DENVER Southwests NEW Frontier?

mrfish3726

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Jul 7, 2004
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http://www.kansascity.com/mld/kansascity/b...ss/13296592.htm

Southwest’s days as an industry upstart may be drawing to a close.

But hard times are driving big changes in the industry. With other airlines slashing costs inside and outside of bankruptcy court, Southwest is losing its industry lock on low fares.

Moving into Denver is one of the bigger risks the airline is taking as it tries to grow before other airlines catch up.

One of Southwest’s main cost advantages over other airlines is likely to melt away over the next few years. When oil prices were low, Southwest shrewdly executed extensive fuel hedges to lock in low prices. For the past 18 months, the benefits have been huge, but they will shrink steadily over the next five years. If oil prices remain high, Southwest won’t be able to negotiate new hedges at attractive prices, bringing its fuel costs more in line with other airlines.

Frontier and United already have matched the low fares Southwest announced for its flights between Denver and Phoenix, Las Vegas and Chicago, which are scheduled to begin Jan. 3. With comparable fares, passengers will be choosing between no-frills Southwest and two airlines that, unlike Southwest, offer assigned seating and premium features such as first-class sections, more legroom and in-flight entertainment.

For some Denver travelers, that is reason enough to stick with the airlines they have grown used to flying.


Southwest’s operating cost, as measured by each seat flown one mile, is a low 7.85 cents. That compares with 8.68 cents for Frontier and 10.43 cents for United in the most recent quarter. But if fuel prices come down, that advantage could shrink. Excluding fuel, Southwest’s cost is 6.31 cents per seat mile, compared with Frontier’s 5.86 cents and United’s 7.11 cents.

In an interview, Potter argued that fliers would prefer Frontier’s extras, such as more legroom in its seats and personal television screens that offer programs and onboard movies for a fee. He maintained that fliers are turned off by Southwest’s first-come, first-served seating, which sometimes resulted in long lines of passengers waiting to board.

Frontier immediately matched Southwest’s introductory Denver fares, and Potter maintains the airline can make money at the lower prices.

“I’m not trying to be arrogant here in saying Southwest is not a fierce competitor, because they are,â€￾ said Donohue. “But things are changing. And things are changing pretty significantly.â€￾
 
Fish,

Interesting article, to say the least.

It SURE would make for some GREAT commentary, on this ol' web site, "IF" it turned out, that DENVER was the place where WN started to "slip", because of F9 AND UA !!!!!!!


NH/BB's
 
Frontier will be bankrupt in two years if it doesn't merge with another LCC to expand it's network. Frontier is a sitting duck target just like the old Frontier was. One hub means only one target to destroy. I heard Southwest is painting some of their planes black with two white stripes running down the back. All those cute Frontiers animals will run when they see the Southwest "Skunks" coming into Denver.
 
Fish,

Interesting article, to say the least.

It SURE would make for some GREAT commentary, on this ol' web site, "IF" it turned out, that DENVER was the place where WN started to "slip", because of F9 AND UA !!!!!!!
NH/BB's
I believe that DIA is going to do whatever they can to ensure SWA succeeds. They obviously can't (openly) play favorites nor give any major breaks that the other tenants don't get, but still help out as much as possible. It's an ego thing for Airport Managers to land certain accounts. DFW failed to get SWA while DIA succeeded. There's a big ol' shine on their faces and they're gloating big time. They don't want to have SWA bail out on them (again) if for no other reason than it would be hard to attend the next conference of airport managers.
 
Fish,

Interesting article, to say the least.

It SURE would make for some GREAT commentary, on this ol' web site, "IF" it turned out, that DENVER was the place where WN started to "slip", because of F9 AND UA !!!!!!!
NH/BB's


Yes, it might make for some great commentary, but I think the chances of their re-entry into Denver failing are pretty small.

Here's why:

What does Southwest Airlines Co. do, probably more than any other airline?

One stops.

They have been using the one-stop-no-change-of-plane flight to stay out of trouble since they first expanded out of the "Texas Triangle" in 1975 with their route to Harlingen.

In fact, even today, I believe Harlingen to Dallas is the largest single market in the country that has no nonstop service.

One stop direct flights are not so repugnant to the passenger that they cannot be sold, especially if the price is right.

That being said, Denver is in just about the right place to be a one stop on many, many markets.

You can go MDW-DEN-PHX. You can go MCI-DEN-SLC. You can go STL-DEN-LAS. You gan go OMA-DEN-LAX. You can go HOU-DEN-PDX or SEA. You can go SAN-DEN-BWI. You can go BNA-DEN-OAK. Lots and lots of options.

What I am saying is that Southwest can throw a lot of frequency in and out of Denver while relying on thru passengers to fill a lot of seats as they acquire a following.

And they will acquire a following. Even if Frontier and United hold the Demver folks captive as loyal hometown passengers, Southwest will bring their own following in from places like Midway and Phoenix and Las Vegas etc etc.

What is going to bother Frontier and United is not WN's discount advance purchase fares. That is seldom a problem for any carrier -they meet or beat them.

Where the game begins is when Southwest throws a reasonable walk up fare out there. Airlines are a lot more reluctant to want to match those prices.

I think it will not take long before Southwest plops 4 or 5 SLC round trips in and out of Denver with a walk up fare of maybe $109. If Wright goes completely away Dallas to Denver will be a walk up fare of around $149.

When the so-called major carriers have to match THOSE fares is when they start to feel some pain.
 
  • Thread Starter
  • Thread starter
  • #6
Princess says "Frontier will be bankrupt in two years if it doesn't merge with another LCC." Didn't you say you worked for BK Delta? Yuu should worry about your OWN job security before you worry about others LOL! Quite the trip you are Princess! SEE you in two years, while we continue to be DENVER'S HOMETOWN AIR Line! :up:
 
No Fish, I never worked for Delta. I said I would paint mountains instead of flowers on the Delta "Pycho" test. So, they didn't hire me. See you on the unemployment line in two years, Fish.
 
You can go MDW-DEN-PHX. You can go MCI-DEN-SLC. You can go STL-DEN-LAS. You gan go OMA-DEN-LAX. You can go HOU-DEN-PDX or SEA. You can go SAN-DEN-BWI. You can go BNA-DEN-OAK. Lots and lots of options.

Some of what you posted makes sense, however, the quoted piece above makes very little sense. Why would SWA deviate from their core philosophy so dramatically by operating "through flights" through one of the most expensive airports in the country? DIA is an O&D market plain and simple. They will very quickly find out that they can not make money with $39 fares out of Denver like they can out of Amarillo.
 

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