Wednesday, March 27, 2013

Southwest putting an end to that low-fare mojo.

When Southwest Airlines launched their PR offensive to get approval to fly their blue and reddish-orange planes to Mexico and other points South from Hobby Airport there was much gushing and praise for the plucky little airline and their ability to move into a market and lower prices.  Such was the myth of the 'Southwest effect' thrown into the argument despite the warnings of local travel experts (and people who actually have an understanding about how airlines function).

Fast forward to today and it's becoming more and more evident that those warning against Southwest acting as a lower-fare genie are being proven out.  Yesterday in the media the following two stories ran suggesting that Southwest is now beginning to position themselves as a more serious airline without the quirkiness and "low fare" fanfare that accompanied all of their previous ads.

Southwest Airlines: We're not about cheap fares any more. Brad Tuttle, TIME

One reason that Southwest seems to be saying it no longer stands (just) for low fares is that, in recent studies, the airline has been shown to not always have the cheapest flights.

So long to the fun, funny Southwest Airlines of old. Mac Watson,

The low-fare, cares about you, airline with a sense of humor is gone. No more do my "bags fly for free," and you can forget about "being free to move about the country."
Now, granted, the second piece of opinion isn't reality.  For now, bags are still flying free on Southwest and the idea that they're considering unbundling the charges from their fares is just that, speculation.  The bigger point is that, for now, Southwest seems to be growing up and throwing away their devil-may-care-us-against-the-world attitude in an attempt to be seen as a fourth legacy airline, and not just a discount carrier. My guess is they're doing this for two reasons:

1. They long ago lost the single component that let them charge lower fares.  I'm talking about their fuel hedges.  For a long while WN was paying much less for fuel than were the legacy carriers, and it helped them build a brand.  Now that their cost structure is on almost equal footing with the legacies (and, in some cases higher) they can't afford to come into a market and undercut fares for long spans of time as they used to.

2. Discount carriers are suffering from some negative marketing right now. With carriers such as Spirit and Allegiant damaging the brand, it makes sense that Southwest might want to distance themselves from the realm of no-recline seats, charging for water and carry-on bag fees.

All of this serves to reinforce the point made by the anti-Hobby expansion group that spending Millions of dollars to reconfigure Houston's smaller airport into a CLE-type hub is not going to allow Houston travelers to realize the cost savings promised when the deal was inked.  The real reality is that there will now be more seats available to these destinations, at approximately the same cost, which will make the flights more empty and less profitable for the airlines at IAH (read: United)  If this happens then there's a very real possibility that route reductions will take place in order to make the routes profitable again.

Millions of dollars spent for less service and two reduced hubs instead of one International hub of distinction.  Sounds like the makings of a boondoggle to me.

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