More good news about SWA business model

[magsau]

SWA Warns on pricing pressure


Interesting article.

"It's more of a low-fare environment this year than it is an environment that allows for fare increases," said Kelly.

If SWA touts themselves as the low fare leader should this not be a boon to them? Sounds like the business model is not working as well as everyone thinks. With the mention of joining up with international carriers it throws cold water on the "we don't go there, because no one wants to go there" arguement by some.

Also, did anyone catch Samantha B's comment about Kansas last night on the Daily Show? Classic!

 

[KCFlyer]

SWA Warns on pricing pressure
Interesting article.

If SWA touts themselves as the low fare leader should this not be a boon to them? Sounds like the business model is not working as well as everyone thinks. With the mention of joining up with international carriers it throws cold water on the "we don't go there, because no one wants to go there" arguement by some.

Also, did anyone catch Samantha B's comment about Kansas last night on the Daily Show? Classic!

I am sure that United faces none of these challenges, since I am sure their business plan has already accounted for the fare pressures and they will make up any loss leading fares by the increased volume they get from selling them on Expedia. Oh well...there's always the second bankruptcy option I guess.

Missed the comments on Kansas, but have pretty much already heard them all anyways.

 

[magsau]

I am sure that United faces none of these challenges,

UAL has always faced these challenges and generally the irrational pricing was on behalf of SWA. Now SWA is struggling to deal with the world without cheap fuel and receeding LF. UAL will have to continue to deal with these issues, something SWA has avoided. Now they are the prey and it sure is nice seeing the truth told about them for a change.

Any profit less than 500 mil is the amount of loss they will incur when the hedges expire. Seeking alliances and desparately trying to gin up revenue is a nice struggle to see for the cowboys from SWA.

As for the comment it is worth viewing KC Comments Check out the "is america ready for a mormon president" video. It is the rebuff to the mormon thoughts on where the Garden of Eden is located.

 

[KCFlyer]

As for the comment it is worth viewing KC Comments Check out the "is america ready for a mormon president" video. It is the rebuff to the mormon thoughts on where the Garden of Eden is located.

You might want a hearing aid mags...I didn't hear Kansas mentioned at all in that clip.

 

[magsau]

You might want a hearing aid mags...I didn't hear Kansas mentioned at all in that clip.

Maybe they clipped it. On the show she said Kansas was the infected hair on Americas 'taint.

 

[ramper_in_las]

SWA Warns on pricing pressure
Interesting article.

If SWA touts themselves as the low fare leader should this not be a boon to them? Sounds like the business model is not working as well as everyone thinks. With the mention of joining up with international carriers it throws cold water on the "we don't go there, because no one wants to go there" arguement by some.

Also, did anyone catch Samantha B's comment about Kansas last night on the Daily Show? Classic!

You take one sentence and manipulate it to benefit your flame bait campaign against southwest. What I get from this article is that our executives are looking down the road in order to keep WN prosperous in the future. WN is a public company and I appreciate the fact that WN execs are forthright about upcoming trends. I would think that is better than most of the legacies have done.

 

[magsau]

You take one sentence and manipulate it to benefit your flame bait campaign against southwest.

Hardly, this clearly shows the SWA business model does not work in todays fuel and revenue economy. This is a pivotal time for SWA and with high labor cost the first hit will come from inside.

 

[KCFlyer]

Hardly, this clearly shows the SWA business model does not work in todays fuel and revenue economy. This is a pivotal time for SWA and with high labor cost the first hit will come from inside.

So can I ask....who is now dragging down the industry because it cannot support the revenue economy? I would imagine that since SWA's costs are STILL lower than UAL's, this revenue is going to hurt them worse than it will SWA. Or if you sell enough Expedia seats at a loss, will the volume somehow generate a profit?

 

[magsau]

Or if you sell enough Expedia seats at a loss, will the volume somehow generate a profit?

Are you sure that ALL of the expedia seats are sold for a loss? I see other carriers turning profits on expedia. 'taint no worries, KC, I now know why your thoughts are skewed.....

 

[KCFlyer]

Are you sure that ALL of the expedia seats are sold for a loss? I see other carriers turning profits on expedia. 'taint no worries, KC, I now know why your thoughts are skewed.....

What's UAL's profit picture looking like...they load factors are phenomenal. If load factor is high, and profits are low or negative, then that tells me that yes, most of those Expedia seats are sold at a loss.

 

[I'mRayFlyMe]

Maybe they clipped it. On the show she said Kansas was the infected hair on Americas 'taint.

Didn't moderator Richard warn you and others on the other SWA business model thread about gutter talk and sniping? :down:

 

[magsau]

If load factor is high, and profits are low or negative, then that tells me that yes, most of those Expedia seats are sold at a loss.

Not exactly but continue that line of thinking. How many carriers added more ASM than they filled? Only a couple and they were considered "Low fare" carriers. The fact that SWA is trying to shuffle the deck chairs is proof the traditional SWA business model is not working.

Most of the US carriers have shed tons of ASM's over the years while LUV was offering service to places no one wants to fly-----based on LF. Not a good trend and one that I hope continues.

Didn't moderator Richard warn you and others on the other SWA business model thread about gutter talk and sniping?

He asked for clarification and I provided it, while still maintaining the thread. Your sniping is of what relevance to this thread? Where is the gutter talk? Show me a defined prohibited word in the post? Perhaps someones mind is in the gutter and thus you need to clense your thoughts.

 

[FrugalFlyerv2.0]

Most of the US carriers have shed tons of ASM's over the years while LUV was offering service to places no one wants to fly-----based on LF.

If over the last 5-6 years most of the US ("legacy") carriers have been shedding ASM's - then wouldn't they be the ones offering service to places no one wants to fly?

 

[magsau]

If over the last 5-6 years most of the US ("legacy") carriers have been shedding ASM's - then wouldn't they be the ones offering service to places no one wants to fly?

You might have missed the influx of LCC carriers. The legacy airlines can get you to any point on the globe. SWA can not. SWA has dumped capacity into markets at a rate that the industry could not absorb. This was done when with wreckless abandon and when fuel cost allowed them to keep profits. Now they are on the other side of the equation and are going to be forced to cut ASM's and salaries.

 

[FrugalFlyerv2.0]

You might have missed the influx of LCC carriers. The legacy airlines can get you to any point on the globe. SWA can not. SWA has dumped capacity into markets at a rate that the industry could not absorb. This was done when with wreckless abandon and when fuel cost allowed them to keep profits. Now they are on the other side of the equation and are going to be forced to cut ASM's and salaries.

I know that "legacy" (I hate that term) carriers like UAL can take me all over the globe and I appreciate it (once a year).

I have to disagree with you about SW dumping capacity. I think jetBlue (NYC-Florida) is an example of dumping capacity (and to a lesser extent Frontier and Airtran). On the other hand I think SW has managed and planned their growth - selecting markets carefully, executing their business plan rather carefully not deviating too much, and more importantly planning! Fuel hedges are a part of the planning!

Ofcourse SW looks like a genius having the fuel hedges when most other airlines were paying an arm and a leg for fuel. But that's good management. While SW is certainly going to face problems (as is UA) I have more confidence in SW & their current management, given their track record, of coming out better than UA (with UA's current management).