think those grounded MAX’s are going to suddenly return to the skies.

Doesn’t it make sense that they can scale down their core routes, start new routes, and then bringing everything up together with the Max’s over the next 2-5 years as it all grows?


Depends on:
1. How many new routes
2. Timing of MAX returning to service

I agree that WN will and should take advantage of market opportunities. I do not agree that it will be to the degree some on here believe.

I do not believe WN is going to gain significant US market share.

I do not believe WN is going to acquire another airline.

I do not believe if AA shuts down that WN will take over DFW.

I do not believe WN will take over the Hawaiian market.

I do believe that WN is a respectable, major player in the US market.
 
32andBelow
Posts: 5033
Joined: Mon Sep 03, 2012 2:54 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 3:14 am

gaystudpilot wrote:
32andBelow wrote:
gaystudpilot wrote:

Point missed. What gives within WN network?

Any *new* opportunities to take advantage of current market conditions compete with returning other portions of the network as demand increases. Since the MAX is still grounded, at some point the analysis is threeway among *new* opportunities, returning routes/frequencies and, don’t forget, plans WN already had for growth.

So, if WN wants to take advantage of *new* opportunities, eventually something will have to give within its network. Unless you think those grounded MAX’s are going to suddenly return to the skies.

Doesn’t it make sense that they can scale down their core routes, start new routes, and then bringing everything up together with the Max’s over the next 2-5 years as it all grows?


Depends on:
1. How many new routes
2. Timing of MAX returning to service

I agree that WN will and should take advantage of market opportunities. I do not agree that it will be to the degree some on here believe.

I do not believe WN is going to gain significant US market share.

I do not believe WN is going to acquire another airline.

I do not believe if AA shuts down that WN will take over DFW.

I do not believe WN will take over the Hawaiian market.

I do believe that WN is a respectable, major player in the US market.

WN should try to swipe Hawaii when it reopens and the hotels start offering deals.
 
n2dru
Posts: 193
Joined: Thu Nov 09, 2017 7:02 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 4:16 am

Does anyone think Southwest will put the squeeze on a weakened Delta in ATL?
 
ShinyAndChrome
Posts: 280
Joined: Fri Aug 28, 2015 1:53 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 5:04 am

n2dru wrote:
Does anyone think Southwest will put the squeeze on a weakened Delta in ATL?


If the last five years have been any indication, ATL isn't a big priority for them. It would make more sense for them to focus on areas they've already been focusing on: DEN, DAL, Southern California, Hawaii whenever the lockdown eases up, etc.

Just some gambler's intuition. In spite of their reputation among some people, WN is historically pretty deliberate in where they choose to concentrate on.
 
LCDFlight
Posts: 674
Joined: Wed Jan 01, 2020 9:22 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 5:37 am

WN isn't really an LCC because their *costs* are not really *low*.

However, thanks to its different business model and operational style, here WN has more liquidity. Result? Possibly, WN can distribute its fleet over a bigger network... fully replacing, say, American Airlines' domestic network. Just for example. That way, instead of American and WN each shrinking by 50%, American shrinks its domestic fleet by 100% and WN shrinks by 0%. I think that is one of the scenarios they are thinking about (whether or not that is realistic). It might be quite realistic.
 
ShinyAndChrome
Posts: 280
Joined: Fri Aug 28, 2015 1:53 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 6:08 am

LCDFlight wrote:
WN isn't really an LCC because their *costs* are not really *low*.

However, thanks to its different business model and operational style, here WN has more liquidity. Result? Possibly, WN can distribute its fleet over a bigger network... fully replacing, say, American Airlines' domestic network. Just for example. That way, instead of American and WN each shrinking by 50%, American shrinks its domestic fleet by 100% and WN shrinks by 0%. I think that is one of the scenarios they are thinking about (whether or not that is realistic). It might be quite realistic.


Wouldn't the fact that WN has a different business model and operational style preclude them from "fully replacing" AA's network? They'd have to switch to a straght hub-and-spoke model, schedule their hubs like AA, buy RJs to serve markets that are too small for WN service, etc. to do what you're saying, unless "fully replacing" entails a lot of places just losing service and WN bulking up on their trunk routes I guess.
 
jplatts
Posts: 3796
Joined: Sat Mar 18, 2017 6:42 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 12:02 pm

hiflyeras wrote:
frmrCapCadet wrote:
WN also is willing to back out of markets. They have a presence in Seattle, but less than before. They seem to have decided to let Alaska and Delta fight it out, and remain a profitable(?) third place presence.


WN gave up on growth out of SEA long before the AS-DL battle. They tried to expand to regional flying and AS chased them out. Pre-covid they were tied in third place with AA and UA and had a 6% market share. They might increase that share but to where? No one is flying to SNA, SJC or many other of their n/s SEA markets. And as to chasing AS out of Hawaii, they won't succeed except likely out of OAK and SMF.


WN adding SEA-LAX nonstop service might be a possibility with (a) VX no longer around, (b) NK no longer serving LAX nonstop from SEA, (c) LAX being one of the largest WN stations that WN doesn't serve nonstop from SEA, and (d) SEA-LAX being one of the top routes in the contiguous US that isn't currently served nonstop by WN.

I also previously mentioned WN re-adding SEA-AUS nonstop service as a possibility as WN had been able to fill SEA-AUS nonstop flights prior to discontinuing SEA-AUS nonstop service in January 2018.

There are a few other adds that could be made by WN at SEA, including extending SEA-BWI and SEA-HOU nonstop service to year-round and the return of daily nonstop service to DAL from SEA on a year-round basis.
 
jplatts
Posts: 3796
Joined: Sat Mar 18, 2017 6:42 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 12:25 pm

ShinyAndChrome wrote:
n2dru wrote:
Does anyone think Southwest will put the squeeze on a weakened Delta in ATL?


If the last five years have been any indication, ATL isn't a big priority for them. It would make more sense for them to focus on areas they've already been focusing on: DEN, DAL, Southern California, Hawaii whenever the lockdown eases up, etc.


WN could add nonstop service to ATL from ABQ, PDX, SMF, and SJC with ABQ, PDX, SMF, and SJC being four of the largest WN stations that WN doesn't currently serve nonstop from ATL. WN would also be able to offer 1-stop connecting service to a few additional destinations such as GSP, RIC, and PBI from ABQ, PDX, SMF, and SJC if WN adds ABQ-ATL, PDX-ATL, SMF-ATL, and SJC-ATL nonstop service.
 
777Mech
Posts: 1018
Joined: Sun Sep 11, 2016 10:54 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 2:36 pm

n2dru wrote:
Does anyone think Southwest will put the squeeze on a weakened Delta in ATL?


Delta is the second best positioned airline, I wouldn't call them weakened. They'll retrench into ATL if it came down to it.

Don't forget SWA actually gave up gates in ATL and shrunk the operation. They have bigger fish to fry.
 
tphuang
Posts: 5462
Joined: Tue Mar 14, 2017 2:04 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 2:46 pm

777Mech wrote:
n2dru wrote:
Does anyone think Southwest will put the squeeze on a weakened Delta in ATL?


Delta is the second best positioned airline, I wouldn't call them weakened. They'll retrench into ATL if it came down to it.

Don't forget SWA actually gave up gates in ATL and shrunk the operation. They have bigger fish to fry.

Delta is not close to being the second best positioned airline. That’s why they have told their pilots they will be operating less than 75% of pre covid schedule by end of 2021.
 
DfwRevolution
Posts: 9306
Joined: Sat Jan 09, 2010 7:31 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 2:59 pm

kiowa wrote:
williaminsd wrote:
And why wouldn't they? The same capitalism and competition that affords us cheap fares and great frequencies affords the ability for the well-positioned to crush weaker counterparts. It also keeps these competitors sharp and responsive to the flying public to avoid extinction. These executives run Southwest Airlines, not the "Weak Airline Charity Foundation." They are doing exactly what I would expect. It's up to the other airlines to execute the appropriate response.


Didn't Southwest suck up the same taxpayer dollars as the other airlines with the latest government bailout? That is not capitalism or competition. Those words don't even belong in the US airline lexicon for many years to come or until the government gets paid back.


CARES Act is better categorized as disaster relief than a bailout. And I say that as the resident cool-blooded, small government capitalist.
I have a three post per topic limit. You're welcome to have the last word.
 
phlswaflyer
Posts: 91
Joined: Sat Oct 19, 2013 9:02 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 3:19 pm

flybry wrote:
Does Southwest have a death wish?


??..Just the opposite actually - and they will succeed BIG BIG time. They will rise once again and be bigger and stronger AND the greedy and vicious BIG 3 can't do a thing,.Parker is in trouble.
 
ShinyAndChrome
Posts: 280
Joined: Fri Aug 28, 2015 1:53 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 3:50 pm

jplatts wrote:
ShinyAndChrome wrote:
n2dru wrote:
Does anyone think Southwest will put the squeeze on a weakened Delta in ATL?


If the last five years have been any indication, ATL isn't a big priority for them. It would make more sense for them to focus on areas they've already been focusing on: DEN, DAL, Southern California, Hawaii whenever the lockdown eases up, etc.


WN could add nonstop service to ATL from ABQ, PDX, SMF, and SJC with ABQ, PDX, SMF, and SJC being four of the largest WN stations that WN doesn't currently serve nonstop from ATL. WN would also be able to offer 1-stop connecting service to a few additional destinations such as GSP, RIC, and PBI from ABQ, PDX, SMF, and SJC if WN adds ABQ-ATL, PDX-ATL, SMF-ATL, and SJC-ATL nonstop service.


They could add service between anywhere and anywhere. But I'd bet they have other priorities than ATL, as I've stated before.
 
LCDFlight
Posts: 674
Joined: Wed Jan 01, 2020 9:22 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 5:58 pm

ShinyAndChrome wrote:
LCDFlight wrote:
WN isn't really an LCC because their *costs* are not really *low*.

However, thanks to its different business model and operational style, here WN has more liquidity. Result? Possibly, WN can distribute its fleet over a bigger network... fully replacing, say, American Airlines' domestic network. Just for example. That way, instead of American and WN each shrinking by 50%, American shrinks its domestic fleet by 100% and WN shrinks by 0%. I think that is one of the scenarios they are thinking about (whether or not that is realistic). It might be quite realistic.


Wouldn't the fact that WN has a different business model and operational style preclude them from "fully replacing" AA's network? They'd have to switch to a straght hub-and-spoke model, schedule their hubs like AA, buy RJs to serve markets that are too small for WN service, etc. to do what you're saying, unless "fully replacing" entails a lot of places just losing service and WN bulking up on their trunk routes I guess.


Very good post. You know your stuff. You are right that WN cannot replace AA's diverse fleeting & large / medium / small market coverage.

But, there is a lot of AA's network that WN can replace, perhaps by doing some hubbing. In a free market (which this is clearly not), the company with greater liquidity would survive longer. Part of the overall capacity needs to come down in this historic downturn - the part with least liquidity being the AA network.

When the AA network would go down (in a free market), this would replenish demand for the other carriers, especially WN, who are best capitalized to seek market opportunities in a crisis. Can WN fully replace AA, no, but in _today's market_ WN's fleet is probably big enough to cover a lot of it.
 
airfrnt
Posts: 2174
Joined: Fri Jul 02, 2004 2:05 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 6:05 pm

I think it's more likely that WN goes after UA in DEN or AA in Texas, then DL in ATL. WN had already been moving towards DEN being a hub in the classic sense of the word for them, and they (as well as UA) just signed new long term leases with the airport. They may figure that while they can't replace AA with multiple different frequencies to small cities, they can bootstrap the network by shoving as much capacity as they can through DEN, which is a great east-west hub, and a reasonable north south hub.
 
Jerseyguy
Posts: 2183
Joined: Sun Oct 30, 2005 12:05 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 6:35 pm

tphuang wrote:
I think long term, WN leaving EWR will actually be good for competition at EWR. WN was never really competitive on most of those routes out of EWR. WN leaving + COVID caused reductions will allow B6 and ULCCs to really expand at EWR. B6 had been slot/gate constrained at EWR for a long time and that's not an issue anymore. On many routes, B6 gets just as high yield at EWR as JFK and higher than at LGA. I think you will see over time, B6 will provide real competition to UA as it adds more routes out of EWR over the next few years. And on a lot of remaining routes, NK/F9 will provide sustainable long fare competition that was simply unsustainable for WN.

WN will get more slots at LGA and not return to EWR.


Where do you think B6 will expand to...more flights to florida? Are they going to try to go at long flight like SEA, LAS, LAX? I would love to see competition at Newark, once they get rid of Terminal A even betterr
 
tphuang
Posts: 5462
Joined: Tue Mar 14, 2017 2:04 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 7:26 pm

Jerseyguy wrote:
tphuang wrote:
I think long term, WN leaving EWR will actually be good for competition at EWR. WN was never really competitive on most of those routes out of EWR. WN leaving + COVID caused reductions will allow B6 and ULCCs to really expand at EWR. B6 had been slot/gate constrained at EWR for a long time and that's not an issue anymore. On many routes, B6 gets just as high yield at EWR as JFK and higher than at LGA. I think you will see over time, B6 will provide real competition to UA as it adds more routes out of EWR over the next few years. And on a lot of remaining routes, NK/F9 will provide sustainable long fare competition that was simply unsustainable for WN.

WN will get more slots at LGA and not return to EWR.


Where do you think B6 will expand to...more flights to florida? Are they going to try to go at long flight like SEA, LAS, LAX? I would love to see competition at Newark, once they get rid of Terminal A even betterr

I think more island stuff is likely + leisure stuff like MSY/LAS/ACK and to LAX if they can get enough mint A321s.
 
Jo8338
Posts: 166
Joined: Fri Dec 16, 2016 4:27 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 7:26 pm

The only think WN needs from AA is some 738’s on the cheap. I think that will happen when AA cancels leases in bankruptcy.
 
EWRandMDW
Posts: 446
Joined: Thu Jul 20, 2006 5:28 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 8:31 pm

I think WN made a huge mistake in pulling out of EWR. I flew MDW-EWR-MDW a number of times and the flights were always 3/4 or more full. That suggests to me that many other passengers decided LGA was not the right choice for them. Surely WN's management must realize that NJ is not NYC and doesn't necessarily want to be. That would be like calling Texas South Oklahoma. To me it'll be stupid to fly into LGA and then have to work my way back to NJ, often passing EWR, to get where I'm going.
 
williaminsd
Posts: 341
Joined: Thu Mar 22, 2018 3:52 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 9:02 pm

DfwRevolution wrote:
kiowa wrote:
williaminsd wrote:
And why wouldn't they? The same capitalism and competition that affords us cheap fares and great frequencies affords the ability for the well-positioned to crush weaker counterparts. It also keeps these competitors sharp and responsive to the flying public to avoid extinction. These executives run Southwest Airlines, not the "Weak Airline Charity Foundation." They are doing exactly what I would expect. It's up to the other airlines to execute the appropriate response.


Didn't Southwest suck up the same taxpayer dollars as the other airlines with the latest government bailout? That is not capitalism or competition. Those words don't even belong in the US airline lexicon for many years to come or until the government gets paid back.


CARES Act is better categorized as disaster relief than a bailout. And I say that as the resident cool-blooded, small government capitalist.


A valid point...
 
NLINK
Posts: 343
Joined: Sat Nov 15, 2003 3:20 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 9:24 pm

What helps Southwest a lot is minimal international exposure and not hundreds of tiny jets for those tiny markets. They have the mentality that basically on mid sized and up cities are all they need to serve and people will drive to take them which works.
 
User avatar
SEPilot
Posts: 5649
Joined: Sat Dec 30, 2006 10:21 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 10:57 pm

The airline business is brutally competitive, and WN has gotten to the place they are by being better brutal competitors than the rest. So what does that entail? Strong finances (low debt), efficient use of personnel and equipment, and aggressive pursuit of any advantage that presents themselves, as well as doing their utmost to please their customers. Why should they not do it now? I have not flown domestically recently (all my flights in the past 6+ years has been to the Philippines) but prior to that I had a stepdaughter in Florida (she has now moved here, and in fact is renting from me) and so my late wife and I would fly to Florida once a year. We found WN to be by far the most pleasant experience and did not even look at the others after our first flight with them. If I do need to fly domestically again they will be my first choice. Largely because of their low debt position they are better prepared than any of the other carriers to ride out and take advantage of the present crisis. Ironically the MAX situation is working very much to their advantage, as all of their new planes are MAXs, and so they have not taken delivery of any new ones in over a year, and hence do not have payments on them to worry about. That is certainly helping their financial position, as any planes they park are going to be fully paid for, and likely overdue for retirement. Other carriers, who have more varied fleets, are facing much more painful choices, especially if they have a lot of brand new widebodies that they now cannot fill but still have to pay for. I fully expect WN to take every advantage of this situation that they can.
The problem with making things foolproof is that fools are so doggone ingenious...Dan Keebler
 
wnflyguy
Posts: 2040
Joined: Thu Feb 10, 2011 7:58 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 2:43 am

[twoid][/twoid]
EWRandMDW wrote:
I think WN made a huge mistake in pulling out of EWR. I flew MDW-EWR-MDW a number of times and the flights were always 3/4 or more full. That suggests to me that many other passengers decided LGA was not the right choice for them. Surely WN's management must realize that NJ is not NYC and doesn't necessarily want to be. That would be like calling Texas South Oklahoma. To me it'll be stupid to fly into LGA and then have to work my way back to NJ, often passing EWR, to get where I'm going.


WN had a MAX problem.
Lack of aircraft and aircraft time to cover the equivalent of 34 aircraft. To fix that problem it saw an opportunity to rebook it's customers via LGA by eliminating EWR.
WN will be back at EWR in my the future.

Flyguy
My Wings are clipped just another Retired Airline person. The Ultimate Armchair out of the loop airline industry geek. Aloha Mr Hand!
 
HVN2HEL2LAX
Posts: 44
Joined: Tue Dec 27, 2016 9:26 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 3:18 am

SEPilot wrote:
The airline business is brutally competitive, and WN has gotten to the place they are by being better brutal competitors than the rest. So what does that entail? Strong finances (low debt), efficient use of personnel and equipment, and aggressive pursuit of any advantage that presents themselves, as well as doing their utmost to please their customers.


Don't forget...they also get really friendly w/ FAA inspectors to "look the other way", "forget" ADs, hire old (drunk) FAA Administrator to help schmooze their way around/through FAA red tape and call in favors, and amazing PR folks who help everyone forget about their accidents.
 
alasizon
Posts: 2629
Joined: Sat Apr 28, 2007 8:57 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 3:35 am

HVN2HEL2LAX wrote:
SEPilot wrote:
The airline business is brutally competitive, and WN has gotten to the place they are by being better brutal competitors than the rest. So what does that entail? Strong finances (low debt), efficient use of personnel and equipment, and aggressive pursuit of any advantage that presents themselves, as well as doing their utmost to please their customers.


Don't forget...they also get really friendly w/ FAA inspectors to "look the other way", "forget" ADs, hire old (drunk) FAA Administrator to help schmooze their way around/through FAA red tape and call in favors, and amazing PR folks who help everyone forget about their accidents.


Pretty sure WN has burned through most of their goodwill with the FAA compared to the US3.

NLINK wrote:
What helps Southwest a lot is minimal international exposure and not hundreds of tiny jets for those tiny markets. They have the mentality that basically on mid sized and up cities are all they need to serve and people will drive to take them which works.

The lack of RJs also hurts them when it comes to network connectivity. Not saying either model is better than the other but RJs do enable a lot of connectivity at great yields. At some point, Southwest is stuck competing on fares and the more medium and large markets that the rest of the US airlines cause fares to plummet in, the worse off WN is when it comes to pricing power.

WN and AA are taking the risk of being the ones able to provide extra connectivity and options for passengers; if it works for them they will certainly end up with the spoils.
Airport (noun) - A construction site which airplanes tend to frequent
 
pmanni1
Posts: 252
Joined: Mon Oct 15, 2018 10:17 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 9:57 am

EWRandMDW wrote:
I think WN made a huge mistake in pulling out of EWR. I flew MDW-EWR-MDW a number of times and the flights were always 3/4 or more full. That suggests to me that many other passengers decided LGA was not the right choice for them. Surely WN's management must realize that NJ is not NYC and doesn't necessarily want to be. That would be like calling Texas South Oklahoma. To me it'll be stupid to fly into LGA and then have to work my way back to NJ, often passing EWR, to get where I'm going.

WN only had 15 flights per day at EWR out of 4000 daily system wide. EWR was a tiny station and they had no more slots available to allow for any type of growth.
 
EWRandMDW
Posts: 446
Joined: Thu Jul 20, 2006 5:28 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 1:56 pm

pmanni1 wrote:
WN only had 15 flights per day at EWR out of 4000 daily system wide. EWR was a tiny station and they had no more slots available to allow for any type of growth.


Well, they have an opportunity to return possibly in a big way. Not all pre-Covid services on other carriers will make a comeback anytime soon if ever, so the door is open to WN and anyone else who cares to step through.
 
SWADawg
Posts: 600
Joined: Tue Dec 03, 2013 6:43 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 2:09 pm

WN will return to EWR in the not too distant future. Besides the MAX being grounded and being short nearly 70 Airplanes between those grounded and deliveries that weren’t able to be taken. EWR Terminal A was a disaster at the time the decision to leave was made. The bathrooms had already been shutdown because of the new Terminal construction and there were literally porta potties inside the Concourses for passengers to use. It was truly a miserable experience. I’m sure once the new Terminal is finished, WN will procure some gates in the new facility.
My posts are my opinion only and do not reflect the views of Southwest Airlines
 
tphuang
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 2:30 pm

The problem with WN at EWR is that its performances were just so horrible. I'm sure if it wants to make a go at it, it could. But there are just way more fish to fry for WN than at EWR. An obvious target for it would be PHL as AA will be significantly weaker coming out of this.
 
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IrishAyes
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 2:32 pm

So over the weekend I was able to get more context about the statement from the VP of flight ops and a lot of my initial suspicions were confirmed. I worked at Southwest for several years, and left around two years ago this time. The VP had apparently been hired in between then and now. Whatever. The point I’m trying to make here is, we are all missing the point on this thread. My friend, who I have known since 1995, and I were catching up yesterday. They worked at HR at Southwest up until very recently before they left to work for new firm in Dallas. What they said to me was, quite alarmingly, the situation and messaging internally is actually getting to be pretty grim in the fall. And a ton of missteps are taking place at HQ in the midst of this crisis as we speak.

Quite frankly, it is really careless of this VP to make a statement like he did, because what it definitely doesn’t speak of is good confidence in their business plan. This is not the time to be talking about the Southwest “effect” (didn’t that effectively die in years past? Since when is anyone ever said that they get a much cheaper fare on Southwest these days compared to flying one of the big three? ) and how they’re gonna be able to take advantage of competitive weaknesses from OALs. They posted a loss for Q1, and that was really only with one month of decline in performance. That was MARCH. And it wasn’t even really the entire month. Come July, when the Q2 numbers are going to come out for all of the US airlines and globally alike, it’s going to be utter carnage.

If anyone thinks that Southwest is On-track to retain its employee headcount and remain the size that it is come Oct, particularly with all of the excess weight that they have from nearing 50 years of operations given seniority, union contracts, a lot of people who have been working there for ever and a half who play tug of war over limited resources and simply believe that the gravy train that they’ve been following for all this time is going to stay intact, are likely seeing this whole thing through tinted glasses.

WN is not an agile company. No discussions of network opportunities that they can potentially “exploit “in the event/aftermath of one of their competitors suffering, will spare them from succumbing to similar fates. This statement from Leadership was really reckless, and frankly, it’s gonna bite him in the you know what.

Hang in there, guys. Be safe
 
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 2:49 pm

Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.
 
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PA727
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 3:30 pm

There’s an old cliche, “Luck is where preparation and opportunity meet.” I definitely agree with IrishAyes, any organization as “inbred” and long-tenured as WN is going to have huge problems with institutionalized thinking. But the way the deck is currently stacked plays entirely to WN’s strengths.

For starters, through no effort of its own, WN’s Max problem became a Max opportunity. How? The Max groundling was a chokepoint on WN’s growth and strategic execution. With the COVID downturn, this issue became not just moot, but a bonus. WN has already negotiated its compensation with Boeing (not sure to what extent though, I’m sure there is future negotiating still to be done.) They can put that in the bank for future discounts. Meanwhile, their schedule never had to account for grounding a fleet that was already grounded.

Now, as passenger numbers begin to come up, they have an already grounded fleet to pad the schedule while recertification of the Max continues. Should Max RTS dovetail somewhat with future passenger growth, it would certainly help fuel WN expansion.

All of that is independent of WN’s strategy. Where WN can really take advantage of the opportunity is through what it does best. After Oct. 1, there will most likely be plenty of Max delivery slots available whenever WN would like to take delivery, given the previous cancelations and penalties paid to other airlines. Add to that WN’s position as the assumed-to-be-best financially-positioned airline coming out of the COVID crisis, and you have the recipe for low-cost, fuel-efficient fleet growth on your own timeline. Now if that isn’t part of the formula WN used to become what it is today, it’s certainly a major part of it.

In summary, my point is not that this is what will happen or that WN is assured a path to glory and world ((US) domination. My point is, there is most likely a path for WN to come out of this and continue to strengthen itself in a way no other airline in the U.S. can. Even if organizationally WN is old and monolithic, how many key moments in an airline’s history relied solely on strategic brilliance? Very few. In the vast majority, it has been a combination of leadership and opportunity. Given WN’s history, I know where I’d put my money.
 
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Midwestindy
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 3:33 pm

IrishAyes wrote:
So over the weekend I was able to get more context about the statement from the VP of flight ops and a lot of my initial suspicions were confirmed. I worked at Southwest for several years, and left around two years ago this time. The VP had apparently been hired in between then and now. Whatever. The point I’m trying to make here is, we are all missing the point on this thread. My friend, who I have known since 1995, and I were catching up yesterday. They worked at HR at Southwest up until very recently before they left to work for new firm in Dallas. What they said to me was, quite alarmingly, the situation and messaging internally is actually getting to be pretty grim in the fall. And a ton of missteps are taking place at HQ in the midst of this crisis as we speak.

Quite frankly, it is really careless of this VP to make a statement like he did, because what it definitely doesn’t speak of is good confidence in their business plan. This is not the time to be talking about the Southwest “effect” (didn’t that effectively die in years past? Since when is anyone ever said that they get a much cheaper fare on Southwest these days compared to flying one of the big three? ) and how they’re gonna be able to take advantage of competitive weaknesses from OALs. They posted a loss for Q1, and that was really only with one month of decline in performance. That was MARCH. And it wasn’t even really the entire month. Come July, when the Q2 numbers are going to come out for all of the US airlines and globally alike, it’s going to be utter carnage.

If anyone thinks that Southwest is On-track to retain its employee headcount and remain the size that it is come Oct, particularly with all of the excess weight that they have from nearing 50 years of operations given seniority, union contracts, a lot of people who have been working there for ever and a half who play tug of war over limited resources and simply believe that the gravy train that they’ve been following for all this time is going to stay intact, are likely seeing this whole thing through tinted glasses.

WN is not an agile company. No discussions of network opportunities that they can potentially “exploit “in the event/aftermath of one of their competitors suffering, will spare them from succumbing to similar fates. This statement from Leadership was really reckless, and frankly, it’s gonna bite him in the you know what.

Hang in there, guys. Be safe


How will that statement come back to bite them?

They say they'll be at 70% of capacity by YE, which is leaps and bounds higher than their competitors, & they have the liquidity to sustain their current burn rate for nearly 2 years.

No where did the statement at the employee event say that layoffs were not going to be part of the equation, in fact WN has been out front from the beginning saying layoffs were entirely possible, and management has repeated it time and time again. I think everyone is aware of the risk of job losses at WN, however despite possible job losses they have the ability & will to aggressively compete in this new environment.

Even Gary said back in the earnings call in April (when the situation was much more dire) that they were ready to compete aggressively in this new environment. None of the US3 made statements like that.

hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


Every airline has said capping capacity is a very near-term solution, but even if it does get extended out, WN is the best positioned to compete in a low LF world.

Remember even though yield is down, Fuel/CapEX/Labor/Food is also down significantly, therefore WN could theoretically get fairly close to break even on their flights (at least compared to the US3)
Image
Last edited by Midwestindy on Mon May 25, 2020 3:37 pm, edited 1 time in total.
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United1
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 3:36 pm

tphuang wrote:
The problem with WN at EWR is that its performances were just so horrible. I'm sure if it wants to make a go at it, it could. But there are just way more fish to fry for WN than at EWR. An obvious target for it would be PHL as AA will be significantly weaker coming out of this.


AA will be weaker coming out of this but WN already tried building up PHL against a relatively weak US without much success.
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 3:51 pm

Midwestindy wrote:
hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


Every airline has said capping capacity is a very near-term solution, but even if it does get extended out, WN is the best positioned to compete in a low LF world.

Remember even though yield is down, Fuel/CapEX/Labor/Food is also down significantly, therefore WN could theoretically get fairly close to break even on their flights (at least compared to the US3)
Image


Yield is not just down it's utterly in the gutter...a few anecdotal points about that were even in this thread. A WN flyer was bragging about how he picked WN over UA on DAL-MDW because WNs fare was $90 roundtrip. The actual revenue to WN will be less if that fare includes taxes and fees but let's assume it's all revenue. That works out to 5.6 cents a mile. Do you think WN can generate a profit at that yield even flying 100% load factors?
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joeblow10
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 4:03 pm

United1 wrote:
Midwestindy wrote:
hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


Every airline has said capping capacity is a very near-term solution, but even if it does get extended out, WN is the best positioned to compete in a low LF world.

Remember even though yield is down, Fuel/CapEX/Labor/Food is also down significantly, therefore WN could theoretically get fairly close to break even on their flights (at least compared to the US3)
Image


Yield is not just down it's utterly in the gutter...a few anecdotal points about that were even in this thread. A WN flyer was bragging about how he picked WN over UA on DAL-MDW because WNs fare was $90 roundtrip. The actual revenue to WN will be less if that fare includes taxes and fees but let's assume it's all revenue. That works out to 5.6 cents a mile. Do you think WN can generate a profit at that yield even flying 100% load factors?


WN had been running a lot of sales - I picked a lot of them up too for $98 RT in markets like DAL-DEN, but that was several weeks ago. The fares are creeping back up, and close in, its no longer like $99 OW for a walk up like I had seen throughout March and early April.

I don’t think Southwest is going to turn a profit in 2020 - but I would say they are definitely now in the drivers seat to ride this out and hurt the competition, a marked turnaround from a year ago and the MAX debacle. They have a giant cash reserve for a reason
 
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Midwestindy
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 4:55 pm

United1 wrote:
Midwestindy wrote:
hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


Every airline has said capping capacity is a very near-term solution, but even if it does get extended out, WN is the best positioned to compete in a low LF world.

Remember even though yield is down, Fuel/CapEX/Labor/Food is also down significantly, therefore WN could theoretically get fairly close to break even on their flights (at least compared to the US3)
Image


Yield is not just down it's utterly in the gutter...a few anecdotal points about that were even in this thread. A WN flyer was bragging about how he picked WN over UA on DAL-MDW because WNs fare was $90 roundtrip. The actual revenue to WN will be less if that fare includes taxes and fees but let's assume it's all revenue. That works out to 5.6 cents a mile. Do you think WN can generate a profit at that yield even flying 100% load factors?


Yes I do, for the US3 the yield situation is significantly worse than WN. Remember while people "luv" to hate on WN for being the low cost carrier that doesn't actually offer low fares, WN is actually used to competing on ULCC fares, given their enormous presence in places like MCO, FLL, LAS, e.t.c.

This is from 2019, and as you can see average fares aren't way higher than what G4 is pricing.
Image

If you go by the analysis done in the break-even study I referenced above:

In the example they use, each flight would cost $26,741, and 100% load would be $36,889 in revenue

Assuming a conservative cost savings of 15% per flight, the new cost per flight would be $22,730, so essentially even with a 40% reduction in revenue per flight (aggressively low average fare of $93) they would still be close to break-even.
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tphuang
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 5:03 pm

United1 wrote:
tphuang wrote:
The problem with WN at EWR is that its performances were just so horrible. I'm sure if it wants to make a go at it, it could. But there are just way more fish to fry for WN than at EWR. An obvious target for it would be PHL as AA will be significantly weaker coming out of this.


AA will be weaker coming out of this but WN already tried building up PHL against a relatively weak US without much success.


Not saying they will succeed at PHL, but at least they still have a presence there. Whereas at EWR, they got chased out because they have no point of sale at all.

Either way, I think there is enough opportunities out there that trying EWR again so soon after they got chased out of it is kind of crazy.

wnflyguy wrote:
WN had a MAX problem.
Lack of aircraft and aircraft time to cover the equivalent of 34 aircraft. To fix that problem it saw an opportunity to rebook it's customers via LGA by eliminating EWR.
WN will be back at EWR in my the future.

Flyguy

They didn't leave EWR because of MAX. They left because their performances were dreadful. Why would they go back to EWR anytime soon when they had such horrible experience trying to get anything to work for years?

I could only see a return in the near future if they merge with NK or B6.

here is Andrew Watterson talking about their departure from Newark. Does that sound like someone that wants to come back anytime soon? Especially in this demand environment?
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 5:24 pm

joeblow10 wrote:
United1 wrote:
Midwestindy wrote:


Every airline has said capping capacity is a very near-term solution, but even if it does get extended out, WN is the best positioned to compete in a low LF world.

Remember even though yield is down, Fuel/CapEX/Labor/Food is also down significantly, therefore WN could theoretically get fairly close to break even on their flights (at least compared to the US3)
Image


Yield is not just down it's utterly in the gutter...a few anecdotal points about that were even in this thread. A WN flyer was bragging about how he picked WN over UA on DAL-MDW because WNs fare was $90 roundtrip. The actual revenue to WN will be less if that fare includes taxes and fees but let's assume it's all revenue. That works out to 5.6 cents a mile. Do you think WN can generate a profit at that yield even flying 100% load factors?


WN had been running a lot of sales - I picked a lot of them up too for $98 RT in markets like DAL-DEN, but that was several weeks ago. The fares are creeping back up, and close in, its no longer like $99 OW for a walk up like I had seen throughout March and early April.


I'm sure fares are going back up a bit, as the US reopens demand is starting to return, I question how long fares will stay up though. The US3 are starting to add capacity back..for instance UA is going from operating 10% of it's pre-covid capacity in May to operating 25% of capacity in June. That will depress fares again and while WN does have lower costs than the US3 the US3 operate in a lot of markets that WN do not. What all that means is the US3 might be able to generate higher yields on average even if they are matching WNs $90 sale flights on trunk routes.

I know a lot of folks on this thread are going on and on about WN dominating the competition and taking advantage of this opportunity ect. Reality is WN is in the same boat all of their competitors are in. All of them have deep pockets, all of them have unique advantages they are going to leverage the heck out of to make it out of this and all of them all of them also have unique weaknesses they are managing around. Simply trying to bleed the competition dry won't work because WN will kill itself off in the process. This WN will dominate the world koolaid has been going on for decades....another reality people seem to forget is all four of them have sort of learned to live with each other. None of them are going to be able to dominate the other.
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 8:08 pm

United1 wrote:
joeblow10 wrote:
United1 wrote:

Yield is not just down it's utterly in the gutter...a few anecdotal points about that were even in this thread. A WN flyer was bragging about how he picked WN over UA on DAL-MDW because WNs fare was $90 roundtrip. The actual revenue to WN will be less if that fare includes taxes and fees but let's assume it's all revenue. That works out to 5.6 cents a mile. Do you think WN can generate a profit at that yield even flying 100% load factors?


WN had been running a lot of sales - I picked a lot of them up too for $98 RT in markets like DAL-DEN, but that was several weeks ago. The fares are creeping back up, and close in, its no longer like $99 OW for a walk up like I had seen throughout March and early April.


I'm sure fares are going back up a bit, as the US reopens demand is starting to return, I question how long fares will stay up though. The US3 are starting to add capacity back..for instance UA is going from operating 10% of it's pre-covid capacity in May to operating 25% of capacity in June. That will depress fares again and while WN does have lower costs than the US3 the US3 operate in a lot of markets that WN do not. What all that means is the US3 might be able to generate higher yields on average even if they are matching WNs $90 sale flights on trunk routes.

I know a lot of folks on this thread are going on and on about WN dominating the competition and taking advantage of this opportunity ect. Reality is WN is in the same boat all of their competitors are in. All of them have deep pockets, all of them have unique advantages they are going to leverage the heck out of to make it out of this and all of them all of them also have unique weaknesses they are managing around. Simply trying to bleed the competition dry won't work because WN will kill itself off in the process. This WN will dominate the world koolaid has been going on for decades....another reality people seem to forget is all four of them have sort of learned to live with each other. None of them are going to be able to dominate the other.


I'm fairly certain fares won't go down further than what they have been at, in fact quite the opposite. The US3 are actually charging higher yoy fares, according to one Cowen analyst, and most other analysts are projecting higher fares in the coming months & years.
https://www.barrons.com/articles/airfar ... 1589549611
https://www.forbes.com/sites/marisagarc ... 9c7b4696e1

Also UA is not at 25% for June that is for July
https://www.marketwatch.com/story/unite ... 2020-05-19

WN has been able to gain share in past recessions, I don't see why they wouldn't be able to during this one.
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United1
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 8:52 pm

Midwestindy wrote:
United1 wrote:
joeblow10 wrote:

WN had been running a lot of sales - I picked a lot of them up too for $98 RT in markets like DAL-DEN, but that was several weeks ago. The fares are creeping back up, and close in, its no longer like $99 OW for a walk up like I had seen throughout March and early April.


I'm sure fares are going back up a bit, as the US reopens demand is starting to return, I question how long fares will stay up though. The US3 are starting to add capacity back..for instance UA is going from operating 10% of it's pre-covid capacity in May to operating 25% of capacity in June. That will depress fares again and while WN does have lower costs than the US3 the US3 operate in a lot of markets that WN do not. What all that means is the US3 might be able to generate higher yields on average even if they are matching WNs $90 sale flights on trunk routes.

I know a lot of folks on this thread are going on and on about WN dominating the competition and taking advantage of this opportunity ect. Reality is WN is in the same boat all of their competitors are in. All of them have deep pockets, all of them have unique advantages they are going to leverage the heck out of to make it out of this and all of them all of them also have unique weaknesses they are managing around. Simply trying to bleed the competition dry won't work because WN will kill itself off in the process. This WN will dominate the world koolaid has been going on for decades....another reality people seem to forget is all four of them have sort of learned to live with each other. None of them are going to be able to dominate the other.


I'm fairly certain fares won't go down further than what they have been at, in fact quite the opposite. The US3 are actually charging higher yoy fares, according to one Cowen analyst, and most other analysts are projecting higher fares in the coming months & years.
https://www.barrons.com/articles/airfar ... 1589549611
https://www.forbes.com/sites/marisagarc ... 9c7b4696e1

Also UA is not at 25% for June that is for July
https://www.marketwatch.com/story/unite ... 2020-05-19

WN has been able to gain share in past recessions, I don't see why they wouldn't be able to during this one.


You are right I did get June and July backwards...sorry about that but the days, weeks and months have been running together for some strange unknown reason :scratchchin:

As for the US3 charging higher fares right now well yeah because unlike WN they are not trying to stimulate demand to fill their planes...quite the opposite actually. They have eliminated lots of those loss leaders simply because of social distancing. That being said at some point if they want to fill the planes they will have to drop pricing and stimulate demand...especially if business travel doesn't pick up.

This isn't like any previous recession and I don't think WN assuming the same rules apply and using the same tactics will necessarily work. WN was able to take advantage back in 2008 because it stopped being an airline and operated as a fuel trading company that happened to fly planes. That happened because WN got lucky with its fuel hedges. That situation doesn't apply this time...oil is not likely to spike...in fact it can't because as soon as oil hits a certain price it becomes profitable for US oil to ramp up again which will crash the price back down or at least level it out.

In 2008 UA, DL and AA all had to retire 100s of aircraft while WN was able to hang on and grow because the fuel hedges saved their balance sheet...that's how they gained market share. This time around is a bit different. All are hemorrhaging cash right now and none are going to be in a position to expand rapidly once we are on the tail end of this recession because all of them are going to be busy repairing their balance sheets. WN can probably hang onto its market share but I don't think they are going to be able to make inroads on UA, DL or even AA's share.
Last edited by United1 on Mon May 25, 2020 9:05 pm, edited 1 time in total.
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737max8
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 8:53 pm

hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


How do you know how many money-losing flights the airline will run? How do you know what profitable load factors are?

Most of the "information" in this thread is complete garbage.

WN has made a ton of great moves already. And they are getting great publicity over capping flights to leave middle seats open. And flights are filling up to allowed capacities. I doubt cash burn is even as bad as it was projected to be.

We'll just wait and see the results that speak for themselves and not what people on a forum think. We all know Q2 is going to be ugly for everyone. But I am very optimistic for June and leading into Q3.
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joeblow10
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 8:57 pm

737max8 wrote:
hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


How do you know how many money-losing flights the airline will run? How do you know what profitable load factors are?

Most of the "information" in this thread is complete garbage.


People also forget that for the foreseeable future- the concept of “cash burn” is key. Maybe southwest can’t be profitable by 10/1. But if they can nearly break-even or cash-neutral, maybe they can feasibly get to a cash burn of say $5M a day. They can run an airline for a very long time with $12B+ (I believe?) in the coffers. And I’m sure they would do it if it means they were gaining market share over competitors.
 
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 9:37 pm

SWADawg wrote:
WN will return to EWR in the not too distant future. Besides the MAX being grounded and being short nearly 70 Airplanes between those grounded and deliveries that weren’t able to be taken. EWR Terminal A was a disaster at the time the decision to leave was made. The bathrooms had already been shutdown because of the new Terminal construction and there were literally porta potties inside the Concourses for passengers to use. It was truly a miserable experience. I’m sure once the new Terminal is finished, WN will procure some gates in the new facility.

And here I thought it was horrible when they had indoor plumbing, no way am I flying out of Terminal A now. The terminal is close to 50 years old and did not lend it self to improvements. If security could somehow be moved to where the escalators from ticketing are, things would improve but it still would need more shops and food close to the gate. So for me if I go back to EWR (I prefer PHL even though it is further) Terminal 1 cant come fast enough.
 
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 10:03 pm

United1 wrote:
Midwestindy wrote:
United1 wrote:

I'm sure fares are going back up a bit, as the US reopens demand is starting to return, I question how long fares will stay up though. The US3 are starting to add capacity back..for instance UA is going from operating 10% of it's pre-covid capacity in May to operating 25% of capacity in June. That will depress fares again and while WN does have lower costs than the US3 the US3 operate in a lot of markets that WN do not. What all that means is the US3 might be able to generate higher yields on average even if they are matching WNs $90 sale flights on trunk routes.

I know a lot of folks on this thread are going on and on about WN dominating the competition and taking advantage of this opportunity ect. Reality is WN is in the same boat all of their competitors are in. All of them have deep pockets, all of them have unique advantages they are going to leverage the heck out of to make it out of this and all of them all of them also have unique weaknesses they are managing around. Simply trying to bleed the competition dry won't work because WN will kill itself off in the process. This WN will dominate the world koolaid has been going on for decades....another reality people seem to forget is all four of them have sort of learned to live with each other. None of them are going to be able to dominate the other.


I'm fairly certain fares won't go down further than what they have been at, in fact quite the opposite. The US3 are actually charging higher yoy fares, according to one Cowen analyst, and most other analysts are projecting higher fares in the coming months & years.
https://www.barrons.com/articles/airfar ... 1589549611
https://www.forbes.com/sites/marisagarc ... 9c7b4696e1

Also UA is not at 25% for June that is for July
https://www.marketwatch.com/story/unite ... 2020-05-19

WN has been able to gain share in past recessions, I don't see why they wouldn't be able to during this one.


You are right I did get June and July backwards...sorry about that but the days, weeks and months have been running together for some strange unknown reason :scratchchin:

As for the US3 charging higher fares right now well yeah because unlike WN they are not trying to stimulate demand to fill their planes...quite the opposite actually. They have eliminated lots of those loss leaders simply because of social distancing. That being said at some point if they want to fill the planes they will have to drop pricing and stimulate demand...especially if business travel doesn't pick up.

This isn't like any previous recession and I don't think WN assuming the same rules apply and using the same tactics will necessarily work. WN was able to take advantage back in 2008 because it stopped being an airline and operated as a fuel trading company that happened to fly planes. That happened because WN got lucky with its fuel hedges. That situation doesn't apply this time...oil is not likely to spike...in fact it can't because as soon as oil hits a certain price it becomes profitable for US oil to ramp up again which will crash the price back down or at least level it out.

In 2008 UA, DL and AA all had to retire 100s of aircraft while WN was able to hang on and grow because the fuel hedges saved their balance sheet...that's how they gained market share. This time around is a bit different. All are hemorrhaging cash right now and none are going to be in a position to expand rapidly once we are on the tail end of this recession because all of them are going to be busy repairing their balance sheets. WN can probably hang onto its market share but I don't think they are going to be able to make inroads on UA, DL or even AA's share.


If legacies are still 20% smaller by end of 2022 and WN is larger than it was pre-COVID by then, they will automatically be gaining market share. It's really hard to argue that this downturn is not hitting legacies harder. Everyone is admitting that leisure is coming back before business travel and domestic is coming back before international.

It will be interesting for me to see what happens at DEN. I anticipate a huge battle there. If UA devotes a lot of resources to keep its market share at DEN against WN, that's less resources it will have in its other hubs.
 
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Midwestindy
Posts: 5435
Joined: Sun Mar 12, 2017 3:56 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 10:41 pm

737max8 wrote:
hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


We'll just wait and see the results that speak for themselves and not what people on a forum think.


Lol why the hell are you on an aviation forum then?

joeblow10 wrote:
737max8 wrote:
hiflyeras wrote:
Great post. Anyone thinking that WN is going to escape the carnage coming in October is not paying attention. And even if they DO operate more departures in comparison to their competitors that just means they're operating more money-losing flights. Even at load factors of 60-70% no one would be making money unless the fares were outrageously expensive.


How do you know how many money-losing flights the airline will run? How do you know what profitable load factors are?

Most of the "information" in this thread is complete garbage.


People also forget that for the foreseeable future- the concept of “cash burn” is key. Maybe southwest can’t be profitable by 10/1. But if they can nearly break-even or cash-neutral, maybe they can feasibly get to a cash burn of say $5M a day. They can run an airline for a very long time with $12B+ (I believe?) in the coffers. And I’m sure they would do it if it means they were gaining market share over competitors.


:checkmark:

Not a big fan of WN in general, but they look very well positioned (comparatively) for the months & years to come
Status for 2019/2020: AAdvantage Platinum, Delta Gold, Southwest A-List
 
United1
Posts: 4194
Joined: Wed Oct 08, 2003 9:21 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Mon May 25, 2020 10:58 pm

tphuang wrote:
United1 wrote:
Midwestindy wrote:

I'm fairly certain fares won't go down further than what they have been at, in fact quite the opposite. The US3 are actually charging higher yoy fares, according to one Cowen analyst, and most other analysts are projecting higher fares in the coming months & years.
https://www.barrons.com/articles/airfar ... 1589549611
https://www.forbes.com/sites/marisagarc ... 9c7b4696e1

Also UA is not at 25% for June that is for July
https://www.marketwatch.com/story/unite ... 2020-05-19

WN has been able to gain share in past recessions, I don't see why they wouldn't be able to during this one.


You are right I did get June and July backwards...sorry about that but the days, weeks and months have been running together for some strange unknown reason :scratchchin:

As for the US3 charging higher fares right now well yeah because unlike WN they are not trying to stimulate demand to fill their planes...quite the opposite actually. They have eliminated lots of those loss leaders simply because of social distancing. That being said at some point if they want to fill the planes they will have to drop pricing and stimulate demand...especially if business travel doesn't pick up.

This isn't like any previous recession and I don't think WN assuming the same rules apply and using the same tactics will necessarily work. WN was able to take advantage back in 2008 because it stopped being an airline and operated as a fuel trading company that happened to fly planes. That happened because WN got lucky with its fuel hedges. That situation doesn't apply this time...oil is not likely to spike...in fact it can't because as soon as oil hits a certain price it becomes profitable for US oil to ramp up again which will crash the price back down or at least level it out.

In 2008 UA, DL and AA all had to retire 100s of aircraft while WN was able to hang on and grow because the fuel hedges saved their balance sheet...that's how they gained market share. This time around is a bit different. All are hemorrhaging cash right now and none are going to be in a position to expand rapidly once we are on the tail end of this recession because all of them are going to be busy repairing their balance sheets. WN can probably hang onto its market share but I don't think they are going to be able to make inroads on UA, DL or even AA's share.


If legacies are still 20% smaller by end of 2022 and WN is larger than it was pre-COVID by then, they will automatically be gaining market share. It's really hard to argue that this downturn is not hitting legacies harder. Everyone is admitting that leisure is coming back before business travel and domestic is coming back before international.

It will be interesting for me to see what happens at DEN. I anticipate a huge battle there. If UA devotes a lot of resources to keep its market share at DEN against WN, that's less resources it will have in its other hubs.


You are assuming that WN can continue to grow...I'm not convinced of that for a few reasons. One even before the MAX debacle WN seemed to be loosing its way a bit. They entered IAD and didn't make any inroads, they scaled back their proposed Hawaii service, what little international service they have was scaled back, PHL was scaled back, ATL was scaled back, SFO was scaled back, EWR was eliminated. Two at the height of "we are scaling back service because of the MAX" WN sells 20 73Gs to UA...that doesn't seem like a company that was desperate for aircraft that seems like a company that can't figure out where to put new aircraft profitably. Don't get me wrong I think WN has an incredibly well built out profitable core network...I question their networks profitability once they get outside of that core...and their ability to expand that core.

I do think DEN is going to be interesting as it seems to be one of the home runs in WNs network. I don't know how it's going to all go down but last time there was a battle of DEN everyone counted UA out...we all know how that turned out WN grew, UA grew, the market grew and F9 lost. You are also assuming the US3 will be 20% smaller domestically I'm not. Even if they are smaller overall I think most of those cuts will be overseas not on the domestic network...the cuts certainly will not be on UAs domestic network. Domestic was where the money was being made pre-covid and domestic will be where the money is being made post covid.
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