WSJ ARTICLE

[wnbubbleboy]

BUSINESS INSIGHT: Are any airlines getting this right?

MR. KOCHAN: Several. The premier example -- the one that people always turn to -- is Southwest Airlines, which happens to be the most highly unionized airline in the industry. Southwest gets to low cost by emphasizing improved productivity through loyalty on the part of employees, who stay a long time and operate a system that maximizes employee ideas and discretion for solving problems and achieving financial objectives. It has had 25 years of successful financial performance and good labor relations. But there are other examples. Continental Airlines is one.

BUSINESS INSIGHT: Do low fares inevitably mean low-quality jobs? I think the public generally presumes so.

MR. KOCHAN: The answer is no. Southwest is a low-fare competitor, and they've had high-quality jobs, and their employees are among the highest paid in the industry. Productivity controls cost.


http://online.wsj.com/article/SB1210265789...=googlenews_wsj

 

[Borescope]

BUSINESS INSIGHT: Are any airlines getting this right?

Southwest is a low-fare competitor

WN is not by any means the lowest fare competitor in many markets. A lot of the time they are quite a bit more. I'll have to hand it to them though, they have done a great job marketing their product. They don't allow their fare to be published anywhere except their own web site. While all other airline fares can be compared on many travel web sites, WN is not included in this. You have to go to their web site. People "think" WN has the lowest fare and therefore when they see it at WN's site they think they have found the cheapest fare.

 

[Dan Webb]

WN is not by any means the lowest fare competitor in many markets. A lot of the time they are quite a bit more. I'll have to hand it to them though, they have done a great job marketing their product. They don't allow their fare to be published anywhere except their own web site. While all other airline fares can be compared on many travel web sites, WN is not included in this. You have to go to their web site. People "think" WN has the lowest fare and therefore when they see it at WN's site they think they have found the cheapest fare.

That's not the only reason though, and certainly not the primary one. Forcing people to book on southwest.com eliminates paying a fee to Expedia/Travelocity/etc. Same reason some of the other majors will offer a FF bonus for booking online.

 

[KCFlyer]

WN is not by any means the lowest fare competitor in many markets. A lot of the time they are quite a bit more. I'll have to hand it to them though, they have done a great job marketing their product. They don't allow their fare to be published anywhere except their own web site. While all other airline fares can be compared on many travel web sites, WN is not included in this. You have to go to their web site. People "think" WN has the lowest fare and therefore when they see it at WN's site they think they have found the cheapest fare.

And this is a bad thing? If other airlines are pricing below Southwest, how exactly does Southwest "lower the bar"? I mean, if the bar lowerers are offering a fare of $200 and hasn't seen the inside of a bankruptcy court, why are other airlines offering fares of $180 for the same route - especially if people can't see the Southwest fare to compare it to?

I fully understand SWA doesn't always have the lowest fare...but I also understand that they DO have the "fairest fare". If given the opportunity to pay $200 and know that if my plans change, I can change my ticket without a penalty...meaning that if I find the same fare on a different day, I can book it at no cost, I will usually do so over the $180 for a fare that will automatically hit me with a $50 to $100 change fee - even if the same fare is available for the dates I book.

 

[whlinder]

WN is in some Sabre systems I believe. Their website isn't the only place to go.

 

[citrus jock]

WN is not by any means the lowest fare competitor in many markets. A lot of the time they are quite a bit more. I'll have to hand it to them though, they have done a great job marketing their product. They don't allow their fare to be published anywhere except their own web site. While all other airline fares can be compared on many travel web sites, WN is not included in this. You have to go to their web site. People "think" WN has the lowest fare and therefore when they see it at WN's site they think they have found the cheapest fare.

If an airline has a "sale", and offers the first 10 seats at the "sale" price (say $99 OW), and the next block of seats is sold at the next fare level, and once those are sold out, we move on to the next fare level, etc., etc., what does it tell you when this particular airline is selling their seats at a much higher fare than another airline? It tells me more of the seats on the higher-charging airline are sold than are seats on the lower-charging airline. WN (nor anyone else, for that matter) doesn't start selling seats at a price way above the competition, unless there is no competition.

 

[Borescope]

If an airline has a "sale", and offers the first 10 seats at the "sale" price (say $99 OW), and the next block of seats is sold at the next fare level, and once those are sold out, we move on to the next fare level, etc., etc., what does it tell you when this particular airline is selling their seats at a much higher fare than another airline? It tells me more of the seats on the higher-charging airline are sold than are seats on the lower-charging airline. WN (nor anyone else, for that matter) doesn't start selling seats at a price way above the competition, unless there is no competition.

WN does a great job marketing. That was my point. Your last sentence is incorrect though. If you go to WN's web site they do "sell seats at a price way above the competition". And there are people that will buy that fare for what ever reason. They also list the cheapest fares, which are usually gone. All airlines sell "99 dollar" fares. Some only have a few of them. WN does a great job "fooling" the general public with advertising that they are the "Low Fare Airline". Nothing wrong with this, just pointing out that someone else had said on another page that WN had the lowest fares, when in fact they don't always. They just keep their fares published on their own web site where as most other airlines put them out everywhere. Thus the guy who sees the ads for "the Low cost airline" goes to LUV's web site and thinks they have gotten a steal when in fact they may have paid quite a bit more. All because they were to lazy to look online at some other airline or travel sites.

 

[KCFlyer]

WN does a great job marketing. That was my point. Your last sentence is incorrect though. If you go to WN's web site they do "sell seats at a price way above the competition". And there are people that will buy that fare for what ever reason. They also list the cheapest fares, which are usually gone. All airlines sell "99 dollar" fares. Some only have a few of them. WN does a great job "fooling" the general public with advertising that they are the "Low Fare Airline". Nothing wrong with this, just pointing out that someone else had said on another page that WN had the lowest fares, when in fact they don't always. They just keep their fares published on their own web site where as most other airlines put them out everywhere. Thus the guy who sees the ads for "the Low cost airline" goes to LUV's web site and thinks they have gotten a steal when in fact they may have paid quite a bit more. All because they were to lazy to look online at some other airline or travel sites.

The general public won't see SWA's fares on the "mainstream" web sites...but other airlines are certainly aware of them....so...how come if SWA is selling seats for $200, and the other airlines know it...are they selling seats for less?

 

[citrus jock]

WN does a great job marketing. That was my point. Your last sentence is incorrect though. If you go to WN's web site they do "sell seats at a price way above the competition". And there are people that will buy that fare for what ever reason. They also list the cheapest fares, which are usually gone. All airlines sell "99 dollar" fares. Some only have a few of them. WN does a great job "fooling" the general public with advertising that they are the "Low Fare Airline". Nothing wrong with this, just pointing out that someone else had said on another page that WN had the lowest fares, when in fact they don't always. They just keep their fares published on their own web site where as most other airlines put them out everywhere. Thus the guy who sees the ads for "the Low cost airline" goes to LUV's web site and thinks they have gotten a steal when in fact they may have paid quite a bit more. All because they were to lazy to look online at some other airline or travel sites.

Marketing has nothing to do with it. It's simple supply and demand: When the seats for a particular flt. first go on sale, there are more of them (and the price is lower); later, when there are less seats, the price is higher. WN could do lots of advertising, no advertising, sell them via their website, a travel agt., print signs that say "We're the low cost leader", signs that say, "We sell the most expensive tickets anywhere", whatever. It doesn't matter. Many seats available=less (relative) demand=lower (relatively) price. Fewer seats available=higher demand=higher price. I can understand Joe Traveler thinking, "Low cost airline??? Yeah, right", when he buys the last seat on a WN flt. for the walk-up fare; but that doesn't have anything to do with the price of the first 10 seats that were sold, and what WN (and others) are allowed to claim it will cost Joe Traveler to fly from A to B.

Of course, WN can't control what other airlines choose to charge. If Spirit, for example, chose to start flying one flt. a day between DAL and MDW, and charge $9 for a seat (in addition to 50 cents for each breath of air, etc.), I don't see WN charging $9 for every seat on their flts. When Joe Traveler looks up the "lowest fare" between DAL and MDW, he'll see $9 on Spirit for as long as those $9 seats are available. Once the Spirit flt. is sold out, he'll see WN for however many hundred dollars. WN might charge $9 for seats on their flt. that departs at the same time as the Spirit flt., and then fares based on what I described in my 1st paragraph. When there are many $9 seats available, fares look good. When there are no $9 fares available (before and after the Spirit flt departs), fares appear higher.

It still all boils down to supply and demand, not how WN markets themselves or how well they can fool the public.