Southwest Seeks Revenue Lift


Sep 13, 2006
Southwest Airlines seeks a revenue lift
Carrier considers adding options such as meals and charging for them

Copyright 2007 Houston Chronicle

As fuel costs remain stubbornly high and bookings flat, Southwest Airlines is doing what its competitors have been doing for years: looking for new ways to make money.

"It is pretty basic," spokeswoman Paula Berg said. "Costs are rising, and we are a low-fare airline, so how do we reconcile those two things?"

The options include charges for some things the airline has never offered before, like assigned seats or meals.

Those are two examples of what the Dallas-based carrier is considering, Berg said.

"Some customers might like to have those options and might pay a small charge for those additional services," she said.

The airline already has programs in place to boost its cargo revenue, chief executive Gary Kelly said at a conference last week.

Southwest has tremendous potential to generate added revenue by selling merchandise and services to passengers, Jim Parker, an airline analyst with Raymond James, said in a recent report.

Such sales "are on the verge of becoming pervasive in the airline industry because it enables airlines to diversify their revenue bases," Parker wrote.

The analyst said a fee for assigned seating or priority boarding — to replace the current open seating and boarding by categories — is likely near the top of Southwest's list.

Change is in the air at Southwest.

"There is a transformation process under way," Kelly said. "It is far from done. It will take place over several years."

The airline's goal, Kelly said, is to find ways to enhance its low-fare and strong customer service brand by offering even more options for passengers.

No final decisions have been made, and the list of possible options is long, according to Berg.

But the carrier could announce some offerings by year's end.

The carrier won't be taking anything away and will continue to provide items like snacks, pillows and blankets at no charge, Berg added.

Travelers who fly Southwest a lot, particularly on business, might find paying a bit extra for good seats worthwhile.

For the airline, this could be a big moneymaker.

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