Southwest Affect still working

Discussion in 'Southwest Airlines/Airtran Airways' started by swamt, May 20, 2014.

  1. WorldTraveler

    WorldTraveler Corn Field

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    you are right, Q.

    It is precisely because the tax structure for airlines is so horrible that the airlines fight loopholes around it.

    WN can tout all it wants regarding its no bag fees but the network airlines that obtain a couple percent of revenue at a much lower tax structure are the winners.
     
  2. Glenn Quagmire

    Glenn Quagmire Veteran

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    If that tax structure did not exist, airports would be crumbling throughout the US. No airline is going to willingly pay for a competitors large hub airport to be improved. Also, general aviation users do not want to pay for large hub airport improvements.

    The AIP program is and has been a success.

    Of course, this has nothing to do with the topic of the 'Southwest Effect'. I will no longer drift away here on this topic.

    This tax subject could/should be a thread topic itself.
     
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  3. eolesen

    eolesen Veteran

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    Depends on how you would define success... with all that AIP money, we still haven't seen next-gen ATC...

    Transportation infrastructure funding in general is long due for an overhaul. Highway funding worked great when we had inefficient cars buying lots of gas. Now, you have cars like the Volt which wind up contributing nothing into the infrastructure funds because they don't use gas...
     
  4. swamt

    swamt Veteran

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  5. eolesen

    eolesen Veteran

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    Reposting an article from February?...

    The proof will be in the pudding. From the fares I've seen so far, the only "20-40% cut" I'm seeing are in the walk-up fares, which very few people actually wind up paying yet every wannabe analyst doing fare comparisons seems to use exclusively.
     
  6. FWAAA

    FWAAA Veteran

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    Did you mean to post a link to something else, because that link is a story dated February 3, 2014.

    From where did you pull the fantasy fare reduction percentages?   
     
  7. 737823

    737823 Veteran

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    Or anyone without access to OAG, DIIO, etc let alone savvy enough to access DOT data.
     
    Josh
     
  8. swamt

    swamt Veteran

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    Correct E, we will see, note;  I said possibility.  The video stated that they will go down 20-40%.
     
    FWAAA, if you watch the video or read the article you will see I did not pull fantasy fares percentiles.
     
    Don't really care that the article is from Feb.  Just pointing out (and not really towards you two) that the Southwest Effect does in fact still happens as others have stated is is no longer working.  Also pointing out that it looks like it will happen at an airport already served by SWA, which I don't think that has happened anywhere else, anywhere.  Could be wrong but highly doubt it.  We will all wait after 1 year and see if fares were lowered and passengers numbers increased in the N Tx market.
     
  9. WorldTraveler

    WorldTraveler Corn Field

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    Fares will fall because there will be alot more capacity from N. Texas plus AA has had well above average fares

    But should we call what DL is doing in SEA and Alaska the DL effect?

    Fares are falling far more than WN will lower fares in N. Texas
     
  10. WNMECH

    WNMECH Veteran

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    The effects of Delta's bankruptcy also hurt other prominent companies. More than 50 prominent American companies own airplanes that they lease to Delta at interest rates ranging from 9 percent to 12 percent or more. The companies include Altria Group Inc. subsidiary Philip Morris Capital Corp., The Walt Disney Co., Verizon Corp. subsidiary Bell Atlantic Credit Corp., and subsidiaries of AT&T Corp. and Bank of America N.A.

    Walt Disney Chief Financial Officer Tom Staggs said today the entertainment giant may have to write down $100 million of Delta aircraft leases that it holds.



    I thought this was the "Delta Effect".
     
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  11. Kev3188

    Kev3188 Veteran

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    They all took a hit, but so too did a slew of small businesses that may have found it harder to recover than the big firms...
     
  12. WorldTraveler

    WorldTraveler Corn Field

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    If you would like to play loose with terminology, then the WN effect was entering markets post deregulation with costs that were well below what the legacy carriers had which were accumulated during the first 40 years of the US airline industry when WN didn't even exist.

    Congress deregulated the airline industry and also provided bankruptcy laws so you take up your frustration with them just as much as some of us would argue with the way deregulation allowed airlines that were more focused on highlighting female skin as part of their service package as the legacy carriers were focused on showing the breadth of their networks.

    BTW, debt in BK is not "wiped away" but rather exchanged for equity. A company that swapped debt for DAL stock in BK would have received very good compensation given that DAL is now one of the highest valued airlines in the world and has been one of the best investments among ALL stocks.

    the lower interest rates reflect what was in effect at the time of DL's restructuring. other companies, including WN, have restructured and refinanced their debt outside of BK as part of the normal course of business. If you think that refinancing debt is an advantage that airlines gained in BK but which other companies could not, go study basic finance.


    The real fear which you and WN have is that WN no longer has the cost advantage over the legacy carriers it once had, WN is now forced to compete in the largest domestic markets where the legacy cariers have and will continue to maintain an advantage, and that the legacy carriers have the advantage of much larger networks and service offerings which they can use to win over business. Further, WN cannot continue to pay its employees huge premiums to the rest of the industry when WN is losing much of its cost and revenue generating advantages and also must directly compete and not run or hide from competition which is exactly what their zeal to expand under the AA divestiture process was and which was funded by service reductions in key markets such as ATL and SLC where WN continues to reduce capacity.

    The sole reason why fares will go down in the N. Texas metroplex is because AA has enjoyed government sanctioned market protection and which is now falling which means that AA's above average fares will have to face intense competition.

    good for WN for building on one last bastion of high fare legacy carrier pricing and exploiting one last protected market in which they can grow.

    When WN has built out DAL and gotten as much as they can out of it, they will be right back to having to compete against healthy legacy carriers like DL which have figured out how to very successful compete with whatever carriers show up in its markets - and that is precisely why WN's size where DL and WN compete in DL's key markets continues to shrink.
     
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  13. swamt

    swamt Veteran

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    How Wichita shows that the 'Southwest effect' still happens
     
    Once again numbers continue to show that the Southwest Effect is still alive and strong.  The same will happen in the international market starting this Mon. July 1st. We should see the numbers July of 2015 for the international SE...
     
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  14. WorldTraveler

    WorldTraveler Corn Field

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    perhaps 10 high performance 737-700s that have been well-maintained can help facilitate the effect.

    all the best to you and WN in all you do.
     
  15. swamt

    swamt Veteran

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