1st Day In Pit

[ELP_WN_Psgr]

You miss the point. Completely.

Southwest is, has been, and presumably always will be about frequency.

If they get to where the load factor is too high (and they assume that if your load factor is generally above 67% you are losing traffic to someone), they don't raise the fare. They add a flight.

Go back and look at what Southwest's LF has been each and every year since about 1973.

Every time it has crept up above the magical 2/3rds.....you would see frequency added and the load factor knocked back down.

All the advertising, marketing, tv shows, what-have-you.....have the desired effect. They get people to fly Southwest.

And then Southwest adds enough flights to where everyone rides around on an airplane that is 2/3rds full and they make a profit for their shareholders and their employees ion the process.

Pretty cool, huh?

 

[AAviator]

Side note: AE started CLT-LGA this week. Flights are doing very well. Seems the local pax likes other options.

 

[WNrforlife]

Wait a second. WN has an hour long commercial on A&E every week, a glowing article in almost every paper and magazine everytime the word "airline" is mentioned and commercial sponsorships out the wazoo yet they leave with 1/3 of the seats empty?? And they do this almost everywhere they go? What else can they do?

That's right. Worry.

[post="266955"][/post]​

LUVn -

Don't you worry about ol' Southwest now, ya hear? We're doing just fine driving all of the legacies crazy and bankrupt.

 

[AirplaneFan]

Within a few years, WN is likely to be flying 150 flights a day at PIT. Could even peak at more daily flights than at STL.

[post="266870"][/post]​

No way in the world PIT will have 150 flights a day. San Antonio (comparable size city) has been in the SW system for 35 years and only has about 50 flights.

 

[luver41]

Wait a second. WN has an hour long commercial on A&E every week, a glowing article in almost every paper and magazine everytime the word "airline" is mentioned and commercial sponsorships out the wazoo yet they leave with 1/3 of the seats empty?? And they do this almost everywhere they go? What else can they do?

That's right. Worry.

[post="266955"][/post]​

The reason Southwest is featured on Airline is that the legacy airlines turned down the opportunity to be featured on the program.

If you'd check the facts --which I'm sure have little interest for you-- you'd find that WN's load factor is historically lower than the legacy airlines. Something to do with point-to-point service versus hub-and-spoke.

If you can make money with a 65 percent load factor, what's the problem? Some of the legacies can't even make money with a ninety percent load factor.

 

[sfb]

yet they leave with 1/3 of the seats empty?? And they do this almost everywhere they go? What else can they do?

That's right. Worry.

Worry about what? Their break-even load factor for the first quarter was 64%. If you're filling 2/3 of your seats and breaking even at 64%, you're profitable. A larger profit would be nice, but the first quarter is usually weak.

Wednesday is generally a slow day for travel, so I'd wager that filling two-thirds of your seats on a non-peak day is also pretty good. How does US's system load factor look on an average Wednesday?

I don't really see 150 daily flights at PIT any time soon, but I can certainly see a nice BNA-sized operation in five years.

 

[jimntx]

Wait a second. WN has an hour long commercial on A&E every week, a glowing article in almost every paper and magazine everytime the word "airline" is mentioned and commercial sponsorships out the wazoo yet they leave with 1/3 of the seats empty?? And they do this almost everywhere they go? What else can they do?

That's right. Worry.

[post="266955"][/post]​

WN has no need to worry. Theire load factors have always been below the other majors. However, their a/c do not fly 3-4 legs of 1.5 to 2 hours each in a day and then sit on the ground somewhere for 16 hours, either.

 

[coolflyingfool]

PIT will probably move up to the 40 to 50 flight a day status over the next 4 years. Slow and steady growth. If PHL can land 2 more gates, they will move up to the 70 to 80 flight a day status. SWA is poised to explode in the next few years with 33 planes in 2006, 54 in 2007, and 51 in 2008. Those 3 years will add as many planes to the fleet as AWA has in theirs right now. Just my thoughts.........

 

[luvn737s]

PIT will probably move up to the 40 to 50 flight a day status over the next 4 years. Slow and steady growth. If PHL can land 2 more gates, they will move up to the 70 to 80 flight a day status. SWA is poised to explode in the next few years with 33 planes in 2006, 54 in 2007, and 51 in 2008. Those 3 years will add as many planes to the fleet as AWA has in theirs right now. Just my thoughts.........

[post="267281"][/post]​

I once had an United management pilot tell me that UAL was going to grow by "one America West per year".

Please allow me to archive your comments for future entertainment.

 

[luvn737s]

You miss the point. Completely.

Southwest is, has been, and presumably always will be about frequency.

If they get to where the load factor is too high (and they assume that if your load factor is generally above 67% you are losing traffic to someone), they don't raise the fare. They add a flight.

Go back and look at what Southwest's LF has been each and every year since about 1973.

Every time it has crept up above the magical 2/3rds.....you would see frequency added and the load factor knocked back down.

All the advertising, marketing, tv shows, what-have-you.....have the desired effect. They get people to fly Southwest.

And then Southwest adds enough flights to where everyone rides around on an airplane that is 2/3rds full and they make a profit for their shareholders and their employees ion the process.

Pretty cool, huh?

[post="266961"][/post]​

Yeah, uh, cool.

So take those 2 little podunk towns, PHL and PHX. How many nonstops y'all got? 2/3 full? Don't let me discourage you from thinking 2/3 is good enough.

Go on now, your show's on, your show's on.

 

[ELP_WN_Psgr]

So take those 2 little podunk towns, PHL and PHX. How many nonstops y'all got? 2/3 full? Don't let me discourage you from thinking 2/3 is good enough.

I'm not sure how long you have been around the airline business.

By the same token, I doubt it makes much difference.

However, if you had followed air traffic since, say, the late 60s....you'd probably realize that this era of 70+ percent load factors is an aberration.

Before deregulation, load factors ran between the upper 40s to mid 50s. Strangely enough, airlines made money.

Deregulation hit. Fares fell. Load factors went up. Airlines lost money.

Not all airlines, however.

Here's the secret. If you have pricing power, you set your fares to where you make money at whatever load factor you choose, or whatever load factor you think you are most likely to achieve. It just so happens that at Southwest, that target is around 65%. That's the point where their accountants and marketing people and schedule folks and what have you think they can maximize their revenue.

If they weren't managing to make a profit, they'd reduce flights in markets and put those airplanes in places that would make a profit.

It's easy to carry profitable loads on Friday and Sunday. It's tougher on Tuesday, Wednesday, and Saturday. Thus it is a balancing act.

In the big scheme of things, load factor really is meaningless without yield and ASM cost attached.

If you went back to 1999 or 2000, when Holly Hegeman had the PlaneBusiness boards up and running....the big debate was how badly Metrojet was harming Southwest....all sorts of USAirways employees were touting these infograms they got from their management telling them how much higher their load factors were than Southwest on competing routes.

Those high load factors didn't seem to keep USAirways from losing money and finally bailing on Metrojet. Nor did those significantly lower load factors by Southwest seem to hurt their bottom line.

That isn't to say Southwest doesn't constantly face challenges. Right now they are avoiding having to cut employee wages a la the legacy carriers by looking for any and every way to trim costs.....the fuel hedges turned out to be pretty smart.....and of course they can always turn the seat cushions (the ones you are supposed to use as a flotation device) inside out looking for spare change.

However, their management has a pretty fair track record at making money, good times and not-so-good times. And they've made that money....strangely enough....with load factors lower than that of the so-called major airlines.

But if it makes you feel good to think that Southwest is doomed because they maintain a lower load factor, please, be my guest. It doesn't make it any more true, but lots of people like to believe things that aren't true.

 

[luvn737s]

Hmm. The airline industry has been deregulated for 27 years out it's roughly 55 years of existance so the aberration argument is a non-starter.

The point I'm making and will state in simple direct terms is that WN achieves it's pricing power due to low costs. It was able to undercut it's competition and lower the industrial water table, thus placing the full-service airlines in a position where they too had to lower their costs. WN's wake up call is that these carriers have lowered their costs and will likely do so more drastically with the de facto approval to dump all pensions. Add to that these airlines have amassed significant market share (as evidenced by system-wide load factors) and WN is facing a challenge the likes of which they have not faced in a very long time.

So what are you disputing; the validity of the handwriting or the existance of the wall?

 

[ClueByFour]

Just for curiosity sake, how many of the following are within so much as a cent or two of LUV's system RASM:

AA
UA
US
DL
NW
CO

?

 

[BoeingBoy]

Hmm. The airline industry has been deregulated for 27 years out it's roughly 55 years of existance so the aberration argument is a non-starter.

[post="268312"][/post]​

Those airlines that helped make Mr. Douglas' DC-3 a commercial success back before WWII might be interested to know that they didn't come into existance until 10-15 years later (not to mention that the current LF's are a recent occurance - they didn't jump up to 80% or so the day deregulation became the law of the land).

Add to that these airlines have amassed significant market share (as evidenced by system-wide load factors) and WN is facing a challenge the likes of which they have not faced in a very long time.

[post="268312"][/post]​

I guess the fact that WN is in a neck & neck race with DL for the honor of enplaning the most domestic passengers doesn't count, huh? Or the fact that the LCC's - including WN - carry a larger percentage of the passengers every year? Maybe the legacies can reduce capacity some more - like they did after 911 - and push LF up to near 100%. Then it can be claimed they've cornered the market.

So what are you disputing; the validity of the handwriting or the existance of the wall?

[post="268312"][/post]​

Maybe some folks just don't want to acknowledge what the handwriting says or have their backs to the wall.....

Jim

 

[ngneer]

...WN is facing a challenge the likes of which they have not faced in a very long time.

[post="268312"][/post]​

Well, if I was a CEO and had to pick whose challenge I'd prefer to deal with, I'd pick WN's challenge over UA's, U's, Delta's...