In what seems like a completely fundamental change in attitude from an airline who has historically prided itself on being a great employer and one who has treated it's people well, Southwest is now looking for it's ground operations department (which encompasses ramp, operations, and provisioning) to accept terms on it's next contract to allow for up to 20% of staffing to be replaced by outside contracted employees.

http://www.cbsnews.com/8301-505244_1...tsource-some-jobs/?tag=mncol;lst;9

Southwest is potentially heading towards a big showdown with all its labor groups, it by far has, and almost without exception, the best paying contracts in the US market. The pilot payscales are substantially above competing carriers (especially legacies who've shed contracts in bankruptcy) and with oil increasing and customer willingness to pay more decreasing there is going to come a crunch somewhere. Southwest does get a lot of efficiencies in its contracts in return with labor groups often sharing and doing tasks other airline union groups will not allow, but I'm not sure how much more, if any, is to be gained there. They are milking every inch of cabin space by squeezing an extra row in, if they can't find other revenue services then something could well have to give on the cost side.

While they have remained consistently profitable for the past 39 years, the last couple have been a little rougher and the future doesn't look too bright for the overall economy. It will be an interesting ride over the next 2 or 3 years.

Oh boy...this will not end well.

They better do something if they want to get those labor costs back from the outer fringes of the universe that they've risen to.

Southwest has changed a lot since Herb Kelleher retired, and not for the better.

Quoting swa4life (Thread starter): In what seems like a completely fundamental change in attitude from an airline who has historically prided itself on being a great employer and one who has treated it's people well

That fundamental shift began 5-7 years ago. The Southwest everyone knew so well over the past 41 years is GONE. Public perception is a powerful thing and WN has been able to hide behind that while slowly transforming itself to something that more resembles the troubled legacies of the past decade.

Just my opinion, of course.

Quoting AWACSooner (Reply 2): Oh boy...this will not end well.

Nope, but they did start this whole thing  WN has been able to buy labor peace for years, and now it can't, and the rest of the carriers have restructured to near-WN cost levels, never mind the new startups that are cheaper with a better product. It's going to get ugly.

WN buying FL opened their eyes. They had to close stations because while FL could make money on them, WN's ground handling costs were so much higher that they would lose money.

20% outsourcing allows those marginal stations to exist in a new WN that has a much more "major" role than the previous incarnation.

Quoting ikramerica (Reply 7): WN buying FL opened their eyes. They had to close stations because while FL could make money on them, WN's ground handling costs were so much higher that they would lose money.

It seems to me they shouldn't have bought FL in the first place. They had a winning formula/strategy before and have lost their focus. They're doing a terrible job of integrating FL and no longer are growing the SW brand organically as they were before the merger.

Quoting ikramerica (Reply 7): WN buying FL opened their eyes. They had to close stations because while FL could make money on them, WN's ground handling costs were so much higher that they would lose money. 20% outsourcing allows those marginal stations to exist in a new WN that has a much more "major" role than the previous incarnation.

I'm not sure it opened their eyes as if they were blind. I do think they have wanted to make this kind of move for a long time and buying FL opened the doors to push for something like this.

[Edited 2012-06-19 17:08:44]

Quoting klkla (Reply 8):

Where we're they going to grow organically? No gates at ATL to get in there with any reasonable presence; no more slots at LGA, DCA, EWR; 0 experience with anything international; etc.

The outsourcing of ground handling is already allowed by the contracts and it will be for cities with marginal operations and too few flights to fully staff the station.

On another note, some organic growth will be happening soon. Very strong rumors of an imminent announcement regarding Hawaii.

It's hard to watch the slow destruction of the proud carrier WN used to be. But that's what's happening, as bit-by-bit the current management team cuts the heart out of the airline. Southwest's old style is gone, replaced by marketing buzz with little else behind it.

Quoting Dreadnought (Reply 4): Southwest has changed a lot since Herb Kelleher retired, and not for the better.

I am not a fan of putting the blame on everyone but Herb. Herb left at the perfect time. Before all this mess came to the surface. 10 years ago, WN had some of the lowest labor costs in the industry. Over the past 7-10 years they have been at the top of every hourly pay scale of pretty much every workgroup in the industry. Think Gary Kelly gave them those deals? Nope. Herb did. What do you think Herb would have done differently right now to keep this company in the black? Herb stepped down for good right before the fuel run up of 2008 so he didn't have to deal with all that. The industry is different now than it was 5 years ago when Herb stepped aside. DL/NW and UA/CO have put pressure on WN to reduce their costs. I just don't think WN could have kept doing things business as usual or in the Herb way in the current state of the industry.

Quoting N202PA (Reply 12): Southwest's old style is gone,

Just curious but how would Southwest's "old style" have handled the current situation regarding overall cost's etc.? I guess that increased scope would be the the obvious choice but how would that work for situations that usflyguy mentions:

Quoting usflyguy (Reply 10): The outsourcing of ground handling is already allowed by the contracts and it will be for cities with marginal operations and too few flights to fully staff the station.

Tugg

WN should have taken the Airtran name, they could be racking in luggage fees and capturing more business travel with business class.

Quoting ikramerica (Reply 7): WN buying FL opened their eyes. They had to close stations because while FL could make money on them, WN's ground handling costs were so much higher that they would lose money.

The FL merger did nothing to harm WN, other than expose WN's long simmering flaws. WN had to buy FL because it was easier than competing with it.

Quoting klkla (Reply 8): They had a winning formula/strategy before and have lost their focus I don't think they lost their focus so much as control of their costs. Then again a real res system wouldn't have hurt. Quoting N202PA (Reply 12): It's hard to watch the slow destruction of the proud carrier WN used to be. The seeds for the destruction were laid long ago--the carrier had creeping costs and a res/IT infrastructure that couldn't handle anything that would drive any incremental revenue. Quoting hatbutton (Reply 13): I am not a fan of putting the blame on everyone but Herb. Herb left at the perfect time.    Their culture has become a double edged sword. Herb built a great carrier, but now everyone is going to resist change because it's not the way Herb would have done it or the way it used to be.

Quoting swa4life (Thread starter): In what seems like a completely fundamental change in attitude from an airline who has historically prided itself on being a great employer and one who has treated it's people well, Southwest is now looking for it's ground operations department (which encompasses ramp, operations, and provisioning) to accept terms on it's next contract to allow for up to 20% of staffing to be replaced by outside contracted employees.

There is nothing that precludes a company from simultaneously being "a great employer and one who has treated it's people well" and one that outsources certain non-core or non-cost-competitive functions. Indeed - Southwest has proven that quite conclusively over the last 40 years by being both a good employer, and a master outsourcer, sending heavy maintenance work out to third parties long before it was en vogue among legacies.

Quoting BD338 (Reply 1): Southwest is potentially heading towards a big showdown with all its labor groups, it by far has, and almost without exception, the best paying contracts in the US market.

Yep. This is yet another reminder that somehow, some way, economic reality will always win in the long run.

Southwest's business model from 1971 up until the mid-2000s was one built on (1) low labor costs (both lower compensation and higher productivity), (2) cost avoidance (single fleet, less-congested airports) and perhaps most of all, (3) continual growth, which both benefited from and enabled (1) and (2) in an insanely profitably, continuous feedback loop. That model worked astoundingly well for thirty years - indeed, it became essentially the blueprint for every other low-fare airline around the world.

However, by the mid-2000s, that model was beginning to lose its effectiveness. In order to buy labor peace, Southwest bought the unions off with successively richer and richer pay scales at precisely the time when Southwest's largest competitors were using bankruptcy to drastically reduce their labor costs. Also challenging the status quo was a move out of Southwest's traditional "comfort zone" - into longer flights, lower frequency, and more congested airports, in search of the higher fares needed to finance the higher labor costs and rising fuel costs - this hurt productivity and undercut the traditional "pressure valve" Southwest had used to offset higher wages. Southwest did make a great bet on fuel hedges in the early 2000s that paid off big and kept the old model limping along for several years past its economic death, but fuel hedges were never going to be enough to keep a fundamentally unsustainable business operating as-is forever.

And so we are where we are now: Southwest's business as it existed 20-30, or even 10, years ago is now gone. They have transitioned full-force into an airline built around a totally different business model, one oriented on higher costs, higher fares and lower growth. Inevitable for a company at this stage in its life cycle, Southwest has had to change in order to compete, because once those fuel hedges evaporated, Southwest's underlying business was no longer profitable.

Quoting Dreadnought (Reply 4): Southwest has changed a lot since Herb Kelleher retired, and not for the better.

Perhaps, although most of what has changed at Southwest has been as a result of things outside Southwest's own control. While there has been enormous change within Southwest in the last decade, there has - overall - been far more dramatic changes elsewhere in the industry, and of course most of the internal changes have been directly as a response to the external changes. Again - Southwest had no choice but to change. It is unfortunate that some of Southwest's legendary culture has had to change, too, and perhaps for the worse (I have heard that before from several Southwest veterans). But, again, I don't think that was avoidable to a large extent - the things that worked for a 15-year-old airline with 70 airplanes will no longer work for a 40-year-old airline with 700 airplanes.

Quoting Silver1SWA (Reply 5): Public perception is a powerful thing

... and nobody in the airline industry does it better than Southwest. Delta I think is a close second these days with their exceptionally good advertising (in my experience their operational execution is a different story, but that's another discussion). But when it comes to convincing the public of something - whether accurate or not - Southwest is the absolute best in the airline business.

Quoting Silver1SWA (Reply 5): WN has been able to hide behind that while slowly transforming itself to something that more resembles the troubled legacies of the past decade.

They really have no choice. These days, those "troubled legacies" are in several notable cases producing better returns to shareholders than Southwest. Southwest has to compete.

Ironically enough, Southwest's competitors - to a certain extent - are now basically doing to Southwest precisely what Southwest did to them 10 years ago: exploiting Southwest's structural weaknesses, at precisely the moment when Southwest is trying to manage the transition and address those weaknesses.

Quoting klkla (Reply 8): They had a winning formula/strategy before

Perhaps, but again, that strategy was not going to last forever. It worked great in 1995. It won't work great in 2015. And besides, Southwest had effectively hit the ceiling on organic growth in an essentially no-growth U.S. economy circa-2010. This gets back to the earlier point: Southwest's business model was built on growth, but in a world where Southwest was no longer the lowest-cost competitor, and where even the lower-cost competitors themselves were slowing growth, Southwest had no other way to expand but through acquisition, however unpalatable or complicated the integration might be.

Quoting Silver1SWA (Reply 5): Public perception is a powerful thing and WN has been able to hide behind that while slowly transforming itself to something that more resembles the troubled legacies of the past decade. Just my opinion, of course.

Fact, not opinion.

Quoting MaverickM11 (Reply 6): Nope, but they did start this whole thing  WN has been able to buy labor peace for years, and now it can't, and the rest of the carriers have restructured to near-WN cost levels, never mind the new startups that are cheaper with a better product. It's going to get ugly.

The legacies all have lower costs than WN. It's not a secret that WN has the highest labor costs in the industry... unless you work for them. Then it's a secret. shhhh

Quoting klkla (Reply 8): It seems to me they shouldn't have bought FL in the first place. They had a winning formula/strategy before and have lost their focus. They're doing a terrible job of integrating FL and no longer are growing the SW brand organically as they were before the merger.

Their strategy was winning in the past but is fast approaching a dead end road. They needed FL more than FL needed them. The unfortunate thing is, it seems like they're too stuck in their ways to reap all of the benefits they could have gained from FL. It would be impossible for them to keep growing the WN brand as they have in the past. How many more cities in the US can they add with at least 8-9 flights ( with hope to grow beyond that)?

I hope it doesn't come down to things like this at WN. But I pin it on the price of success. All their in-house labor translates to higher costs compared to carriers that failed and outsourced labor. I don't like the road the legacies have traveled to profitability, and I respect WN for being able to resist that path to this point.

Quoting Dreadnought (Reply 4): Southwest has changed a lot since Herb Kelleher retired, and not for the better.

That is not it at all. The world around Southwest has changed a lot. If Southwest gets in trouble, it will be proof that it has not been changing fast enough - it needs to keep pace with change outside it.

The harmony at WN wont be able to survive the higher relative cost structure WN has. FL has reveled that while the emperor may still have clothes, everyone can now see through them.

Quoting AWACSooner (Reply 2): Oh boy...this will not end well.

No. It won't.

Quoting Dreadnought (Reply 4): Southwest has changed a lot since Herb Kelleher retired, and not for the better.

Are you a Southwest employee? Because you sure do share the same sentiments that most Southwest employees do! "WWHD" (What would Herb do) has become a battle cry!

Quoting ikramerica (Reply 7): WN buying FL opened their eyes.

By "their," I hope you mean management... because the eyes of the front-line employees have been open since the day this acquisition was announced. After Morris, Herb said Southwest would NEVER acquire another airline... his eyes were open in the mid-80s.

Quoting Silver1SWA (Reply 5): WN has been able to hide behind that while slowly transforming itself to something that more resembles the troubled legacies of the past decade.

No arguments there. Herb, where are you?

Quoting Silver1SWA (Reply 5): Just my opinion, of course.

One felt by MANY. Silver1SWA, I know many many many who share the same sentiments.

Quoting MaverickM11 (Reply 6): Nope, but they did start this whole thing

Stupid smiley face or not... what EXACTLY did Southwest start? The trend of paying it's employees very well? The trend of having only company-employed people on the front lines and servicing the aircraft? The trend of treating its employees like they were a valuable commodity and not a liability? If those are the trends Southwest started, they certainly have NOT caught on over the past decade and they are certainly not the norm these days.

Love or hate Southwest... there is something to be said for paying employees well, encouraging loyalty to a company and treating your employees well.

I am sure that employees who are employed directly by and receive the benefits provided by an airline take their job and their commitment to customers to a level higher than the employees of a contract company who have no loyalty and no benefits to the airline and are just working for a paycheck for the contract company who bid the lowest price.

So what, exactly, did Southwest start? Treating it's employees TOO well?

Quoting klkla (Reply 8): It seems to me they shouldn't have bought FL in the first place. They had a winning formula/strategy before and have lost their focus.

Ya think? I wish there was a "SUPER-RESPECTED" list I could add you to.

Quoting klkla (Reply 8): They had a winning formula/strategy before and have lost their focus.

Yeah... suddenly no one needs to fly from Dallas to Houston or Oakland to Los Angeles or Tampa to Fort Lauderdale.... suddenly the formula that worked for 35 years.... flying to underserved airports and offering high frequency travel in business markets..... all of the things that make Southwest profitable for 35+ years went out the window. Again.... WWHD...

Quoting usflyguy (Reply 10): Where we're they going to grow organically? No gates at ATL to get in there with any reasonable presence; no more slots at LGA, DCA, EWR; 0 experience with anything international; etc.

This argument always gets me. WHERE WERE THEY GOING TO GROW?

WHY is such growth necessary? Southwest made money for 35+ years doing what they do best.... They ALWAYS made money on high-frequency business routes. Tell me, all of a sudden, are people NOT needing to fly from Dallas to Houston? Or from Southern California to the Bay Area? Or from New England to the DC Area? Or between the major business markets of Florida? Or Texas? Southwest made GOOD money for 35+ years flying these kinds of routes. Why is it suddenly necessary for Southwest to offer service to international markets? I don't get it.... the routes flown by Southwest since DAY ONE ALWAYS made money..... people are STILL flying those same routes.... why the need for such expansion?

So Southwest may have run out of cities to fly to.... but they ALWAYS made money flying to those cities! People are NOT suddenly abandoning those types of routes!

Quoting N202PA (Reply 11): It's hard to watch the slow destruction of the proud carrier WN used to be. But that's what's happening, as bit-by-bit the current management team cuts the heart out of the airline. Southwest's old style is gone, replaced by marketing buzz with little else behind it.

Is that you, Herb?

Quoting hatbutton (Reply 12): What do you think Herb would have done differently right now to keep this company in the black?

I think he would have looked at cities like Allentown, Fresno, Harrisburg, Colorado Springs, Milwaukee... I think he would have followed the same cookie-cutter formula that had been followed since the early days. I think he would have lived by his statement that Southwest would NEVER buy another airline because of the culture clashes.... I think he would have let AirTran and all of the issues they have brought be and never considered acquiring them.

Quoting frontierflyer (Reply 14): WN should have taken the Airtran name, they could be racking in luggage fees and capturing more business travel with business class.

Heck, why not just take the ValuJet name? There is, unlike ValuJet, NOT A DANG THING wrong with the Southwest brand name.

Quoting MaverickM11 (Reply 15): The FL merger did nothing to harm WN

Other than hammer in the final nail in the coffin of Southwest culture. It's been two years since the acquisition was announced.... other than a few 737-700s that have been reconfigured and repainted and access to a gate or two in Atlanta...at THIS POINT.... what has the acquisition given Southwest other than a bunch of routes it cannot code-share on and a bunch of former WN employees who are bitter?

Yeah... the culture has been shattered.... if you don't consider that to be harm, then I don't know what to say.

Glad I'm already sitting down.

Just wow.

Quoting skycub (Reply 21): The trend of paying it's employees very well?

Southwest's problem isn't pay employees well. Southwest's problem is labor costs that are now at the top of the industry, while the revenue-generating potential of Southwest's network most certainly is not at the top of the industry. Southwest's storied, successful past has really been about a masterful balance of those two - making sure that Southwest's rising costs didn't get too far out in front of the increasing revenue generation of Southwest's growing network.

The challenge in the last decade is that Southwest let those two get further out of balance than at any other time in the company's history, but also did so at precisely the time that Southwest's competitors were bringing those two into closer balance than at any other time in those companies' histories.

Quoting skycub (Reply 21): The trend of having only company-employed people on the front lines and servicing the aircraft?

Hardly. Again - Southwest was outsourcing before outsourcing was cool. Southwest has, to my knowledge, never performed overhauls on its aircraft on a regular basis, with its own employees, whereas the network carriers pretty much all did up until the late 1990s/early 2000s.

Quoting skycub (Reply 21): Yeah... suddenly no one needs to fly from Dallas to Houston or Oakland to Los Angeles or Tampa to Fort Lauderdale.... suddenly the formula that worked for 35 years.... flying to underserved airports and offering high frequency travel in business markets..... all of the things that make Southwest profitable for 35+ years went out the window. Again.... WWHD...

First off, the change hasn't been sudden - it's happened over the span of years. But to your point - no, there simply aren't as many people flying on those short hops that Southwest made famous as their once were. The rise in fuel has led to a rise in fares, and that has particularly eroded demand from the more price-sensitive travelers that Southwest traditionally catered to. Beyond that, it has become increasingly clear that simply flying short hops within Texas, California and Florida simply no longer cut it in 2012. It might have worked when Southwest's costs were 20% less than their competitors, and thus they could afford to charge far lower fares. But now that Southwest's costs are nearly at the same level as their competitors - and, in fact, substantially higher than some of them - Southwest needs to generate higher revenue to cover those rising costs. And 20 milk runs a day from Love to Hobby no longer cuts it in the revenue-generation department.

Quoting skycub (Reply 21): WHY is such growth necessary? Southwest made money for 35+ years doing what they do best

... which was to grow. That is the key. What Southwest did best for 35 years was grow. Growth was the linchpin that sustained their business model for so long. Continual expansion meant new planes at low cost, new employees at low cost, and a positive halo effect that continually bolstered the network. But that growth was predicated on costs below market that allowed Southwest to "buy market share" - below-market at first due to cheap labor, high productivity, and a simplified operation, and below-market in the last decade primarily from fuel hedges.

But now with both of those cost controllers gone, Southwest's growth model no longer works. Like a shark must keep moving to stay alive, Southwest - as a publicly traded company in an industry as hyper-competitive as the airline industry - has to keep growing in order to remain competitive. But with the organic growth phase now largely over for Southwest (they already fly virtually everywhere that can support their type of service), the only opportunity to grow was to buy. Thus AirTran.

Quoting skycub (Reply 21): Are you a Southwest employee? Because you sure do share the same sentiments that most Southwest employees do! "WWHD" (What would Herb do) has become a battle cry!

No, but I am old enough to remember walking up to the counter at Houston Hobby with no reservation, paying $30 for a plastic reusable boarding pass, walking up to a nicely appointed 737-200 and being in the air within 20 minutes from walking up to the counter, and basically enjoying what was essentially an airborne bus service. Cheap, quick, safe.

The boarding process on Southwest now is now even worse than on all other airlines. And the price of a ticket between Atlanta and Dallas (both now are Southwest hubs) is significantly more expensive than I can get on Delta or American Airlines.

Quoting Dreadnought (Reply 24): No, but I am old enough to remember walking up to the counter at Houston Hobby with no reservation, paying $30 for a plastic reusable boarding pass, walking up to a nicely appointed 737-200 and being in the air within 20 minutes from walking up to the counter, and basically enjoying what was essentially an airborne bus service. Cheap, quick, safe. The boarding process on Southwest now is now even worse than on all other airlines. And the price of a ticket between Atlanta and Dallas (both now are Southwest hubs) is significantly more expensive than I can get on Delta or American Airlines.

Okay, I pretty much have to totally disagree with your post. First off, like it or not Sept. 11 pretty much killed the old way of showing up with no reservation and being on your way and taking a total of 20 minutes from counter to plane. Changes like that weren't exactly ones that WN chose to make.

As for your second paragraph, I highly, highly disagree. I've flown WN fairly regularly going back to about 1990 and the days of the plastic boarding cards were horrible. I hate it when people still bring up the "cattle call" cliche but frankly, WN earned and deserved that back in the plastic boarding card days. Just about everyone who is a current WN flier feels that the current system is a *vast* improvement and that it's better than other carriers. Of course, the people who insist on assigned seating will never like any system that WN uses as long as there is open seating but otherwise you are probably the only person that thinks the plastic cards were a better system.

Your final point though regarding pricing has truth in it.

[Edited 2012-06-19 20:24:37]

[Edited 2012-06-19 20:25:11]

Quoting skycub (Reply 21): Because you sure do share the same sentiments that most Southwest employees do! "WWHD" (What would Herb do) has become a battle cry!

WN can get their costs under control--this WWHD battle cry however, I'm not sure they'll be able to fix, and it could very well be the biggest challenge.

Quoting skycub (Reply 21): Stupid smiley face or not... what EXACTLY did Southwest start?

The low cost revolution, and ultimately the commoditization of airline travel. Of course had it not been WN it would have been someone else, but they were the first meaningful LCC that's still around.

Quoting skycub (Reply 21): Southwest made money for 35+ years doing what they do best.... They ALWAYS made money on high-frequency business routes

RIM and Nokia made buckets of money just a few years ago on products that they can't give away today. Things change, especially over 35 years, multiple fuel spikes, 9-11, several downturns, and umpteen airline bankruptcies. Just look at WN's frequency in some of those markets a decade ago versus today--that should tell you most of the story.

Quoting skycub (Reply 21): It's been two years since the acquisition was announced.... other than a few 737-700s that have been reconfigured and repainted and access to a gate or two in Atlanta...at THIS POINT.... what has the acquisition given Southwest other than a bunch of routes it cannot code-share on and a bunch of former WN employees who are bitter?

It has been one of the roughest mergers I've ever witnessed, but first and foremost WN got a carrier that was underpricing them left and right out of the market.

Quoting skycub (Reply 21): Stupid smiley face or not... what EXACTLY did Southwest start? The trend of paying it's employees very well? The trend of having only company-employed people on the front lines and servicing the aircraft? The trend of treating its employees like they were a valuable commodity and not a liability? If those are the trends Southwest started, they certainly have NOT caught on over the past decade and they are certainly not the norm these days.

DL was doing this long before WN was a glimmer in Herb's eyes.

Quoting skycub (Reply 21): Heck, why not just take the ValuJet name? There is, unlike ValuJet, NOT A DANG THING wrong with the Southwest brand name.

Perhaps, if they had taken the FL name, they could got themselves out of the baggage fee corner that they've painted themselves into.

I have said it before... WN has indeed changed, and it is not a good change IMO. WN will face dark days, just like every legacy has. But, WN has put lots of money away for rainy days. I honestly don't like what WN has become. WN used to be the airline getting bullied around, but the airline did what it did and continued to strive. Since Herb has left, it seems like WN has started flexing their muscles, and began their own bullying. Competition is fine, but WN has changed how they compete. Its almost like they are becoming a Braniff in a way. Maybe I am wrong in my views, but it is not the airline it once was. Its sad actually.

Before people start endless threads about how today's WN isn't the old WN, has anyone stopped to consider that maybe this is language for the International destinations WN will start/inherit? If WN starts LIM, MEX, etc, why would they not use contract employees? Why hire a WN employee for 1 or 2 flts a day and pay them full Southwest salary, benefits, and whatever international things are included?

Also, I highly doubt WN will layoff 20% of the current workforce only to replace them with contract employees.

Southwest has and will continue to change. Just look at or fly on their 737-800! Who ever thought that, Hawaii, or anything international would ever have been in the realm of the airline's future, yet they are coming. The vision of Southwest's future is exciting and I'm sure Herb still there behind the scenes. There will be growing pains, but airline has to change to survive.

Quoting QANTAS747-438 (Reply 29): Before people start endless threads about how today's WN isn't the old WN, has anyone stopped to consider that maybe this is language for the International destinations WN will start/inherit?

Yes, it has already been mentioned above. And like I said, buying FL created the opportunity for WN to make a move like this. It's a slippery slope though. First they keep it to international cities. Then cities with a handful of flights. Then cities with a dozen flights. Then cities under X number of flights and so on. That's the fear at least.

Quoting QANTAS747-438 (Reply 29): Before people start endless threads about how today's WN isn't the old WN, has anyone stopped to consider that maybe this is language for the International destinations WN will start/inherit? If WN starts LIM, MEX, etc, why would they not use contract employees? Why hire a WN employee for 1 or 2 flts a day and pay them full Southwest salary, benefits, and whatever international things are included? Also, I highly doubt WN will layoff 20% of the current workforce only to replace them with contract employees.

Except that the current contract already allows for situations like this and I think people already understood (or probably should have) that the international stations would more than likely not be staffed by WN personnel and be the first to exercise the contract labor for less than 12 flights clause.

"Up to 20%" is such a huge amount that could never be reached solely on international stations.

Quoting F9animal (Reply 28): I have said it before... WN has indeed changed, and it is not a good change IMO. WN will face dark days, just like every legacy has. But, WN has put lots of money away for rainy days. I honestly don't like what WN has become. WN used to be the airline getting bullied around, but the airline did what it did and continued to strive. Since Herb has left, it seems like WN has started flexing their muscles, and began their own bullying. Competition is fine, but WN has changed how they compete. Its almost like they are becoming a Braniff in a way. Maybe I am wrong in my views, but it is not the airline it once was. Its sad actually.

Yeah things are changing since Herb left but the industry is changing too. Hence the reason the went after AirTran. But to the people talking about the high wages at SWA...Yes they are paid very well and were under Herb too. It is not the wages of the employees take AA for example they have one of the highest labor costs in the industry but the employees are among the lowest paid. SW employees are VERY productive compared to other carriers not to mention the one fleet type makes things a whole lot cheaper all the way around. But the market is changing...Mergers are happening the dynamic is changing and SWA knows its original model needs to change as well. Maybe not the employee/management part but other parts. If I wasn't already working for a top employer I would strive to work for them. I almost did but the merger with AirTran had me think twice. Sometimes mergers do not go well and I can already see friction between the SW and FL people with the way this was handled with the FL people feeling screwed.

Quoting skycub (Reply 21): They ALWAYS made money on high-frequency business routes. Tell me, all of a sudden, are people NOT needing to fly from Dallas to Houston? Or from Southern California to the Bay Area? Or from New England to the DC Area? Or between the major business markets of Florida? Or Texas? Southwest made GOOD money for 35+ years flying these kinds of routes. Why is it suddenly necessary for Southwest to offer service to international markets? I don't get it.... the routes flown by Southwest since DAY ONE ALWAYS made money..... people are STILL flying those same routes.... why the need for such expansion?

Yes people are still flying those routes. But still have AA and UA to compete with. Many markets you don't serve. VCT,MOB,LCH,BPT,TYR,GRK,AEX,MFE,LRD,LCH,BTR
New England and DC ? You got AA,US,UA and Delta with major hubs in the Norrtheast.

Most of those carriers can get you anywhere in the world with one stop. In the cases of their hubs located there, non-stop.

You don't think the money made on international routes would be good for WN ? But even then, it's a whole new game,because they would not only be going against their domestic peers, but the likes of international carriers.

I can say loads of people fly BOS-NYC/WAS/PHL. Alot of those business people do business all over the country, and most importantly in places like NRT,LHR,HKG,GVA,FRA,MUC,AMS,CDG,and on and on.

Same on the DAL-HOU route.

It's alot of business to leave on the table.

Quoting skycub (Reply 21): WHY is such growth necessary? Southwest made money for 35+ years doing what they do best.... They ALWAYS made money on high-frequency business routes. Tell me, all of a sudden, are people NOT needing to fly from Dallas to Houston? Or from Southern California to the Bay Area? Or from New England to the DC Area? Or between the major business markets of Florida? Or Texas? Southwest made GOOD money for 35+ years flying these kinds of routes. Why is it suddenly necessary for Southwest to offer service to international markets? I don't get it.... the routes flown by Southwest since DAY ONE ALWAYS made money..... people are STILL flying those same routes.... why the need for such expansion?

Because WN's business model is predicated on constant growth, that's why. It relies on a constant "feed" of traffic and new markets to survive and thrive. It's the only way to keep their non-fuel CASM down. Once the low-hanging fruit is gone, they have no choice but to expand or their labor costs will overwhelm them.

Exactly what Ryanair does.......

Quoting Dreadnought (Reply 4): Southwest has changed a lot since Herb Kelleher retired, and not for the better.

Quoting N202PA (Reply 11): It's hard to watch the slow destruction of the proud carrier WN used to be. But that's what's happening, as bit-by-bit the current management team cuts the heart out of the airline. Southwest's old style is gone, replaced by marketing buzz with little else behind it.

Quoting skycub (Reply 21): Are you a Southwest employee? Because you sure do share the same sentiments that most Southwest employees do! "WWHD" (What would Herb do) has become a battle cry!

For many, the defining moment when the "old style" Southwest vanished was the day Herb and Colleen retired. It certainly doesn't feel like a family anymore and the "treat your employees like customers" motto is no longer the top priority, in my opinion.

Quoting commavia (Reply 23): Southwest's problem isn't pay employees well. Southwest's problem is labor costs that are now at the top of the industry, while the revenue-generating potential of Southwest's network most certainly is not at the top of the industry.

The problem is a huge chunk of the workforce that was hired during the expansion of the last ten years is now approaching top out pay and these employees are young and not going anywhere soon.

Quoting commavia (Reply 16): They really have no choice. These days, those "troubled legacies" are in several notable cases producing better returns to shareholders than Southwest. Southwest has to compete.

I understand that. But I find it ironic that their way of staying in the game is to become, in many ways, just like everyone else.

Quoting Silver1SWA (Reply 37): The problem is a huge chunk of the workforce that was hired during the expansion of the last ten years is now approaching top out pay and these employees are young and not going anywhere soon.

... like I said: Southwest's model for the first thirty years was built on continuous expansion, so that there was always a steady stream of bottom-of-scale, lower-cost people coming in to offset the steadily rising costs of the more senior workforce. However, that no longer works in an environment where Southwest's organic growth capacity is essentially done - they've already grown into basically every place they can.

Quoting Silver1SWA (Reply 37): But I find it ironic that their way of staying in the game is to become, in many ways, just like everyone else.

Well, I guess I just don't really see what alternative they have. The numbers are the numbers - there's no getting around that reality.

I know Southwest has convinced everybody for forty years that they are different and in some sense special - and at the beginning they really were - but the truth these days is that a 40-year-old company simply has a harder and harder time being difference and special when they have to contend with all the same issues as their competitors. That's not just about Southwest - every company in that position eventually has to contend with the same thing.

Quoting Dreadnought (Reply 24): And the price of a ticket between Atlanta and Dallas (both now are Southwest hubs) is significantly more expensive than I can get on Delta or American Airlines.

Not really a meaningful comparison since WN doesn't fly the route nonstop.

Quoting EA CO AS (Reply 35): Because WN's business model is predicated on constant growth, that's why.

So is every carrier. And once those carriers stopped growing, they all quickly found themselves in bankruptcy.

Quoting klkla (Reply 8): They had a winning formula/strategy before

You mean airTran did, right?

Quoting swa4life (Thread starter): Southwest is now looking for it's ground operations department (which encompasses ramp, operations, and provisioning) to accept terms on it's next contract to allow for up to 20% of staffing to be replaced by outside contracted employees.

Well a majority of their MX is already outsourced.

Quoting BD338 (Reply 1): Southwest is potentially heading towards a big showdown with all its labor groups, it by far has, and almost without exception, the best paying contracts in the US market

SW mechanics are the highest paid in the Passenger business. And it is not even close.

Quoting FlyPNS1 (Reply 39): Not really a meaningful comparison since WN doesn't fly the route nonstop.

Which in itself is a mystery. Dallas is the Hub and HQ. Atlanta is the Hub and HQ of Airtran, which they just bought, and SW started flying there several months ago. Why no direct link? The Wright Amendment is long dead.

Quoting Dreadnought (Reply 42): The Wright Amendment is long dead.

I thought it didn't die until 2014?

Quoting Dreadnought (Reply 42): The Wright Amendment is long dead.

The Wright Amendment is anything but dead. Do a bit more research before posting such a heavy claim.

Quoting ikramerica (Reply 7): WN buying FL opened their eyes. They had to close stations because while FL could make money on them, WN's ground handling costs were so much higher that they would lose money.20% outsourcing allows those marginal stations to exist in a new WN that has a much more "major" role than the previous incarnation.

It's certainly no secret that WN has some of the highest labor cost in the industry, and since labor is about the only cost they can control, this is not a surprise. The union will have fits of course. But WN is going to have to do something or it will end up in the same mess AA has right now.

If the union is smart, they will understand and help, not the other way around. They need to remember the death of airlines which have had unions who were so entrenched thay couldn't give a little for the long term benefit of all. WN management had better give a little here too - multimillion $ bonuses handed out to executives during times like these are completely unwelcome.

"Atlanta is the Hub and HQ of Airtran"

AirTrans HQ was in Orlando...just a heads' up

Hopefully all of this change will get some of those long-time employees that are so resistant to change to finally retire, ask honestly believe they are a major component to the "morale issue" that keeps getting brought up. One of those is on this board and hasn't had a positive thing to say, that I can recall, about his employer on this board.

Quoting Dreadnought (Reply 24): The boarding process on Southwest now is now even worse than on all other airline

This right here pretty much tells me that you are not looking at the facts and are fitting the facts to your view.