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bob75013
Posts: 958
Joined: Tue Jun 23, 2015 5:05 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 3:17 pm

ShinyAndChrome wrote:
Playing devil's advocate, how applicable is the "Southwest Effect" over the next few months? I get that passenger numbers are on their way up, but how much latent traffic is there to actually be stimulated?


I can only talk about one route that I fly a lot: Dallas / Chicago

Looking at July, I can fly WN for $90 RT most days, but it costs me about $155-$170 on UA (and that is bottom of the barrel deep discount)-or $ 222 for economy.. Which airline is likely to get more people flying? It's called the Southwest effect.

And traffic is coming back. I flew DEN//DAL yesterday on a 738 that hit capacity control: 117 pax. .
 
ericm2031
Posts: 1398
Joined: Tue Jun 19, 2012 8:46 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 3:55 pm

This was also brought up on their investor call, so it shouldn't be any surprise. Scott Kirby (who is extremely competitive) even acknowledged this on their town hall a couple weeks ago and admitted there's no way they could match their liquidity, so they have to do whatever it takes to protect their assets.

WN is getting their cash burn down to almost $20 million in June and even repaid $3B of their higher cost debt they took on when the sky was initially falling.
 
capitalflyer
Posts: 629
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 4:07 pm

This is very smart. COVID has provided opportunity to make major moves (fleet overhauls/retirements, route adjustments, etc.). I wonder if WN is also buying as much fuel as possible right now given prices.
They should try to kill off F9 and NK (either buying them or driving them out of business). In re: slots, legacies will not make those available without going bankrupt first. WN might be able to get slots from B6, F9 or NK if they need cash and sell them.
 
StrandedAtMKG
Posts: 304
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 4:31 pm

DDR wrote:
WN is not a LCC


WN is the original LCC. They invented it. We wouldn't even have the concept of an LCC without WN.


Back to the topic:

How much deeper are WN's pockets compared to the likes of, say, DL or UA (not even going to ask about AA, as a.net seems to think AA is a dead man walking right now)? How long can they burn cash keeping the lights on and running mostly empty flights from smaller stations versus their competitors?
 
WN732
Posts: 779
Joined: Sat Feb 26, 2011 12:49 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 4:49 pm

StrandedAtMKG wrote:
DDR wrote:
WN is not a LCC


WN is the original LCC. They invented it. We wouldn't even have the concept of an LCC without WN.


Back to the topic:

How much deeper are WN's pockets compared to the likes of, say, DL or UA (not even going to ask about AA, as a.net seems to think AA is a dead man walking right now)? How long can they burn cash keeping the lights on and running mostly empty flights from smaller stations versus their competitors?


No no he's right, they are not an LLC. They are THE LLC.
 
flybry
Posts: 161
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 5:08 pm

If Southwest is such a Brilliant, vibrant competitor on the offense, what do you call its pullout from Newark BEFORE the coronavirus crisis?
 
United1
Posts: 4164
Joined: Wed Oct 08, 2003 9:21 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 5:09 pm

StrandedAtMKG wrote:
DDR wrote:
WN is not a LCC


WN is the original LCC. They invented it. We wouldn't even have the concept of an LCC without WN.


Back to the topic:

How much deeper are WN's pockets compared to the likes of, say, DL or UA (not even going to ask about AA, as a.net seems to think AA is a dead man walking right now)? How long can they burn cash keeping the lights on and running mostly empty flights from smaller stations versus their competitors?


Well that depends....on how much any of them can borrow and at what speed demand returns. All three airlines are projecting relatively stable cash positions into the winter and the analyst community are projecting all three airlines to be profitable in 2021 (they are early projections but encouraging.) All three have fairly large piles of unencumbered assets that could be borrowed against, all three can borrow from the feds under CARES if they need to. WN and DL will probably be cash positive by the end of this year and while I haven't seen UAs projection decent chance UA will be as well or will be early next year.

WN is projecting a cash burn of around $20 million a day in June, UA is projecting around $40-$45 and DL is projecting around $40. Those numbers will continue to go down as demand increases and as airlines cut costs and generate more revenue.
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
swafa
Posts: 50
Joined: Tue Mar 20, 2012 12:33 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 5:13 pm

flybry wrote:
If Southwest is such a Brilliant, vibrant competitor on the offense, what do you call its pullout from Newark BEFORE the coronavirus crisis?


I call it an unfortunate victim of the boeing Max debacle.
 
hiflyeras
Posts: 2256
Joined: Thu Jul 14, 2011 6:48 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 5:16 pm

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.
 
PhilMcCrackin
Posts: 317
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 5:18 pm

DDR wrote:
WN is not a LCC


Southwest is still very much an LCC.
 
United1
Posts: 4164
Joined: Wed Oct 08, 2003 9:21 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 5:20 pm

WN732 wrote:
StrandedAtMKG wrote:
DDR wrote:
WN is not a LCC


WN is the original LCC. They invented it. We wouldn't even have the concept of an LCC without WN.


Back to the topic:

How much deeper are WN's pockets compared to the likes of, say, DL or UA (not even going to ask about AA, as a.net seems to think AA is a dead man walking right now)? How long can they burn cash keeping the lights on and running mostly empty flights from smaller stations versus their competitors?


No no he's right, they are not an LLC. They are THE LLC.


Oh quit thumping your chest...

WN is a LCC and we can debate all day whether Herb or Sir Freddie Laker came up with the concept but WN is certainly not "THE" LCC any longer. Quite a number of of LCC carriers have improved upon WNs model and offer lower fares, better service and have lower costs. I will give you that WN is a very successful stable carrier but they are certainly not the end all of airlines any longer.
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
flybry
Posts: 161
Joined: Mon Jul 09, 2012 11:26 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 5:44 pm

swafa wrote:
flybry wrote:
If Southwest is such a Brilliant, vibrant competitor on the offense, what do you call its pullout from Newark BEFORE the coronavirus crisis?


I call it an unfortunate victim of the boeing Max debacle.


Convenient excuse lolz
 
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par13del
Posts: 10337
Joined: Sun Dec 18, 2005 9:14 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 5:51 pm

flybry wrote:
swafa wrote:
flybry wrote:
If Southwest is such a Brilliant, vibrant competitor on the offense, what do you call its pullout from Newark BEFORE the coronavirus crisis?


I call it an unfortunate victim of the boeing Max debacle.


Convenient excuse lolz

I call it a recognition that the market was not working for them the way they intended, when EWR have their normal meltdowns, the effect on WN who does not interline is greater than the legacy carriers.
WN has done well over the years, that does not mean that they are perfect and do not make mistakes, they have made a few especially in the north east, the Islip ramp also springs to mind, you can look it up.
 
tphuang
Posts: 5209
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 5:54 pm

StrandedAtMKG wrote:
DDR wrote:
WN is not a LCC


WN is the original LCC. They invented it. We wouldn't even have the concept of an LCC without WN.


Back to the topic:

How much deeper are WN's pockets compared to the likes of, say, DL or UA (not even going to ask about AA, as a.net seems to think AA is a dead man walking right now)? How long can they burn cash keeping the lights on and running mostly empty flights from smaller stations versus their competitors?


They have far and away the deepest pocket in terms of cash position and burn rate. They also have the lowest debt to equity ratio. In fact, they have more cash than debt right now. They are so far ahead of the field in cash position that they have been using that to pick up market share.

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.

They don't need to be strongest everywhere

wnflyguy wrote:
WN like every other airline is trying to keep the lights on. It's also trying to keep it's track record of not having to laying off or force pay-cuts. During every downturn in the economy WN has always expanded to find ways to increase revenue.
Using SNA as a example it saw opportunity after 9/11 to gain marketshare as others pulled back which paid off during the downturn.
Yes it had to give slots back as others turned around over time but the gamble paid off.
Instead of parking aircraft during the first mini recession WN decided it was time to finally add DEN and opened MKE.
During the down times WN has always made decisions to make moves to keep revenue coming in. Yes this pandemic is horrible but it can either scale back to nothing and furlough thousands adding to the unemployment numbers. Or it can be nimble and carefully balance it's stability and grow it's revenue to keep It's people employed.
Ya I know it's sucks for UA,AA and DL But WN treats it's employees as an Cherished asset vs a sliding number you can just cut on a whim.

Flyguy


I'm sure more SNA slots will go back to WN this time around.

I'm sure they will pick up more LGA slots this time around too. It would be interesting to see where WN pressures competitors this time around.

To me, DEN and PHX are obvious places. LAX is an obvious place for them to seek additional slots. Same with SFO. Aside from that, PHL could be a good place to attack if AA does a lot of cuts there.

If they really want to eliminate competition and protect themselves against ULCC at MCO/LAS/MSY, then they can merge with one of NK and F9.
 
chicawgo
Posts: 441
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 6:26 pm

Well my anecdotal evidence seems to point to it being true as well. I’m flying phx-chi tomorrow. UA had 1, AA with huge hub to hub had only 3, and WN had 4. With better times. $249 ow and I took WN whereas I would normally want to earn miles on UA or AA.
 
Lootess
Posts: 454
Joined: Sun May 13, 2018 6:15 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 6:36 pm

It's not as easy for WN to retract since they don't operate the usual hub-spoke model, their model makes that 50% more logical. Come September we'll know how smart these decisions are when payroll support ends. If travel continues to rebound they should be okay and get to revenue neutral.

AA747123 wrote:
Southwest knows what they are doing, they have never lost money in their history. I am sure they will post a profit on the second quarter.


So far off of reality, since they already lost money in Q1, and they are still burning $30 million a day.
 
rbavfan
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 7:33 pm

panamair wrote:
AA747123 wrote:
Southwest knows what they are doing, they have never lost money in their history. I am sure they will post a profit on the second quarter.


What are you talking about? They just posted losses for Q1 2020:

http://investors.southwest.com/news-and ... -110107839


There is a difference between a Q1, A2, A3 or A4 loss & annual loss.
 
Jerseyguy
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Joined: Sun Oct 30, 2005 12:05 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 7:55 pm

Airlines slash prices and flood new competitive routes with unreasonable amounts of flights to force their competitor out of the market and then raise the price back up. Now that Southwest can do this they should. Its unfortunate that alot of people don't realize this and continue to fly on the airline that has the monopoly on the route. When WN used to fly EWR-AUS, I used to get $99-109 each way, if NK hadnt picked up the route UA would have raised the price back up. What I always found amusing was that UA used to match WN as Basic Economy, Let me see I can pay $99 and get free bag and free change fees or I can fly UA pay an additional $35 for my bag and not be able to change the ticket for any price.

I'd love to see WN back in EWR but only they know if thats a good move in the current climate.
 
blueflyer
Posts: 4352
Joined: Tue Jan 31, 2006 4:17 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 8:10 pm

capitalflyer wrote:
They should try to kill off F9 and NK (either buying them or driving them out of business). In re: slots, legacies will not make those available without going bankrupt first. WN might be able to get slots from B6, F9 or NK if they need cash and sell them.

They should not, and if they try, they should be blocked! Most markets outside the largest cities were already not very competitive as it was, the last thing we need is an airline taking advantage of this once-in-a-lifetime event to kill off the competition. In the name of maintaining long-term competition, I'd be fine with accepting government intervention in the market I would have never otherwise supported if that is what it takes to keep Frontier, Spirit or Sun Country alive for a reasonable period. It may reeks of government picking winners (or more to the point picking not-losers) and totally unacceptable, except, in my opinion, in these times.

If Southwest kills off a competitor, only its shareholders win. This a recovery does not make, nor does it serve the economy in the short, medium, or long runs.
 
airzona11
Posts: 1755
Joined: Wed Dec 17, 2014 5:44 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 8:38 pm

flybry wrote:
Does Southwest have a death wish?


No other airline is in a better position to grow in their core markets. Not saying the US3 will roll over, they can flex (Expensively) with higher gauge idle wide bodies for one thing WN cannot. But WN has flexibility to capture core O/D. 1 fleet type, common group of pilots and flight attendants. Seems like a recipe to grow the business.
 
ShinyAndChrome
Posts: 280
Joined: Fri Aug 28, 2015 1:53 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 9:13 pm

bob75013 wrote:
ShinyAndChrome wrote:
Playing devil's advocate, how applicable is the "Southwest Effect" over the next few months? I get that passenger numbers are on their way up, but how much latent traffic is there to actually be stimulated?


I can only talk about one route that I fly a lot: Dallas / Chicago

Looking at July, I can fly WN for $90 RT most days, but it costs me about $155-$170 on UA (and that is bottom of the barrel deep discount)-or $ 222 for economy.. Which airline is likely to get more people flying? It's called the Southwest effect.

And traffic is coming back. I flew DEN//DAL yesterday on a 738 that hit capacity control: 117 pax. .


Assuming that there are people flying because of the price who otherwise wouldn't and not just people who were planning to fly regardless of WN's pricing. That's the whole idea of the Southwest Effect: Offering lower fares to draw people who otherwise would've stayed home.

Obviously it isn't the easiest thing to prove either way, but I don't know if we're at that point yet, especially with so many destinations closed/limited.
 
flybry
Posts: 161
Joined: Mon Jul 09, 2012 11:26 am

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 9:28 pm

Jerseyguy wrote:
Airlines slash prices and flood new competitive routes with unreasonable amounts of flights to force their competitor out of the market and then raise the price back up. Now that Southwest can do this they should. Its unfortunate that alot of people don't realize this and continue to fly on the airline that has the monopoly on the route. When WN used to fly EWR-AUS, I used to get $99-109 each way, if NK hadnt picked up the route UA would have raised the price back up. What I always found amusing was that UA used to match WN as Basic Economy, Let me see I can pay $99 and get free bag and free change fees or I can fly UA pay an additional $35 for my bag and not be able to change the ticket for any price.

I'd love to see WN back in EWR but only they know if thats a good move in the current climate.


I agree!!
I’m so sad Southwest left Newark. It gave United a monopoly on EWR-DEN until Frontier came in with just 1 flight a day. I wish Southwest would return to EWR.
 
wnflyguy
Posts: 1962
Joined: Thu Feb 10, 2011 7:58 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 10:10 pm

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
My Wings are clipped just another Retired Airline person. The Ultimate Armchair out of the loop airline industry geek. Aloha Mr Hand!
 
gaystudpilot
Posts: 266
Joined: Sat Dec 08, 2007 10:55 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 10:59 pm

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.
 
gaystudpilot
Posts: 266
Joined: Sat Dec 08, 2007 10:55 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sat May 23, 2020 11:01 pm

airzona11 wrote:
flybry wrote:
Does Southwest have a death wish?


No other airline is in a better position to grow in their core markets. Not saying the US3 will roll over, they can flex (Expensively) with higher gauge idle wide bodies for one thing WN cannot. But WN has flexibility to capture core O/D. 1 fleet type, common group of pilots and flight attendants. Seems like a recipe to grow the business.



With what? What gives in return?
 
tphuang
Posts: 5209
Joined: Tue Mar 14, 2017 2:04 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 12:00 am

flybry wrote:
Jerseyguy wrote:
Airlines slash prices and flood new competitive routes with unreasonable amounts of flights to force their competitor out of the market and then raise the price back up. Now that Southwest can do this they should. Its unfortunate that alot of people don't realize this and continue to fly on the airline that has the monopoly on the route. When WN used to fly EWR-AUS, I used to get $99-109 each way, if NK hadnt picked up the route UA would have raised the price back up. What I always found amusing was that UA used to match WN as Basic Economy, Let me see I can pay $99 and get free bag and free change fees or I can fly UA pay an additional $35 for my bag and not be able to change the ticket for any price.

I'd love to see WN back in EWR but only they know if thats a good move in the current climate.


I agree!!
I’m so sad Southwest left Newark. It gave United a monopoly on EWR-DEN until Frontier came in with just 1 flight a day. I wish Southwest would return to EWR.


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.
 
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lightsaber
Moderator
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 12:08 am

gaystudpilot wrote:
airzona11 wrote:
flybry wrote:
Does Southwest have a death wish?


No other airline is in a better position to grow in their core markets. Not saying the US3 will roll over, they can flex (Expensively) with higher gauge idle wide bodies for one thing WN cannot. But WN has flexibility to capture core O/D. 1 fleet type, common group of pilots and flight attendants. Seems like a recipe to grow the business.



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
Flu+Covid19 is bad. Consider a flu vaccine, if not for yourself, to protect someone you care about.
 
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OzarkD9S
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 1:13 am

StrandedAtMKG wrote:

WN is the original LCC. They invented it. We wouldn't even have the concept of an LCC without WN.


Then why did WN execs go to PSA and study their concept? Give credit where credit is due...PSA.
"True, I talk of dreams,
Which are the children of an idle brain." -Mercutio
 
UA735WL
Posts: 286
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Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 1:43 am

OzarkD9S wrote:
StrandedAtMKG wrote:

WN is the original LCC. They invented it. We wouldn't even have the concept of an LCC without WN.


Then why did WN execs go to PSA and study their concept? Give credit where credit is due...PSA.



To be fair, WN did pioneer the homogeneous fleet model (PSA did not).
"One test is worth a thousand expert opinions" -Tex Johnston
 
wnflyguy
Posts: 1962
Joined: Thu Feb 10, 2011 7:58 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 2:26 am

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
My Wings are clipped just another Retired Airline person. The Ultimate Armchair out of the loop airline industry geek. Aloha Mr Hand!
 
gaystudpilot
Posts: 266
Joined: Sat Dec 08, 2007 10:55 pm

Re: Southwest Airlines planning on squeezing competitors in weaker positions

Sun May 24, 2020 2:46 am

lightsaber wrote:
gaystudpilot wrote:
airzona11 wrote:

No other airline is in a better position to grow in their core markets. Not saying the US3 will roll over, they can flex (Expensively) with higher gauge idle wide bodies for one thing WN cannot. But WN has flexibility to capture core O/D. 1 fleet type, common group of pilots and flight attendants. Seems like a recipe to grow the business.



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.
 
gaystudpilot
Posts: 266
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: 266
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: 4969
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: 266
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: 4969
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: 192
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: 565
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: 3613
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: 3613
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: 969
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: 5209
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: 9305
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: 90
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: 565
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: 2181
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

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