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Drafran
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WN Kelly seems to think change fee elimination won't help the legacy carriers

Fri Sep 11, 2020 10:34 pm

https://simpleflying.com/southwest-ceo-other-airlines/

A quotation from the Simple Flying site:

"Remember, they began charging fees in the first place because they couldn’t match our low fares. To try to get closer, they reduced their published fares, knowing they could get money from hidden fees. It was a gimmick. Now that advantage is being taken away, now they’re going to have to match our fares, and our cost structure is lower, our fares are lower. It will be difficult for them to replace this change fee revenue while still trying to match Southwest fares and make a profit.”

Airlines started change fees because restricted fares were designed more for the leisure traveler whose travel plans were usually much firmer. Business travelers pay change fees more than anyone else and the airlines wanted them to buy unrestricted or less restrictive tickets. When I worked for US Airways, I got more complaints about change fees from business travelers than leisure. I would tell them, 'you want more flexibility, we offer fares that allow that. But if you choose restricted fares, you agree to change fees and add/collects when you bought the ticket.'
 
jetblueguy22
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Fri Sep 11, 2020 10:48 pm

I mean, is anybody surprised he’s saying this? As soon as United announced it the Southwest twitter page was chirping them about how they’ve been that way for decades.
It will without a doubt help the majors, but I don’t think it’s going to be some massive aid to their bottom line. No change fees is a small part of the overall equation. I’m A-List, but that’s just because Southwest fits my flying needs. Meanwhile my father needs the international flights, so it doesn’t help him at all.
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MIflyer12
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Fri Sep 11, 2020 11:13 pm

There are vectors of competition other than price and change fees. Let Kelly explain why AA/DL/UA were getting more per seat mile even while charging for bags...
 
UNDTanner
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Fri Sep 11, 2020 11:15 pm

I have only booked United now for the foreseeable future for work trips, with change fees gone there is zero reason to fly WN and I much more with status on UA then I ever got on WN. Status on WN did very little for me.
 
freakyrat
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Fri Sep 11, 2020 11:24 pm

I live closer to DFW than DAL but tend to use WN more for Intra-Texas Trips and Trips to MDW. WIth the Quarantine etc. for Chicago MDW trips are out of the question for the forseable future. I also use WN when I have to check bags.
 
USAirALB
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Fri Sep 11, 2020 11:29 pm

The new same day flight change benefit being offered by AA/DL/UA/AS is simply a marketing ploy and nothing else. It's essentially designed to give the impression that each of the US3+AS is being a more "customer centric", "caring", "friendly" airline-however you want to call it. The reality is that 99% of leisure travelers (that's primarily who is flying right now anyways) could care less about change fees because vacation plans are usually more concrete (hotel reservations, etc) and it would be more logistically challenging to change such plans all together.

I am willing to bet the ancillary revenue to be lost with the new policy is minimal. I personally have never paid a change fee in my life. The two times I was going to have to do so (both on UA) I was able to get it waived by sweet talking the agent over the phone.

If airlines really wanted to be more "customer centric" they would simply eliminate the first checked bag fee for non-Basic Economy tickets. Doing so would probably improve operational performance as well tenfold due to the circus that bag fees have created during the boarding process. But they won't do this because it would cut into their bottom line.
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Tack
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Fri Sep 11, 2020 11:38 pm

UNDTanner wrote:
I have only booked United now for the foreseeable future for work trips, with change fees gone there is zero reason to fly WN and I much more with status on UA then I ever got on WN. Status on WN did very little for me.


One could make an argument that WN elected to forego change fees for exactly the status reason. Their loyalty program and lack of a global network never made WN an attractive option for me, however even with my EMERALD status on AA, the lack of change fees on a WN ticket always had me weighing a potential switch to them for some domestic flying. Now, with the change fee field more even, I don’t care what WN does, they don’t have a shot at my business. At the end of the day, no change fees by the big 3 plus AS won’t kill ‘em but they’ll loose some business for sure.
 
jayunited
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 12:37 am

Drafran wrote:
https://simpleflying.com/southwest-ceo-other-airlines/

A quotation from the Simple Flying site:

"Remember, they began charging fees in the first place because they couldn’t match our low fares. To try to get closer, they reduced their published fares, knowing they could get money from hidden fees. It was a gimmick. Now that advantage is being taken away, now they’re going to have to match our fares, and our cost structure is lower, our fares are lower. It will be difficult for them to replace this change fee revenue while still trying to match Southwest fares and make a profit.”

Airlines started change fees because restricted fares were designed more for the leisure traveler whose travel plans were usually much firmer. Business travelers pay change fees more than anyone else and the airlines wanted them to buy unrestricted or less restrictive tickets. When I worked for US Airways, I got more complaints about change fees from business travelers than leisure. I would tell them, 'you want more flexibility, we offer fares that allow that. But if you choose restricted fares, you agree to change fees and add/collects when you bought the ticket.'



I think it has been well documented on this site by quite a few of us even WN employees that WN is no longer a low cost carrier. In the Chicagoland region WN fares a lot of times match with AA and UA are charging and there are even time when WN is more expensive. When WN launched Hawaii service their sale fares were quickly replaced by a much higher fare. In fact there were times pre-COVID where WN was charging more than AA/DL/UA/AS/HA on flights to Hawaii from the west cost. There are places where WN's cost structure is lower than AA/DL/UA's but the idea that these airlines will have to match WN's fares is absolutely laughable.

I think Kelly's statement would have more of an impact if instead of focusing on matching WN's fares he focused on the fact that these airlines are still charging check bags fees, and in fact some carriers raised their check bag fees as recently as 2019.

The true low cost major carriers these days are NK, and F9.
 
exmike
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 12:38 am

Tack wrote:
UNDTanner wrote:
I have only booked United now for the foreseeable future for work trips, with change fees gone there is zero reason to fly WN and I much more with status on UA then I ever got on WN. Status on WN did very little for me.


One could make an argument that WN elected to forego change fees for exactly the status reason. Their loyalty program and lack of a global network never made WN an attractive option for me, however even with my EMERALD status on AA, the lack of change fees on a WN ticket always had me weighing a potential switch to them for some domestic flying. Now, with the change fee field more even, I don’t care what WN does, they don’t have a shot at my business. At the end of the day, no change fees by the big 3 plus AS won’t kill ‘em but they’ll loose some business for sure.


I think you guys are missing what may be the true intent of "no change fees". This is to further separate basic economy from discounted economy. I expect as things normalize the price delta between basic economy and discounted economy will grow - essentially it will become the new full fare economy. Leisure travelers which make up the bulk of flyers will still buy basic economy, and they will continue to benefit from flying southwest, much like things are now. Being a AA elite, I will continue to have elite benefits on basic economy and that is a huge differentiator for AA, but for most people nothing will change.

Lets be real here, the airlines aren't going to give up anything for free. The new economy is just priced so that the change fee is baked in compared to basic economy.
 
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klm617
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 12:47 am

Agreed because Basic economy will still not allow changes and that's where most tickets are sold. This is nothing more than a publicity stunt telling you they are giving you something when in reality they are giving you nothing. It would be meaningful if there were no change fees on basic economy fares as well.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
usflyer msp
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 12:57 am

exmike wrote:
Tack wrote:
UNDTanner wrote:
I have only booked United now for the foreseeable future for work trips, with change fees gone there is zero reason to fly WN and I much more with status on UA then I ever got on WN. Status on WN did very little for me.


One could make an argument that WN elected to forego change fees for exactly the status reason. Their loyalty program and lack of a global network never made WN an attractive option for me, however even with my EMERALD status on AA, the lack of change fees on a WN ticket always had me weighing a potential switch to them for some domestic flying. Now, with the change fee field more even, I don’t care what WN does, they don’t have a shot at my business. At the end of the day, no change fees by the big 3 plus AS won’t kill ‘em but they’ll loose some business for sure.


I think you guys are missing what may be the true intent of "no change fees". This is to further separate basic economy from discounted economy. I expect as things normalize the price delta between basic economy and discounted economy will grow - essentially it will become the new full fare economy. Leisure travelers which make up the bulk of flyers will still buy basic economy, and they will continue to benefit from flying southwest, much like things are now. Being a AA elite, I will continue to have elite benefits on basic economy and that is a huge differentiator for AA, but for most people nothing will change.

Lets be real here, the airlines aren't going to give up anything for free. The new economy is just priced so that the change fee is baked in compared to basic economy.


My theory is that going forward:
Basic Economy = ULCC fare
Regular Economy = Southwest fare

Im looking at flights for Thanksgiving and and have noticed that basic economy has disappeared for most cities (at least for AA). I only see BE on routes like MSP - MIA, MCO, PHX, LAS, BNA where there is ULCC competition.
 
jayunited
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 1:29 am

klm617 wrote:
Agreed because Basic economy will still not allow changes and that's where most tickets are sold. This is nothing more than a publicity stunt telling you they are giving you something when in reality they are giving you nothing. It would be meaningful if there were no change fees on basic economy fares as well.


That is not where most tickets are sold, at least on UA and I'm going to go out on a limb and say the same is probably true at AA and DL. At UA for people who have access to SHARES and know how to pull the information you can see the breakdown of how many passenger are on a basic economy ticket and how many are on a regular economy ticket. Now when I say regular economy I'm not talking about a full fare economy ticket. Basic economy once it was rolled out began losing a lot of its luster with travelers because of all the restrictions on those tickets and all the fees. If a passenger isn't careful they could end up pay more for their journey than they would have on a regular economy ticket.

Basic economy was rolled out specifically to fight NK and F9, not WN and as passenger became more familiar with basic economy and the restrictions they realize basic economy does not make financial sense for every trip. As a result passengers became more selective as to when they would book a basic economy ticket verses a regular economy ticket and basic economy is not offered on every flight.
 
phxa340
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 3:24 am

Ditto what everyone says. WN is getting zero of my business moving forward. They didn’t do anything wrong. It’s just that their competitive advantage disappeared overnight.
 
n7371f
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 4:12 am

Not sure if Gary is right or wrong but one thing I'm assured of...

The fare spread between basic economy and the rest of the "regular" coach fares is going to get real wide. Say goodbye to $25-$40 one way differences - and more like $100-$125 differences between basic and regular coach.

AA all but said it in the SimpleFlying article: too many passengers were booking basic economy.

So standby for three, six months or a year from now when the articles are no longer praising the airlines for dropping change fees but criticizing them for bait and switch with no-change-fee air fares costing well over $200 more roundtrip than basic.
 
chicawgo
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 4:29 am

jayunited wrote:
Drafran wrote:
https://simpleflying.com/southwest-ceo-other-airlines/

A quotation from the Simple Flying site:

"Remember, they began charging fees in the first place because they couldn’t match our low fares. To try to get closer, they reduced their published fares, knowing they could get money from hidden fees. It was a gimmick. Now that advantage is being taken away, now they’re going to have to match our fares, and our cost structure is lower, our fares are lower. It will be difficult for them to replace this change fee revenue while still trying to match Southwest fares and make a profit.”

Airlines started change fees because restricted fares were designed more for the leisure traveler whose travel plans were usually much firmer. Business travelers pay change fees more than anyone else and the airlines wanted them to buy unrestricted or less restrictive tickets. When I worked for US Airways, I got more complaints about change fees from business travelers than leisure. I would tell them, 'you want more flexibility, we offer fares that allow that. But if you choose restricted fares, you agree to change fees and add/collects when you bought the ticket.'



I think it has been well documented on this site by quite a few of us even WN employees that WN is no longer a low cost carrier. In the Chicagoland region WN fares a lot of times match with AA and UA are charging and there are even time when WN is more expensive. When WN launched Hawaii service their sale fares were quickly replaced by a much higher fare. In fact there were times pre-COVID where WN was charging more than AA/DL/UA/AS/HA on flights to Hawaii from the west cost. There are places where WN's cost structure is lower than AA/DL/UA's but the idea that these airlines will have to match WN's fares is absolutely laughable.

I think Kelly's statement would have more of an impact if instead of focusing on matching WN's fares he focused on the fact that these airlines are still charging check bags fees, and in fact some carriers raised their check bag fees as recently as 2019.

The true low cost major carriers these days are NK, and F9.


I agree with your post but, to be clear, “low cost carrier” never meant low FARE carrier. It’s meant to mean an airline with much lower business costs. A good argument could be made they’ve moved from that as well (I.e. only secondary airports, etc.) but they still have notably lower costs than the legacies.
 
airplaneboy
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 6:40 am

There is a big misconception that Southwest has higher costs than they actually do. Pre-covid, WN actually had the lowest CASM than any other airline except for G4. I believe NK was a close third (could be wrong, but I can’t find the 2019 investor presentation booklet online that illustrated this when I last viewed it in 2019). Although WN is ~80-90% unionized and their employees are privileged to have some of the better contracts industry wide, they are also the most efficient and productive. So despite their higher labor costs people like to keep emphasizing on here, they are ignorant to the fact that pre-covid, WN employees produced the most return in productivity than other airlines. Particularly the Big 3 - who’s business model by default causes them to be higher cost (many fleet types, multiple cabins like first class etc., banked hubs for connections versus point to point flying, more crew members and ground staff per aircraft than WN, and so on). It is through the efficiency of their point to point network versus banked hubs from their peers that WN is able to offset those higher labor costs in order to enjoy having one of the lowest CASM. Also in pre-covid days, all of the other majors including NK gave their employees significant raises in pay and compensation packages that were equal to or in some cases (like pilots), better than their relative peer groups at WN. So Southwest’s labor costs actually weren’t the highest anymore going into 2020. But Southwest’s employees still remained the most productive despite having the least amount of outsourced workers. Their ROIC (return on invested capital) consistently remained one of the highest during the last several years (and was increasing in measure I believe).

In January of this year, they reported their 47th consecutive year of profitability. There’s a reason why they are the best positioned financially to weather this pandemic and are able to secure the best terms of any loan and also have the best credit rating of any US airline. This isn’t about whether they have the best product or route map, this is about the fact that they have always been a solid business entity. Gary Kelly is only their second CEO in almost 50 years of operating, and he’s helped bring changes to the company to grow into its current form. I would trust his concerns and forecast over any other airline CEO today.
 
cvsirls
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 7:17 am

airplaneboy wrote:
There is a big misconception that Southwest has higher costs than they actually do. Pre-covid, WN actually had the lowest CASM than any other airline except for G4. I believe NK was a close third (could be wrong, but I can’t find the 2019 investor presentation booklet online that illustrated this when I last viewed it in 2019). Although WN is ~80-90% unionized and their employees are privileged to have some of the better contracts industry wide, they are also the most efficient and productive. So despite their higher labor costs people like to keep emphasizing on here, they are ignorant to the fact that pre-covid, WN employees produced the most return in productivity than other airlines. Particularly the Big 3 - who’s business model by default causes them to be higher cost (many fleet types, multiple cabins like first class etc., banked hubs for connections versus point to point flying, more crew members and ground staff per aircraft than WN, and so on). It is through the efficiency of their point to point network versus banked hubs from their peers that WN is able to offset those higher labor costs in order to enjoy having one of the lowest CASM. Also in pre-covid days, all of the other majors including NK gave their employees significant raises in pay and compensation packages that were equal to or in some cases (like pilots), better than their relative peer groups at WN. So Southwest’s labor costs actually weren’t the highest anymore going into 2020. But Southwest’s employees still remained the most productive despite having the least amount of outsourced workers. Their ROIC (return on invested capital) consistently remained one of the highest during the last several years (and was increasing in measure I believe).

In January of this year, they reported their 47th consecutive year of profitability. There’s a reason why they are the best positioned financially to weather this pandemic and are able to secure the best terms of any loan and also have the best credit rating of any US airline. This isn’t about whether they have the best product or route map, this is about the fact that they have always been a solid business entity. Gary Kelly is only their second CEO in almost 50 years of operating, and he’s helped bring changes to the company to grow into its current form. I would trust his concerns and forecast over any other airline CEO today.


Uhm........okay?

So anyway, about these change fees....
When does this new "no change fee" take effect, or has it already begun?
 
SkyVoice
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 7:18 am

Going back to the OP's post, I think that Gary Kelly is also describing what some call "The Franchise of the Mind." It's like, "So what if the legacy carriers do away with change fees. Most people will think of Southwest first when they want to travel with an airline that doesn't charge change fees." That's due to Southwest's marketing & branding over the years, eg. "Fees don't fly with us!"

jayunited wrote:
The true low cost major carriers these days are NK, and F9.


Yes, but let's not overlook G4 & SY.
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Jerseyguy
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 7:32 am

Tack wrote:
UNDTanner wrote:
I have only booked United now for the foreseeable future for work trips, with change fees gone there is zero reason to fly WN and I much more with status on UA then I ever got on WN. Status on WN did very little for me.


One could make an argument that WN elected to forego change fees for exactly the status reason. Their loyalty program and lack of a global network never made WN an attractive option for me, however even with my EMERALD status on AA, the lack of change fees on a WN ticket always had me weighing a potential switch to them for some domestic flying. Now, with the change fee field more even, I don’t care what WN does, they don’t have a shot at my business. At the end of the day, no change fees by the big 3 plus AS won’t kill ‘em but they’ll loose some business for sure.


phxa340 wrote:
Ditto what everyone says. WN is getting zero of my business moving forward. They didn’t do anything wrong. It’s just that their competitive advantage disappeared overnight.


While I respect everyones choices to do what the best for them. I'd like to remind everybody what will happen when the big 3 decide that it is no longer best for them to not charge change fees. The change fees were ridiculous, just look at the ULCCs the airlines that people joked were going to charge you to use the bathroom, they had change fees that were around half as much as the majors. They just kept increasing and increasing until they were out of control. So for me WN is going to get most of my business except for the times when the fare difference is way too much.

usflyer msp wrote:
Lets be real here, the airlines aren't going to give up anything for free. The new economy is just priced so that the change fee is baked in compared to basic economy.

Yep, I said that when this was first announced, the difference between Basic Economy and Economy is going to start slowly expanding, the number of flights will decrease to ensure a profitable which will mean that people will be pushed to regular economy for the $0 change fee and the less risk of having to get check your carryon.
 
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EA CO AS
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 9:21 am

Everyone is looking at this from a competitive perspective. It’s not; this is about SURVIVAL. Most prospective travelers are not booking because they don’t know what cities or states may shut down next week or next month, so they’re booking closer in than ever before, and airlines hate that. They need forward booking demand to be a lot higher, and eliminating change fees takes a buying obstacle off the table, encouraging those prospective buyers to actually buy.

The revenue loss will hurt, but not as much as the slackened demand does. This move was to stimulate demand so the losses aren’t as bad as they’d otherwise be in the current demand environment.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
Varsity1
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 9:26 am

airplaneboy wrote:
There is a big misconception that Southwest has higher costs than they actually do. Pre-covid, WN actually had the lowest CASM than any other airline except for G4. I believe NK was a close third (could be wrong, but I can’t find the 2019 investor presentation booklet online that illustrated this when I last viewed it in 2019). Although WN is ~80-90% unionized and their employees are privileged to have some of the better contracts industry wide, they are also the most efficient and productive. So despite their higher labor costs people like to keep emphasizing on here, they are ignorant to the fact that pre-covid, WN employees produced the most return in productivity than other airlines. Particularly the Big 3 - who’s business model by default causes them to be higher cost (many fleet types, multiple cabins like first class etc., banked hubs for connections versus point to point flying, more crew members and ground staff per aircraft than WN, and so on). It is through the efficiency of their point to point network versus banked hubs from their peers that WN is able to offset those higher labor costs in order to enjoy having one of the lowest CASM. Also in pre-covid days, all of the other majors including NK gave their employees significant raises in pay and compensation packages that were equal to or in some cases (like pilots), better than their relative peer groups at WN. So Southwest’s labor costs actually weren’t the highest anymore going into 2020. But Southwest’s employees still remained the most productive despite having the least amount of outsourced workers. Their ROIC (return on invested capital) consistently remained one of the highest during the last several years (and was increasing in measure I believe).

In January of this year, they reported their 47th consecutive year of profitability. There’s a reason why they are the best positioned financially to weather this pandemic and are able to secure the best terms of any loan and also have the best credit rating of any US airline. This isn’t about whether they have the best product or route map, this is about the fact that they have always been a solid business entity. Gary Kelly is only their second CEO in almost 50 years of operating, and he’s helped bring changes to the company to grow into its current form. I would trust his concerns and forecast over any other airline CEO today.


Southwest has higher casm than Allegiant, Spirit and Frontier.
 
Galore
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 11:19 am

Can someone explain how flexible fares make sense?

I just checked a route where AA competes with WN. DFW to SAT round trip Sept. 16th/17th

AA wants $277 (cheapest non flexible) for Main Cabin. $777 Main Cabin fully flexible and $725 First Flexible.

I mean, huh? Is that some computer pricing glitch? Who would possibly pay 777/277 = 2.8x for the same seat in coach but “flexible”. And then you can get that flexibility cheaper in first???

While this is obviously ridiculous, flexible coach is usually not just a bit more expensive but often comes with a 100%+ up charge. Why would a business purchase that? My employer specifically forbids buying these bizarrely priced tickets as it’s cheaper to just toss an unused ticket in the trash than buy flexible fares.

Oh, WN wants $277.96 for the same dates. LOL. What a “low cost” carrier. And so competitive. It’s 96 cents more expensive than their Oligopoly partner but wow, FLEXIBLE, and they generously let you check bags!!!!!
 
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EA CO AS
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 2:19 pm

Galore wrote:
Can someone explain how flexible fares make sense?


They’re fully refundable. The others aren’t.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
Cubsrule
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 2:35 pm

EA CO AS wrote:
Galore wrote:
Can someone explain how flexible fares make sense?


They’re fully refundable. The others aren’t.


Yup. And to answer the other part of the question, it’s not that uncommon on AA for first to be cheaper than coach in expensive/flexible fare buckets and/or in expensive markets (like smaller cities in Texas and the Carolinas). I don’t know the “why” but it’s a phenomenon from the PMAA side of the house; I don’t recall it happening on US. I’ve never seen it on UA and only occasionally on DL. On DL it typically happens on tickets purchased within hours of travel.
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Galore
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 3:29 pm

EA CO AS wrote:
Galore wrote:
Can someone explain how flexible fares make sense?


They’re fully refundable. The others aren’t.


Yes, but how do they make sense, if they are 2.8x more than a non flexible fare?

I’m not sure if you realize, but it’s cheaper to just buy the non flexible ticket and then in the event that plans change, toss it and buy another one. I just checked, AA would still sell me a ticket DFW-SAT RT for departure today for $297. You’ve got to royally suck at planning if it is actually cheaper to pay a 280% premium.

So even if I just forfeit the non flexible fare and buy a last second ticket I still save more than $200. So why would I buy a flexible ticket again?
 
hpff
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 3:30 pm

EA CO AS wrote:
Everyone is looking at this from a competitive perspective. It’s not; this is about SURVIVAL. Most prospective travelers are not booking because they don’t know what cities or states may shut down next week or next month, so they’re booking closer in than ever before, and airlines hate that. They need forward booking demand to be a lot higher, and eliminating change fees takes a buying obstacle off the table, encouraging those prospective buyers to actually buy.

The revenue loss will hurt, but not as much as the slackened demand does. This move was to stimulate demand so the losses aren’t as bad as they’d otherwise be in the current demand environment.


Which makes sense, considering Alaska kept pushing the no change fee date back further and further until eliminating it completely. I would imagine change fees will return on legacy airlines in a couple of years.

Kelly may well be right about the impact to Southwest as well, as flyers who valued no change fees before 2020 already had that perk for being an FF on a legacy or will looked to fly WN. I completely agree the change fees are meant to stimulate bookings, especially considering the airline will keep the money from the booking for someone who cancels unless they fly on a refundable fare, and then eat the cost later when they're ready to fly, which is exactly what the airlines want right now.
 
frmrCapCadet
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 4:22 pm

EA CO AS wrote:
Everyone is looking at this from a competitive perspective. It’s not; this is about SURVIVAL. Most prospective travelers are not booking because they don’t know what cities or states may shut down next week or next month, so they’re booking closer in than ever before, and airlines hate that. They need forward booking demand to be a lot higher, and eliminating change fees takes a buying obstacle off the table, encouraging those prospective buyers to actually buy.

The revenue loss will hurt, but not as much as the slackened demand does. This move was to stimulate demand so the losses aren’t as bad as they’d otherwise be in the current demand environment.


I think this pretty much nails it. And per my normal comment, airlines should figure out how much it costs them to fly baggage and how much to offer changing flights then add, say, 14% profits to these transactions (and include what ever it costs them from passengers gaming the system). Get rid of 'gotcha' pricing. It just makes customers angry.
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Cubsrule
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 4:34 pm

Galore wrote:
EA CO AS wrote:
Galore wrote:
Can someone explain how flexible fares make sense?


They’re fully refundable. The others aren’t.


Yes, but how do they make sense, if they are 2.8x more than a non flexible fare?

I’m not sure if you realize, but it’s cheaper to just buy the non flexible ticket and then in the event that plans change, toss it and buy another one. I just checked, AA would still sell me a ticket DFW-SAT RT for departure today for $297. You’ve got to royally suck at planning if it is actually cheaper to pay a 280% premium.

So even if I just forfeit the non flexible fare and buy a last second ticket I still save more than $200. So why would I buy a flexible ticket again?


For those of us who charge clients for business travel, refundable fares ease the accounting burden when plans change. That has real value, though probably not a 280 percent premium in value.

One of my last multi-stop trips pre-COVID was CLE for Client X on Tuesday and DEN for Client Y on Wednesday. I flew WN BNA-CLE (charged to Client X), UA CLE-DEN (split between the clients) and WN DEN-BNA (charged to Client Y). If the Cleveland stop had cancelled and I’d had a nonrefundable ticket CLE-DEN, I would have wound up with UA credit split between Client X and Client Y (what I probably would have done is charged Client X the change fee and “banked” the remaining credit between the two clients). If UA had worked for the BNA-DEN I then needed I probably could have changed to that and used up Client Y’s portion of the credit but would have been left with credit for Client X with unknown plans for using it; I don’t fly UA that much so it’s hard to know if or when I would have been able to use it.

That accounting is confusing enough as-is, and when this type of change happens 3 or 4 times a month the confusion adds up really quickly.
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 4:53 pm

Southwest is loosing money as quickly as any other major. Unfortunately, the first major to effect the 30-40% cuts will be the first one to return to profitability. With no Asian or European market access, that seems to leave Southwest with some major challenges.
 
Miamiairport
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 4:55 pm

No the elimination of change fees aren't going to necessarily help other carrier's bottom lines. It essentially was a near 100% profit margin source of revenue. But right now what airlines need more than profits is cash and any means to get people to book a ticket.
 
ALTF4
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 5:04 pm

Galore wrote:
EA CO AS wrote:
Galore wrote:
Can someone explain how flexible fares make sense?


They’re fully refundable. The others aren’t.


Yes, but how do they make sense, if they are 2.8x more than a non flexible fare?

I’m not sure if you realize, but it’s cheaper to just buy the non flexible ticket and then in the event that plans change, toss it and buy another one. I just checked, AA would still sell me a ticket DFW-SAT RT for departure today for $297. You’ve got to royally suck at planning if it is actually cheaper to pay a 280% premium.

So even if I just forfeit the non flexible fare and buy a last second ticket I still save more than $200. So why would I buy a flexible ticket again?


In some rare cases, it makes sense. There have been times for my job that there is a "get out there ASAP" situation and I book full refundable first flight I can make. Then it turns out the situation wasn't as bad as expected, and I don't need to get out there. Out of 6 times that has happened, I have only flown once on that ticket. Great thing is, I can just no-show the flight and I get a full refund. Airline takes the entire risk.

This is the only situation I can think of for fully refundable making sense. And it's rare.
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 5:12 pm

I chalk that up to just being a competitor... I do wonder what took the legacy carriers this long to offer this. It was clear that it was a point of popularity with WN and it’s loyal customers...
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lga31vfr
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 5:44 pm

USAirALB wrote:
The new same day flight change benefit being offered by AA/DL/UA/AS is simply a marketing ploy and nothing else. It's essentially designed to give the impression that each of the US3+AS is being a more "customer centric", "caring", "friendly" airline-however you want to call it. The reality is that 99% of leisure travelers (that's primarily who is flying right now anyways) could care less about change fees because vacation plans are usually more concrete (hotel reservations, etc) and it would be more logistically challenging to change such plans all together.

ne.


I disagree with you 100%. How is it a marketing ploy if it saves me $800.00 when I book 4 tickets on Delta, JFK-LAX for the holidays, I need to change my inbound or outbound and I can do it for free. DL saved me $800.00. I fail to see the marketing ploy in me having that $800.00 in my pocket
 
Tack
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 5:51 pm

frmrCapCadet wrote:
EA CO AS wrote:
Everyone is looking at this from a competitive perspective. It’s not; this is about SURVIVAL. Most prospective travelers are not booking because they don’t know what cities or states may shut down next week or next month, so they’re booking closer in than ever before, and airlines hate that. They need forward booking demand to be a lot higher, and eliminating change fees takes a buying obstacle off the table, encouraging those prospective buyers to actually buy.

The revenue loss will hurt, but not as much as the slackened demand does. This move was to stimulate demand so the losses aren’t as bad as they’d otherwise be in the current demand environment.


I think this pretty much nails it. And per my normal comment, airlines should figure out how much it costs them to fly baggage and how much to offer changing flights then add, say, 14% profits to these transactions (and include what ever it costs them from passengers gaming the system). Get rid of 'gotcha' pricing. It just makes customers angry.


Seems simple enough, but that just doesn’t work. Airlines need to compete on fare. Customers do their price shopping on a myriad of different online platforms. Lowest fare gets eyeballs and gives the airline a chance to convert the looks to a sale. The days of ‘Gotcha’ pricing are pretty much over, all ancillary charges are well documented by airlines and presented to customers. Unbundling fares, like it or not, was a good business move. FYI, before I retired the biggest confusion for customers wasn’t understanding the ancillary fees, it was affinity credit card rules and airline partner rules. I still believe, that WN won’t have a problem retaining their leisure travelers, but the move by the big three does open up more choice for business travelers as they trickle back.
 
Lootess
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 6:13 pm

USAirALB wrote:
The new same day flight change benefit being offered by AA/DL/UA/AS is simply a marketing ploy and nothing else. It's essentially designed to give the impression that each of the US3+AS is being a more "customer centric", "caring", "friendly" airline-however you want to call it. The reality is that 99% of leisure travelers (that's primarily who is flying right now anyways) could care less about change fees because vacation plans are usually more concrete (hotel reservations, etc) and it would be more logistically challenging to change such plans all together.

I am willing to bet the ancillary revenue to be lost with the new policy is minimal. I personally have never paid a change fee in my life. The two times I was going to have to do so (both on UA) I was able to get it waived by sweet talking the agent over the phone.

If airlines really wanted to be more "customer centric" they would simply eliminate the first checked bag fee for non-Basic Economy tickets. Doing so would probably improve operational performance as well tenfold due to the circus that bag fees have created during the boarding process. But they won't do this because it would cut into their bottom line.


Scott Kirby disagrees with you.

https://youtu.be/Czsuv-TFNrw
 
gaystudpilot
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 6:38 pm

Change fees were rolled out in the days of paper tickets. Airlines we’re struggling with costs in a newly deregulated environment and with new or expanding airlines like WN who had simpler business models and much lower costs. The change fees were to (at least partially) offset the frontline and back office expenses of processing paper based transactions and to discourage customers from making changes — a common argument was: “We sell a perishable product. Once that plane leaves the gate with an empty seat we can’t recover the lost revenue.” This argument was also commonly used in discussions about oversold flights.

Over time, paper tickets became electronic tickets, processing nearly fully automated and what work was left was transferred from frontline and back office airline employees to a customer self service model — via apps on smart phones. Airlines automated the work, moved what work remained to the customer AND increased the fees to $200. This is also known in business school as “brilliant bullsh!t.”

Airlines’ revenue management models are much more sophisticated than they were in the 1980’s. However I wonder how many myths and false assumptions are still embedded in the algorithms.

I believe:
- all tickets should be market priced and fully refundable
- once customer purchases ticket, customer is locked in at that price*
- if customer wants to change flights customer is charged/credited difference based on locked in price
- customer is considered a no show when all boarding zones have been called. Refund automatically issued. Seat issued to any standby customers who receive a charge or credit based on their original locked in price

*Price includes fare and add-ons, e.g., seat selection, upgrade to premium economy, etc

I’m sure folks in revenue management would balk and argue about the instability and unpredictability this would create in projecting and protecting revenue. Others would talk about the mayhem this would create at the gates. I believe that even with more data, better analytics and greater sophistication the industry still operates based on dated paradigms. I also believe that the built in complexity increases costs which are unaccountable and exacerbates customer dissatisfaction.

I wonder what would really happen if the above fully refundable policy was implemented.
 
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 8:17 pm

gaystudpilot wrote:

I believe:
- all tickets should be market priced and fully refundable
- once customer purchases ticket, customer is locked in at that price*
- if customer wants to change flights customer is charged/credited difference based on locked in price
- customer is considered a no show when all boarding zones have been called. Refund automatically issued. Seat issued to any standby customers who receive a charge or credit based on their original locked in price

*Price includes fare and add-ons, e.g., seat selection, upgrade to premium economy, etc


And I believe every kid should have a pony but just because we wish for something to happen doesn't mean it makes economic sense, and certainly doesn't mean it will happen. Love your wish list from a consumer-centric standpoint, but prepare for your basic main cabin fare to be 5-6X what it is today to support the business model you've outlined. Then, when demand craters and fewer people fly, you can see the same load factors and booking levels of today and the nasty side effects of a global pandemic without anyone ever getting sick.

Tens of thousands out of work, hospitality and tourism businesses shuttered, economies in ruins...
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 8:25 pm

Tack wrote:
Unbundling fares, like it or not, was a good business move.


Agreed. Yes, your average traveler doesn't like it, but that average traveler is the same one who is willing to make a double connection and fly at midnight on a Tuesday to save five bucks. When it comes to purchasing decisions, what people SAY they will do and what they will ACTUALLY DO are two entirely different things. I've heard for over a decade how someone will gladly pay X amount more to have free bags, more legroom, etc. but when you show them a pricing matrix between Carrier A and Carrier B, regardless of the amenities they'll almost always go with whomever is the cheapest, even regardless of schedule. Now, they can see comparable pricing side by side and get the add ons that matter to them.

The unbundling also allowed the business traveler - you know, the one who was flying last minute and only took a briefcase or an overnight bag and paid top dollar? - to no longer subsidize the free bags and same legroom that the Clampetts flying once every 5 years to Walt Disney World were enjoying.

You want basic A to B? Awesome, there's a ticket that will cover that, but it's nonrefundable, you board last, you won't likely get an assigned seat until check-in, and don't expect any amenities like battlefield upgrades even if you're an elite traveler. Want to choose a seat now and have the option to maybe score an upgrade if you're an elite? There's a ticket that does that, but it's a little more money. Want one that's refundable? No problem, it's just more money. Want to board first, have a bigger, more comfortable seat, a dedicated lav just for you and 11 other people, free drinks, meals, free bags, as well as refundability? Buy the First Class ticket - it's just more money.

It's a-la-carte pricing at its finest.
Last edited by EA CO AS on Sat Sep 12, 2020 8:26 pm, edited 1 time in total.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
Lootess
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 8:25 pm

gaystudpilot wrote:
I believe:
- all tickets should be market priced and fully refundable
- once customer purchases ticket, customer is locked in at that price*
- if customer wants to change flights customer is charged/credited difference based on locked in price
- customer is considered a no show when all boarding zones have been called. Refund automatically issued. Seat issued to any standby customers who receive a charge or credit based on their original locked in price

*Price includes fare and add-ons, e.g., seat selection, upgrade to premium economy, etc

I’m sure folks in revenue management would balk and argue about the instability and unpredictability this would create in projecting and protecting revenue. Others would talk about the mayhem this would create at the gates. I believe that even with more data, better analytics and greater sophistication the industry still operates based on dated paradigms. I also believe that the built in complexity increases costs which are unaccountable and exacerbates customer dissatisfaction.

I wonder what would really happen if the above fully refundable policy was implemented.


Considering transpacific and transatlantic flights are usually only a 1x flight/day situation except some hub-to-hub routes, it's a lot of a factors in-play when there is only a single plane and the next one is 8k miles away and how much it costs per seat mile. Global changes are likely never to be free because of lack of frequencies alone.
 
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 8:30 pm

Galore wrote:
EA CO AS wrote:
Galore wrote:
Can someone explain how flexible fares make sense?


They’re fully refundable. The others aren’t.


Yes, but how do they make sense, if they are 2.8x more than a non flexible fare?

I’m not sure if you realize, but it’s cheaper to just buy the non flexible ticket and then in the event that plans change, toss it and buy another one. I just checked, AA would still sell me a ticket DFW-SAT RT for departure today for $297. You’ve got to royally suck at planning if it is actually cheaper to pay a 280% premium.

So even if I just forfeit the non flexible fare and buy a last second ticket I still save more than $200. So why would I buy a flexible ticket again?


Well for starters, well all know what happens when you're busy making plans. So, you've got that. Second, I absolutely DO realize that it's sometimes cheaper to buy the basic economy ticket and toss it if you can't use it; so do the airlines. But there are also a lot of people who don't care to deal with that and want to avoid the hassle of multiple tickets, not to mention there's a huge subset of travelers who AREN'T THE ONES PAYING FOR IT IN THE FIRST PLACE - their employer is - and they'll get the unrestricted ticket if that's what their company permits, since it's not costing them a thin dime, not to mention those higher priced tickets usually translate in to earning elite status quicker, or at least accumulating more miles at a quicker rate.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
Tack
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 9:33 pm

EA CO AS wrote:
Tack wrote:
Unbundling fares, like it or not, was a good business move.


Agreed. Yes, your average traveler doesn't like it, but that average traveler is the same one who is willing to make a double connection and fly at midnight on a Tuesday to save five bucks. When it comes to purchasing decisions, what people SAY they will do and what they will ACTUALLY DO are two entirely different things. I've heard for over a decade how someone will gladly pay X amount more to have free bags, more legroom, etc. but when you show them a pricing matrix between Carrier A and Carrier B, regardless of the amenities they'll almost always go with whomever is the cheapest, even regardless of schedule. Now, they can see comparable pricing side by side and get the add ons that matter to them.

The unbundling also allowed the business traveler - you know, the one who was flying last minute and only took a briefcase or an overnight bag and paid top dollar? - to no longer subsidize the free bags and same legroom that the Clampetts flying once every 5 years to Walt Disney World were enjoying.

You want basic A to B? Awesome, there's a ticket that will cover that, but it's nonrefundable, you board last, you won't likely get an assigned seat until check-in, and don't expect any amenities like battlefield upgrades even if you're an elite traveler. Want to choose a seat now and have the option to maybe score an upgrade if you're an elite? There's a ticket that does that, but it's a little more money. Want one that's refundable? No problem, it's just more money. Want to board first, have a bigger, more comfortable seat, a dedicated lav just for you and 11 other people, free drinks, meals, free bags, as well as refundability? Buy the First Class ticket - it's just more money.

It's a-la-carte pricing at its finest.


Everything you just posted is what leads me to believe that the big 3 + AS doing away with change fees, regardless for how long, definitely steals away some of the WN value to consumers and adds value to the legacy’s. Especially business travelers. I also believe it definitely devalues A-List. And I believe Kelly’s remarks are exactly what any CEO worth their salary should say. Whether they believe it or not.
 
alfa164
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 10:11 pm

Galore wrote:
Can someone explain how flexible fares make sense? I just checked a route where AA competes with WN. DFW to SAT round trip Sept. 16th/17th. AA wants $277 (cheapest non flexible) for Main Cabin. $777 Main Cabin fully flexible and $725 First Flexible.

I mean, huh? Is that some computer pricing glitch? Who would possibly pay 777/277 = 2.8x for the same seat in coach but “flexible”. And then you can get that flexibility cheaper in first???


In that case, First obviously makes more sense. But flexible - albeit expensive - coach fares make sense for business travelers who may need to change their plans, especially since the cost of travel can be written off as a business expense. Actually, some companies only allow booking flexible, fully-refundable fares for their business travel.
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dannynoble
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 11:03 pm

change fees are not the reason i choose an airline. have never had to change my plans in 35+ years of flying. when i shop i look for final price after bag fees and such, and no one comes close to southwest. before covid i would go to southwest find their fare (with early bird i always use that) and then go to the other carries. right off that bat you know you are saving money on southwest. you have to get the other carriers basic economy fare to get close to Southwest's base price. then you have to pay for seat selection (a wash cause that is basically what early bird is) and then you add the bag fees and there is where you save money on southwest. my girlfriend and i always take about 4 bags per trip depending on the length. that is like 400 round trip savings every trip using southwest. not sure about everyone else but when i travel i want to spend my money in my destination not give it to the airline to get me there.

if covid does not cause it to happen then it never will but if the other guys really want to challenge southwest they will have to drop the bag fees.
 
usflyer msp
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sat Sep 12, 2020 11:32 pm

dannynoble wrote:
change fees are not the reason i choose an airline. have never had to change my plans in 35+ years of flying. when i shop i look for final price after bag fees and such, and no one comes close to southwest. before covid i would go to southwest find their fare (with early bird i always use that) and then go to the other carries. right off that bat you know you are saving money on southwest. you have to get the other carriers basic economy fare to get close to Southwest's base price. then you have to pay for seat selection (a wash cause that is basically what early bird is) and then you add the bag fees and there is where you save money on southwest. my girlfriend and i always take about 4 bags per trip depending on the length. that is like 400 round trip savings every trip using southwest. not sure about everyone else but when i travel i want to spend my money in my destination not give it to the airline to get me there.

if covid does not cause it to happen then it never will but if the other guys really want to challenge southwest they will have to drop the bag fees.


Or it could be that the majors feel that trying to compete for the business of a passenger that needs to take the weight equivalent of small woman in the baggage hold is not worth it.
 
mcdu
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sun Sep 13, 2020 12:02 am

dannynoble wrote:
change fees are not the reason i choose an airline. have never had to change my plans in 35+ years of flying. when i shop i look for final price after bag fees and such, and no one comes close to southwest. before covid i would go to southwest find their fare (with early bird i always use that) and then go to the other carries. right off that bat you know you are saving money on southwest. you have to get the other carriers basic economy fare to get close to Southwest's base price. then you have to pay for seat selection (a wash cause that is basically what early bird is) and then you add the bag fees and there is where you save money on southwest. my girlfriend and i always take about 4 bags per trip depending on the length. that is like 400 round trip savings every trip using southwest. not sure about everyone else but when i travel i want to spend my money in my destination not give it to the airline to get me there.

if covid does not cause it to happen then it never will but if the other guys really want to challenge southwest they will have to drop the bag fees.


If you get the other carriers credit cards you can get those bags checked for free and earn bonus miles in the process. Add to the fact that when the world opens up again those miles can take you to a lot more cities than a WN FF award.
Last edited by mcdu on Sun Sep 13, 2020 12:03 am, edited 1 time in total.
 
sadde
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sun Sep 13, 2020 12:03 am

EA CO AS wrote:
Tack wrote:
Unbundling fares, like it or not, was a good business move.


Agreed. Yes, your average traveler doesn't like it, but that average traveler is the same one who is willing to make a double connection and fly at midnight on a Tuesday to save five bucks. When it comes to purchasing decisions, what people SAY they will do and what they will ACTUALLY DO are two entirely different things. I've heard for over a decade how someone will gladly pay X amount more to have free bags, more legroom, etc. but when you show them a pricing matrix between Carrier A and Carrier B, regardless of the amenities they'll almost always go with whomever is the cheapest, even regardless of schedule. Now, they can see comparable pricing side by side and get the add ons that matter to them.

The unbundling also allowed the business traveler - you know, the one who was flying last minute and only took a briefcase or an overnight bag and paid top dollar? - to no longer subsidize the free bags and same legroom that the Clampetts flying once every 5 years to Walt Disney World were enjoying.

You want basic A to B? Awesome, there's a ticket that will cover that, but it's nonrefundable, you board last, you won't likely get an assigned seat until check-in, and don't expect any amenities like battlefield upgrades even if you're an elite traveler. Want to choose a seat now and have the option to maybe score an upgrade if you're an elite? There's a ticket that does that, but it's a little more money. Want one that's refundable? No problem, it's just more money. Want to board first, have a bigger, more comfortable seat, a dedicated lav just for you and 11 other people, free drinks, meals, free bags, as well as refundability? Buy the First Class ticket - it's just more money.

It's a-la-carte pricing at its finest.

This. It’s just economics. Textbook price discrimination. Should surprise no one yet somehow thread after thread it does.
 
Bradin
Posts: 370
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sun Sep 13, 2020 1:31 am

jayunited wrote:
Drafran wrote:
https://simpleflying.com/southwest-ceo-other-airlines/

A quotation from the Simple Flying site:

"Remember, they began charging fees in the first place because they couldn’t match our low fares. To try to get closer, they reduced their published fares, knowing they could get money from hidden fees. It was a gimmick. Now that advantage is being taken away, now they’re going to have to match our fares, and our cost structure is lower, our fares are lower. It will be difficult for them to replace this change fee revenue while still trying to match Southwest fares and make a profit.”

Airlines started change fees because restricted fares were designed more for the leisure traveler whose travel plans were usually much firmer. Business travelers pay change fees more than anyone else and the airlines wanted them to buy unrestricted or less restrictive tickets. When I worked for US Airways, I got more complaints about change fees from business travelers than leisure. I would tell them, 'you want more flexibility, we offer fares that allow that. But if you choose restricted fares, you agree to change fees and add/collects when you bought the ticket.'



I think it has been well documented on this site by quite a few of us even WN employees that WN is no longer a low cost carrier. In the Chicagoland region WN fares a lot of times match with AA and UA are charging and there are even time when WN is more expensive. When WN launched Hawaii service their sale fares were quickly replaced by a much higher fare. In fact there were times pre-COVID where WN was charging more than AA/DL/UA/AS/HA on flights to Hawaii from the west cost. There are places where WN's cost structure is lower than AA/DL/UA's but the idea that these airlines will have to match WN's fares is absolutely laughable.

I think Kelly's statement would have more of an impact if instead of focusing on matching WN's fares he focused on the fact that these airlines are still charging check bags fees, and in fact some carriers raised their check bag fees as recently as 2019.

The true low cost major carriers these days are NK, and F9.


Southwest is and continues to be a Low Cost Carrier. Spirit, Frontier and Allegiant can also be considered low cost carriers.

Cost is a reference directly related to operational costs. That means simplifying logistics, overhead, etc. As a benefit of lower costs, a business can offer lower prices.

In Southwest instance, flying a fleet of 737s allows for cost savings over someone who has a mixed fleet.

What sets Spirit, Frontier and Allegiant apart is how they approach their business model. They are focused on being "Ultra Low Price" Carriers. Some of the strategies they use to achieve and offer a low price and make money include some of the approaches from the Low Cost Carrier models, but what sets them apart is the nickel and diming of other services and amentities.
 
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sun Sep 13, 2020 2:46 am

dannynoble wrote:
change fees are not the reason i choose an airline. have never had to change my plans in 35+ years of flying. when i shop i look for final price after bag fees and such, and no one comes close to southwest. before covid i would go to southwest find their fare (with early bird i always use that) and then go to the other carries. right off that bat you know you are saving money on southwest. you have to get the other carriers basic economy fare to get close to Southwest's base price. then you have to pay for seat selection (a wash cause that is basically what early bird is) and then you add the bag fees and there is where you save money on southwest. my girlfriend and i always take about 4 bags per trip depending on the length. that is like 400 round trip savings every trip using southwest. not sure about everyone else but when i travel i want to spend my money in my destination not give it to the airline to get me there.

if covid does not cause it to happen then it never will but if the other guys really want to challenge southwest they will have to drop the bag fees.


For some leisure travelers you’re correct. Bag fees mean everything. But to the majority of leisure flyers it’s not that important. Otherwise NK, F9, G4 wouldn’t have the loads or the following that they do. We will see if Kelly’s assumption that all will be well, pans out. As someone who’s continued to fly 3 times a month all year, I’m thinking he might be wrong.
 
Ziyulu
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sun Sep 13, 2020 2:50 am

I think tickets should be refundable, but if you are a no-show, you forfeit the entire amount.
 
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lightsaber
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Re: WN Kelly seems to think change fee elimination won't help the legacy carriers

Sun Sep 13, 2020 3:16 am

USAirALB wrote:
The new same day flight change benefit being offered by AA/DL/UA/AS is simply a marketing ploy and nothing else. It's essentially designed to give the impression that each of the US3+AS is being a more "customer centric", "caring", "friendly" airline-however you want to call it. The reality is that 99% of leisure travelers (that's primarily who is flying right now anyways) could care less about change fees because vacation plans are usually more concrete (hotel reservations, etc) and it would be more logistically challenging to change such plans all together.

I am willing to bet the ancillary revenue to be lost with the new policy is minimal. I personally have never paid a change fee in my life. The two times I was going to have to do so (both on UA) I was able to get it waived by sweet talking the agent over the phone.

If airlines really wanted to be more "customer centric" they would simply eliminate the first checked bag fee for non-Basic Economy tickets. Doing so would probably improve operational performance as well tenfold due to the circus that bag fees have created during the boarding process. But they won't do this because it would cut into their bottom line.

As much as we dislike fees, they are yield management tools.

WN has costs in check, so they offer free bags. On online search engines, Y- competes will Spirit and Allegiant.

Those search engines favor fees. I would prefer if I could select what I'll pay for. I want a bag, tell me how much with a bag. But most do not think of total cost. Those that do book through airline sites where they gain rental and other ancillary revenue.

Like it or not, the ancillary model took over.

Covid19 broke the model.

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