Reply With QuoteGood news as long as you are not one of those employees receiving the package.
Wow, those are surprisingly strong results in comparison to the other air carriers. Looks like Southwest continues to be extremely strong financially and is staying ahead of the 8-ball by making some modest overhead reductions.Originally Posted by PuddinHead
Thanks for sharing the good news, PuddinHead!
Good news as long as you are not one of those employees receiving the package.
Last edited by PuddinHead; 19 April 2009 at 09:24 PM.
Why not? It's purely voluntary. If you want to keep your job, you keep it... if you're starting to feel a little burnt out or something, you can take the package. it's the best of both worlds!
Actually it is structured even better than that, folks taking the offer are eligible to reapply for rehire after 12 months.
So for some it could be like taking a years vacation with full flight/travel benefits.... Choices are wonderful.
Last edited by TexasPlus; 20 April 2009 at 10:25 PM. Reason: fixed a typo
"Liberalism: Moochers Electing Looters to Steal from Producers."
I have no problem and absolutely book 7+ days out when possible. But if a client wants less than 7 days, they'll pay for it.
Again, I think I've already mentioned this... but at what point are you wasting both your client's and your firm/company's time by spending a whole day making multiple connections to save what usually amounts to less than 500 dollars. At some point you need to manage your clients and customer's expectations and help them realize that it wastes both contractor and client time and resources to drag out your travel in the name of less than 500 dollars. In the case of the NY flight, you're adding multiple days to the project timeline to save little money and costing your company money by sitting on a plane all day. A WN flight is far from the ideal working space as are the SW terminals you have wait in.
Saving money flying Southwest's multiple connections reminds me of doing government contracts overseas. Why go DFW to FRA when you can fly DFW-MIA-LHR-FRA? Or why not make a one connection flight to Doha through IAH or IAD when you can go DFW-JFK-LHR-BAH-DOH? We've saved a few hundred dollars and sacraficed hundreds or possibly thousands in productivity to airports and airline seats.
I look forward to UptownD telling me how WN seats have higher productivity levels than all other airlines's coach products and that lining up by number in the Southwest Corral is a stress reliving productivity enhancing action to take part in.
Although I've mentioned this before, I guess it's time to restate: I have several million miles in the AAdvantage program, was Executive Platinum for 4 consecutive years and fly AA far more often than I fly Southwest.
I absolutely agree that one must factor in the value of time in making choices.... I would much rather fly AA non-stop than endure a significantly longer trip on Southwest. For me, I factor in the extra time associated with driving to DFW--- but for someone in, say, Ft. Worth, it would actually add time to drive over to Love-- that's part of the equation. Also, the difference between a long total travel time and a shorter time can sometimes add another night on the road-- that's additional expense as well.
Personally, I can't imagine making the NY flight on Southwest for the time being.
With respect to WN's coach seats-- I think they are about a toss-up compared to AA's with respect to productivity.... WN's seats tend to be cleaner, but that doesn't impact productivity. Many of WN's gate areas do, however, have better seats, with more power outlets, working areas, etc.
I really don't understand the big deal about Southwest's corrals--- I actually find it less stressful than hovering around outside the gate wondering if passengers are self-policing as Group 1, Group 2, Group 3, etc. are called.
Last edited by UptownDallas; 22 April 2009 at 11:24 AM.
From the vast majority of the metroplex dfw is easier to get in and out of than love. Even when I lived downtown it was pretty much a draw getting to love or dfw. Dfw is a straight shot on the highways vs love field being closer mile wise but the streets surrounding it being back up.
From Dallas, there are 15 cities that have nonstop service from both Love Field and DFW. Here are the statistics for each of those city-pairs based on Q2 2008 O&D data from DOT's Consumer Airfare Report (See Table 6) Or you can get the exact same information from Faremeasure.com here
(Note: Q2 2008 is the latest quarter that has been reported, but I did read somewhere that Q3 2008 information is supposed to be released on April 29.)
City - Market share leader - Share
Albuquerque - Southwest - 66.2%
Amarillo - Southwest - 78.4%
Austin - Southwest - 70.1%
Birmingham - American - 50% (Southwest share was 46.7%)
El Paso - Southwest - 65.3%
Houston (includes Hobby and IAH) - Southwest - 67.1%
Kansas City - American - 54% (Southwest share was 45.2%)
I believe AA was still serving Kansas City from both Love Field and DFW back then and now they're gone, so I wouldn't be surprised if Southwest becomes the market share leader on this route as well.
Little Rock - Southwest - 74.8%
Lubbock - Southwest - 79.9%
Midland/Odessa - Southwest - 85.5%
New Orleans - Southwest - 65.7%
Oklahoma City - Southwest - 62.6%
San Antonio - Southwest - 75.3%
St. Louis - American - 51% (Southwest share was 48.5%}
Same as Kansas City. AA was serving Kansas City from both Love Field and DFW back then and now they're gone, so I wouldn't be surprised if Southwest becomes the market share leader on this route as well.)
Tulsa - Southwest - 70.9%
Then why is Southwest the market share leader in 12 out of the 15 city-pairs that offer nonstop service from both Love Field and DFW?
Because Southwest has nowhere else to send those planes from DAL. As soon as Wright bids a final adieu, you can bet that Southwest will be stretching its DAL average stage length quite a bit as it looks for more profitable destinations while in turn reducing capacity on the shorter-stage length flights.
What does that have to do with my question? AA serves all those same city pairs nonstop from DFW. If DFW is more convenient for the majority of the Metroplex, then why aren't more people flying AA to get to these cities?
Perhaps it is the type of people that travel to those markets, type of planes used, # of flights per day, etc.
Last edited by downtownguy25; 22 April 2009 at 05:43 PM.
Because I'm assuming that Southwest has far more capacity (more frequency, more seats) to those cities compared to AA. AA has more profitable markets to which it can deploy its Eagle/mainline fleet ex-DFW.
Because those city pairs especially the smaller cities the majority of the traffic is generated by people traveling to Dallas and back to their own city not the other way around. While the larger cities have direct service to other large cities without the requirement to connect through Dallas Southwest still generates more traffic to and from Dallas because of the number of flights offered.
Airport convenience is not that much of a consideration for the traffic numbers you cite. It is about airline choice more than which is the best airport. Go long go to DFW, stay short go to Love.
Hey TP you get a package? Let us know it turns out.Actually it is structured even better than that, folks taking the offer are eligible to reapply for rehire after 12 months.
So for some it could be like taking a years vacation with full flight/travel benefits.... Choices are wonderful.
Southwest Airlines girds for a challenging year in which growth is off the table.
By Perry Flint
Dallas
Air Transport World, April 2009, p.24
CALL IT A BLACK SWAN EVENT. THIS YEAR FOR THE FIRST TIME in history, Southwest Airlines will shrink. That's right: The carrier that wrote the book on consistent growth is cutting back, reducing seat miles 4% compared to 2008, after growing in every year since it commenced service in June 1971.
"We are operating with an abundance of caution this year and certainly there is no change to our view that we want to keep the fleet steady and also trim unproductive flights," Chairman and CEO Gary Kelly tells ATW. SWA is not parking any aircraft, a point he emphasizes. It will take delivery of 13 737-700s in 2009 and return 15 older 737 Classics; it has also postponed deliveries of six 737-700s previously set to arrive in 2010 and three more in 2011. Instead, in a step Kelly calls "unprecedented," SWA is optimizing its schedule, a capability it really only acquired within the past five years as it has introduced new scheduling tools. Since August 2007, it has eliminated approximately 10% of its flights from its daily schedule, freeing aircraft for more profitable activities. Although SWA is shrinking a bit, it has a number of projects underway that should position it for the upturn. In January it activated auto throttles and vertical navigation capabilities on its 737s for the first time, the better to prepare for its transformation into the industry's leading user of Required Navigation Performance. Then in February it began a trial of onboard Wi-Fi using a system developed in conjunction with Row 44. That's quite a change for an airline that has never shown an in-flight movie.
Later that month, it announced plans to serve Boston's Logan Airport, one of those crowded, expensive East Coast airfields it had always rejected in the past. Boston will complement another surprising destination for 2009: New York LaGuardia, the Godzilla of mega-congested, delay-prone airports, the one that inspired a sitting US President to lambaste the scheduling practices of US airlines and one that Southwest has studiously avoided during the first 38 years of its existence.
The decision to trim 2009 capacity was made "in the nick of time," Kelly said during the company's fourth-quarter conference call in late January. Insulated by its fuel hedges, SWA stayed on a profitable growth curve in 2008 longer than most US carriers. But when oil prices collapsed last fall, the hedges turned turtle, pushing it into losses in the third and fourth quarters, the first since the 1990-91 Gulf War.
Yet the mood in Dallas, if subdued, is certainly not depressed. Regardless of the tumbling economy, SWA has a lot on its plate these days what with new cities, new products and international codeshares with Canada's WestJet and Mexico's Volaris upcoming in 2010. Furthermore (although Kelly doesn't mention it), history has shown that when the airline industry comes down with pneumonia, SWA just gets a bad cold. After all, every other major US passenger carrier lost money last year while SWA earned $178 million on a GAAP basis, or $294 million if those pesky fuel hedges are excluded (see table, p. 29). That performance extended its consecutive profit streak to 36 years.
It remains the only investment-grade, dividend-paying major airline in North America, had approximately $2 billion in the bank in January and is also the largest US carrier in terms of domestic passengers, a position that it likely will retain as legacy network airlines contract at a faster rate. It recently settled with FAA over the operation in 2007 of 46 737s that were not in compliance with airworthiness directives, for which it ultimately was fined $7.5 million. And its 35,500 employees, although many are working fewer hours these days, are not getting pink slips, which certainly helps inspire its famous "Warrior Spirit" that in turn translates into the warm, caring service for which it is known.
Depleted Quiver?
Still, some wonder whether the airline with the most consistent track record of growth and profitability isn't running out of ideasand profitable growth opportunities. Otherwise, why go into a place like Boston Logan when it already brackets the city with service to Providence, R.I., and Manchester, Vt.? And why mess with LGA, a high-cost airport that seems destined to throw a monkey wrench into its reputation for reliability? Understandably, Kelly isn't biting on the negativity. While emphasizing that "2009 will not be a good year," he says, "I think we have our best days before us. We've got opportunities to develop Southwest that legacy carriers don't have. They've done what they can do. We can continue to grow our route map. We can continue to add features and functions to our products."
Explaining the decision to go into airports it used to shun, he points out that the airline of todayit operates approximately 3,200 daily flights on some 439 nonstop city-pairs to 65 domestic destinations and enplaned nearly 102 million last yearis a lot different than the Southwest of 15 years earlier, and "how we think of the route network is very different." Adding a new city and a dozen flights has far less impact and represents far less risk than in the early 1990s, when it was still developing major bases such as Chicago Midway and Baltimore/Washington and had yet to enter Florida and the Northeast.
Concerning the decision to serve LGA, he explains, "We know by our experience codesharing with ATA [in 2005-08] that we can add a dot to our route map and the network effect is unbelievable . . . We weren't even serving LGA [ourselves] and I'll bet you it was generating $20-$25 million a year in revenue." LaGuardia "is a marketer's dream . . . the number one market in America," adds VP-Marketing and Sales Distribution Kevin Krone.
"We had forever said no to LaGuardia and we were successful with the ATA codeshare," Senior VP-Marketing and Revenue Management Dave Ridley agrees. When ATA failed a year ago, SWA mulled another partner, he says, but concluded, "Maybe we ought to consider doing it ourselves." So SWA bid $7.5 million for 14 ex-ATA Airlines slots at LGA that seemingly had been overlooked by everyone else. Bankruptcy court approval was expected last month.
Kelly makes another point: The power of the Internet has changed the ballgame. "Southwest.com didn't exist 15 years ago. [Today] customers are well-prepared to go on the Internet and search for travel . . . We did no marketing for LGA other than have it for sale on our website. So there is a lot of leverage today that we haven't had historically that allows us to add large cities with even a small presence and it will be revenue and profit positive." Nearly 78% of passenger revenues came through Southwest.com last year, up from 59% in 2004.
Case Closed
Logan "is an even easier case to make," Kelly says. Although SWA has served nearby Providence for many years, "we are carrying very few customers who live in the downtown Boston area." Industry evolution also has shaped the carrier's views. When it started flying to Providence in 1996, "We were the low-fare game in the Boston region. So by definition that made Providence the low-fare airport and Logan the high-fare airport." But that's no longer the case. AirTran and JetBlue both serve Logan now, "so it's much more difficult . . . to market the alternative airports as broadly as we could in the past," he concedes, while adding, "The neat thing about Logan is from a marketing perspective we're already there."
That is not the case in Minneapolis/St. Paul, which SWA entered last month with eight daily services to Midway. It may have to spend millions of dollars to make its presence felt in a market dominated by Northwest Airlines, now a subsidiary of Delta Air Lines.
Talk of a network effect notwithstanding, Southwest remains primarily a point-to-point carrier. Approximately 78% of its customers flew nonstop last year, although this was down from around 80% in 2004. The average length of customer haul was 830 mi., up 10% in five years, in part because longer flying helps contain rising unit costs. In January its highest one-way walkup fare was $503, which is quite a change from $299 in 2005.
The desire to serve Logan, LGA and MSP is linked closely to its strategy "to reassert ourselves with business customers," notes Kelly. "We've got to take them where they want to go." And business people want to go to Minneapolis, Boston and New York. "It's a hard sell" to try to woo business travelers going to Boston into flying to a less-convenient alternative, he acknowledges. Ridley estimates that around 40% of the carrier's passengers are traveling on business, "but there's some guesswork there."
Made for Business
Ironically, SWA began life primarily as a businessman's airline. "We built this airline for the business customer," Kelly says. "The schedule frequency and the convenience and the point-to-point network are for business customers. One of our tag lines [in the 1980s] was 'The Company Plane.'" Arguably as it grew beyond short-haul flying in Texas and California and reached into Middle America, Corporate America grew tired of the cattle car boarding process and the one-size-fits-all approach.
SWA began "reasserting" itself with the business casual crowd in 2007as legacy airlines were downsizing amenitieswith a simple yet effective boarding process that eliminates the line-up-to-line-up method that penalized last-minute fliers. It refurbished its gate areas, adding work areas and AC power outlets, and launched Business Select, a fully refundable fare class that gives customers a guaranteed early boarding number regardless of when they check in, bonus credit in its Rapid Rewards loyalty program and a free drink coupon. It is priced $15-$30 over the Anytime fares that also are fully refundable.
The airline is selling about four Business Select tickets per flight on average and the program contributed approximately $73 million in revenue in 2008. "Our very rough target that we adopted back in 2007 was $100 million a year," Kelly says, "so I feel very good about the progress." Customer feedback is "overwhelmingly positive." He points to SWA's fourth-quarter RASM, which rose 7.8% despite a 1.4-point decline in load factor, as evidence that it is carrying more business travelers.
The Best Things Are Free
Probably also contributing to the RASM improvement is the omnipresent "No Hidden Fees" advertising campaign, which in typically humorous fashion informs consumers via television, radio, online and print that on SWA they will not have to pay a fee to check a bag or two, book through a res agent, check in at curbside, choose an aisle or exit row seat or change their reservation. It is virtually alone in North America in its refusal to pad the fare with extra charges, and some on Wall Street have questioned whether, in the words of one analyst, it is in fact "leaving incremental profit dollars on the table by not moving aggressively into ancillary charges."
It's a suggestion Kelly disputes. "I don't agree, for several reasons. I do agree that there are opportunities to leverage the Southwest brand and our 90 million customers to sell more stuff . . . I think the argument will be what stuff do we want to sell? The mantra . . . is we want to give people choice. So if we can give you a choice to give us more money, that would be delightful. The bag fees in particular don't appeal to me because in essence they are penalizing people who can least afford them and they are done in a way that's kind of sneaky . . . The other thing I would argue on the bag fees . . . is that all you need is one [additional] customer to pay for about 10 bag fees." And of course, in order to charge for preferred seats, SWA would have to assign them first, something it insists its customers have rejected by a margin of 2:1 in opinion polls.
The airline introduced a cashless cabin last year, using technology from GuestLogix. Senior VP-Customer Service Daryl Krause says flight attendants are very pleased with the new system: "It was a huge burden for them to rectify their sales and coupons and cash." Onboard spending rose 9%-10% during the first three months. Accepting credit cards also clears the way for SWA to get more expansive with onboard offerings if it desires.
It has other treats in store for business fliers, but officials are vague. Kelly hints about taking Rapid Rewards "to the next level," and an upgrade of Southwest.com is underway. It soon may offer Internet connectivity based on results of the trials with Row 44. Passengers with Wi-Fi-enabled devices such as laptops, iPhones and PDAs can access e-mail and the Web. According to Ridley, weight of the satellite-based system including antenna, cables and computer boxes is in the 65-85-lb. range. The company will need an FCC license to offer the service. Fleetwide rollout would take about a year and it has not announced a price structure. Interestingly, under the agreement with Row 44, SWA sets the user price.
Another key to winning more business is reliability. No worries there: Excluding Hawaiian Airlines, it led the industry in ontime performance last year and it has the best record since Uncle Sam began keeping track in 1987. This is particularly noteworthy given that it now is heavily invested in East Coast flying that several years ago some said would cause it to slip from the top. It also had the fewest number of passenger complaints to DOT last year.
Operation Kick Tail
These metrics make up two of the three goals in an internal contest/campaign called "Operation Kick Tail" that it held last year to inspire overachieving team members to even further heights. The third goal was to have the lowest unit costs in the industry and it did (AirTran was second; see chart). The airline will randomly select 21 participants in Kick Tail to receive a $10,000 prize for winning.
Southwest's ability to keep its CASM below its peers despite steadily rising wages seemingly mystifies and pleases Wall Street in equal measure. According to data from Oliver Wyman and Raymond James & Assoc., labor costs accounted for 31% of SWA CASM for the 2008 third quarter versus 23% at Delta, which had the lowest total CASM of any network airline, yet Delta's total CASM was still 24% higher. Paradoxically, in contrast to workers at DL and most network carriers, all of SWA's unionized work groups have seen their pay go up since 9/11 and they are among the best paid in the industry. With virtually every contract either currently in negotiation or awaiting ratification, wages will rise again.
So how does SWA do it? One way is that it is always improving efficiency. ATW calculates that at the end of 2008 it had 66 employees per aircraft, down from 74 in 2005 and 85 in 2003. Hiring freezes are in place, and as people leave they are not being replaced. The airline normally hires 900-1,000 flight attendants per year; this year it isn't hiring any. The training people will be transferred to other departments.
And of course there were the fuel hedges that delivered cash savings of $734 million in 2007 and $1.3 billion last year before they turned upside down. That advantage is disappearing: Only 10% of its fuel is hedged going forward and those hedges also are out of the moneyits cost per gal. in 2009-11 will exceed market or unhedged prices by 16-17 cents.
But Southwest probably will find a way to stay below the other guys' costs. Saving money is embedded within the DNA of the company, and even after nearly four decades, employees seem to have an almost cult-like devotion to their airline and seeing it do well. "I've never felt the culture so strong," Kelly enthuses. "It's something about tough times. If you really have a family, it comes together. That's how it feels right now . . . I just feel like we're unbeatable."
>>> http://www.atwonline.com/magazine/ar...articleID=2738
"Liberalism: Moochers Electing Looters to Steal from Producers."
Interesting... where did you get that information?
Experience and observation.
Tell you what on your next trip through Love Field walk to the gates for Amarillo, Lubbock and Midland and notice the dress of most of the passengers waiting to board the aircraft.
I am sure even a transplant like yourself will notice the difference in appearance between the the groups waiting to board aircraft to those cities as compared those passengers in transit to Houston, San Antonio and Austin.
You're far more discerning than I am... would that I had your powers of observation!
This reminds me of a comment a SW pilot in a jumpseat made to an AA pilot friend of mine. The SW pilot watched everyone as they boarded an AA flight and commented that AA serves a completely different class of passengers.
I guess I have to admit I am a bit surprised that you would have been at Love Field and seen the gates for Amarillo, Lubbock and Midland.
And we all know how AAmerican pilots describe the class of AAmerican management...
"Liberalism: Moochers Electing Looters to Steal from Producers."
From the Milwaukee Journal-Sentinal:
Southwest Airlines to Fly out of Milwaukee
Southwest Press releaseSouthwest Airlines, the nation's largest low-fare carrier, will begin flying out of Milwaukee's Mitchell International Airport late this year, the company announced Wednesday.
Southwest's entry into Milwaukee likely will create more choices, and lower ticket prices, for area fliers. It also brings another formidable competitor for Midwest Airlines, Delta Air Lines, AirTran Airways and other carriers that fly from Mitchell.
The announcement was made by Chairman, President and Chief Executive Officer Gary Kelly at Dallas-based Southwest's annual shareholders meeting and drew applause from the audience. Kelly didn't include details on which cities Southwest will serve from Milwaukee or the number of flights that will be offered.
Posting from the Southwest Blog:
2009 NEW CITY Number Four--MILWAUKEE HERE WE COME!
LoneStarMike
Wow, nice! I fly to Milwaukee quite a bit and would love to see SWA go there. Any guess as to where they might initially fly. Baltimore? Vegas? Florida? MSP?
Midwest offers a far superior product than southwest does both on their Midwest Connect and Mainline product. I would encourage anyone looking at flying Love to Mitchell to look at Midwest, I'm sure they'll be matching prices now to keep up.
Southwest still hasn't fixed their miserable flifo system. Right now my mother is waiting at Love for her plane to arrive for flight 27 to Houston (her original flight has been delayed by 3 hours). But online, Southwest indicates that everything is just peachy. So good, in fact, that her plane has ALREADY DEPARTED. No, my mother's not senile...
Come on, Mr. Kelly... we want TRUTHFUL information. How hard could it be?
Update... now the flight, scheduled to depart at 1300 (i.e. over two hours ago), is listed as undeparted, but ON TIME!
What does a first in first out system have to do with inaccurate information on a flight's status?
Is FIFO how SW allocates planes to flights?
fLifo... flight information.
Pins? We don't need no steenkin' gear pins!
J.P. | Route Pack Six
The Aviation Art of JPSantiago
Aviation Trivia of the Day
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Southwest Jumps Into Bidding for Frontier Airlines
By PAULO PRADA and SUSAN CAREY
Southwest Airlines Co. on Thursday jumped into a bankruptcy-court auction for Frontier Airline Holdings Inc., potentially thwarting a rival bid with a $113.6 million offer for the smaller carrier.
If successful, the move would make Dallas-based Southwest the second-largest carrier by number of passengers in Denver, a highly-competitive market where Southwest has been third, behind UAL Corp.'s United Airlines and Frontier.
An acquisition, however, would raise questions about Southwest's ability to stick to its low-cost business model. Southwest operates an extensive point-to-point network while Frontier runs a hub-and-spoke system. A deal would force Southwest, the country's largest low-fare carrier, to operate and maintain two different types of aircraft -- if only for a time -- and give the airline its first international destinations.
At the very least, Southwest's offer, which is nonbinding, could spark a bidding war for Frontier. Any combination would be subject to Justice Department review, which could take several months.
Southwest's surprise move came a month after Republic Airways Holdings Inc., the Indianapolis-based holding company for three regional airlines, offered $108.75 million for Frontier. Republic is the single biggest creditor of Frontier, which in April 2008, filed for bankruptcy-court protection. It claims about half of the $28.75 million that Frontier owes unsecured creditors.
Republic is providing $40 million in debtor-in-possession financing to Frontier. Its offer has been approved by the bankruptcy court, pending higher and better offers.
Ron Ricks, Southwest's executive vice president for corporate services, said Thursday the Frontier auction presents "an opportunity to get back into a growth mode." Like other carriers, Southwest has been hit hard by plummeting demand for travel.
Southwest said its goal is to better compete against United Airlines, which controls about 50% of the Denver market. Combined with Frontier, which flies to 59 destinations in the U.S., Mexico and Costa Rica, the carrier would control about a third of the flights in the area, it said.
Southwest would initially operate Frontier as a stand alone carrier, but eventually absorb the airline and do away with its 51 aircraft, all variants of the Airbus A320, it said. Southwest would replace them with the Boeing 737s that it has long operated as its only aircraft type.
Republic declined to say how it would respond to the Southwest offer. In remarks Thursday, before Southwest disclosed its offer, Bryan Bedford, Republic's chairman and chief executive, said there has been "a significant amount of interest in Frontier's reorganization process."
Frontier suitors must present preliminary bids by Monday. Final bids are due a week later.
J.P. | Route Pack Six
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Thursday, July 30, 2009, 4:10pm CDT
Analyst calls Southwest's bid for Frontier Airlines a 'great move'
San Antonio Business Journal - by Kerri Panchuk
Southwest Airlines Co.'s planned bid for bankrupt Frontier Airlines is getting good early reviews, even though the two airlines would have to reconcile their fleets of Boeing and Airbus planes.
Roger King, an airline analyst with CreditSights, told the Dallas Business Journal on Thursday that Dallas-based Southwest's bid would be a "great move from a strategy standpoint." King said it's time-consuming and costly for airlines to add cities and grow market share by adding flights over a period of time.
He categorized Southwest's announcement that it will place a $113.6 million bid for Denver-based Frontier as an attempt for Southwest to "gain more capacity at Denver quickly."
Southwest (NYSE: LUV) is preparing to purchase Frontier Airlines as part of a U.S. Bankruptcy Court proceeding in which airlines are being given the opportunity to submit nonbinding bid proposals to acquire the troubled carrier.
Frontier will be sold at auction next month. Other airline competitors are vying for the airline as well. Republic Airways filed a bid for Frontier on June 22 totaling $108.8 million.
The court’s bidding deadline is Aug. 10.
“We are excited about the opportunity to submit a bid,” said Gary Kelly, Southwest’s chairman of the board, president, and CEO. “We see a strong fit between our company cultures, a mutual commitment to high quality customer service, and similar entrepreneurial roots.”
Southwest said the purchase of Frontier Airlines would expand the company’s network, grow capacity about 10 percent, possibly add jobs and boost competition in areas, including Denver.
The downside to Southwest's planned bid, said King, the analyst, is the degree of difficulty in combining the two airlines' operations when Southwest flies a fleet of 737s and Frontier operates a fleet of 50-plus Airbus aircraft. "It's not impossible, or challenging," he said, "It's just inefficient."
The different planes require different seating charts, and the airlines use different reservation processes, King said.
On Thursday afternoon, Ron Ricks, Southwest's executive vice president for corporate services and corporate secretary, and Bob Jordan, the company's executive vice president of strategy, held a conference call with reporters. During that call, Ricks and Jordan said that if Southwest buys Frontier, the Denver airline initially would operate as it does today, but eventually would be integrated and re-branded as part of Southwest Airlines.
The two confirmed that the airline eventually would retire Frontier's Airbus fleet and pull in additional 737s.
The Southwest executives said the move would allow Southwest to gain strategic positioning in the Denver market, where United Airlines Inc. is the dominant carrier. Jordan said United has 50 percent of the Denver market, while Southwest and Frontier combined would capture a third of the Denver market.
Panchuk writes for the Dallas Business Journal, an affiliated publication to the San Antonio Business Journal.
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Southwest’s Bid for Frontier Is Bad News for United
By Scott McCartney
It’s hard to run a huge hub at an airport where Southwest Airlines becomes a strong number two in market share. So the biggest impact of Southwest’s potential bid to buy bankrupt Frontier Airlines may fall on United Airlines.
If Southwest is successful in acquiring Frontier in bankruptcy court, the two airlines together will have about 30% of the market at Denver International Airport, with UAL Corp.’s United hanging on to 50%. But United is shrinking, and struggling financially.
A bigger fight in Denver with a stronger number-two airline could well weaken United. It might not be long before Southwest could overtake United as the largest carrier in Denver.
Southwest has always been a shrewd, opportunistic player. When Midway Airlines shut down years back, Southwest dispatched a virtual SWAT team to the Chicago airport to move in quickly.
Southwest jump-started its growth in the west by acquiring Morris Air, and took out a potential irritating competitor in Texas by buying Muse Air. Buying assets of bankrupt ATA Airlines gave Southwest slots and gates at important East Coast airports–plus more gates at Midway–at fire-sale prices.
The company has had a keen sense at pegging weak carriers not up for big battles to defend markets (viz. US Airways in Baltimore). Southwest has eaten away at entrenched hubs, weakening Trans World Airlines in St. Louis, for example, and Delta Air Lines in Salt Lake City. As Southwest has grown at Los Angeles International Airport, United has shrunk, from some 240 daily flights to fewer than 100 departures a day. Airline hubs can better compete when Southwest is at a secondary airport, like Houston, Dallas, San Francisco and Chicago. But when the competition is head-to-head, it’s a lot tougher on incumbents.
Bob Jordan, executive vice president for strategy and planning at Southwest, notes that Southwest’s growth has already been strong in Denver. The airline started flying to DIA in January 2006 and in three-and-a-half years has grown to 113 flights a day. But combining with Frontier takes that operation to a whole other level.
“We’re in this to win,” Mr. Jordan said in an interview.
Be careful about betting against them.
J.P. | Route Pack Six
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Aviation Trivia of the Day
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DEN is well on its way to becoming a ghost town... I think they're going to regret their choice of closing Stapleton if Frontier no longer has a hub there and United goes the way of the dinasaurs. They'll be able to close 2 of the concourses.
By Josh Mitchell and Doug Cameron
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- The U.S. House Transportation Committee's chairman is taking aim at a proliferation of airline-ticket surcharges and exploring whether the government should get a cut of the revenue.
Rep. James Oberstar, D-Minn., this week asked the Government Accountability Office, the investigative arm of Congress, to look into the practice of charging separately for checked baggage, meals, seat selection, ticket cancellations and fuel surcharges.
Major carriers in recent years have imposed the extra fees to offset spikes in fuel prices and overcome weak demand. By "unbundling" fares, airlines can advertise cheaper fares and ultimately collect more revenue than if the fees were folded into the overall price of a ticket.
Airlines collected about $566 million in baggage fees in the first three months of 2009, compared to about $123 million in the same period last year, according to the Bureau of Transportation Statistics.
Oberstar voiced concern that the fees are "excessive" and might be diverting funds from the federal Airport and Airway Trust Fund, which finances airport expansion and repairs. The fund is supported by a 7.5% tax on passenger fares, and reduced ticket prices lead to less revenue for the fund.
The GAO study should look into whether the fees "are commensurate with the cost of providing those services to passengers," Oberstar wrote to the agency in a letter co-signed by Rep. Jerry F. Costello, D-Ill. The lawmakers also requested that the office "study ways that Congress can effectively capture these fees for the Airport and Airway Trust Fund."
The move marks the latest attempt by Congress to take a tougher stance against the airline industry.
In May, the House passed a broad aviation bill that would set an expiration date on airlines' antitrust exemptions, making it tougher for them to join global alliances that cooperate on scheduling and revenue-sharing. A companion bill making its way through the Senate excludes that provision but would establish a passengers' "bill of rights," requiring, among other things, that airlines de-plane passengers after three-hour delays on tarmacs.
Airlines maintain that charging "a la carte" fees is popular with passengers because it gives them options to determine what services they pay for.
The practice was first adopted by low-cost airlines such as Allegiant Travel Co. (ALGT) and Spirit Airlines Inc. in the U.S. and Ryanair Holdings Ltd. in Europe, and was later adopted by most of the industry over the past three years.
Southwest Airlines Co. (LUV) is the only major carrier not to charge fees of $15 to $20 for each bag on a one-way trip. The bag fees vary little across the industry, even though airline labor costs vary widely.
AMR Corp.'s (AMR) American Airlines Inc., which uses the extra-fee model, said revenue from ancillary fees rose more than 7% to $565 million in the second quarter of 2009 from the previous year, even though overall passenger revenue was down 20% in the same period.
The U.S. government doesn't have the authority to regulate fee prices but can take enforcement action against airlines that fail to disclose the fees, a Transportation Department spokesman said. For the government to siphon off fees or regulate them, Congress would likely need to act.
-By Josh Mitchell and Doug Cameron, Dow Jones Newswires; 202-862-6637; joshua.mitchell@dowjones.com
"Liberalism: Moochers Electing Looters to Steal from Producers."
American Airlines to charge $8 for blankets
Feb 8, 4:21 PM EST
http://hosted.ap.org/dynamic/stories...02-08-16-21-06
DALLAS (AP) -- If you want a pillow and blanket in coach on American Airlines, it's going to cost you.
The airline will charge $8 for a pillow and blanket in coach class for domestic trips and some international flights longer than two hours, beginning May 1. The international flights are to and from Canada, Mexico, Hawaii, the Caribbean and Central America.
Spokeswoman Andrea Huguely said Monday it was an economic decision.
"American evaluates all aspects of the business to ensure that economic decisions are prudent and strategic for the long-term success of the company," she said.
Huguely said blankets will remain complimentary in premium-class cabins and in all cabins for other international flights.
The airline will sell a blue fleece blanket with an inflatable neck pillow in a clear zippered pouch, and will throw in coupon for $10 off a $30 purchase at Bed, Bath and Beyond, Huguely said.
JetBlue and US Airways charge $7 for a blanket-and-pillow set, with US Airways adding eye shades and earplugs.
...
Does Southwest even have blankets and pillows?
http://www.thedenverchannel.com/news...99/detail.html
From the DMN:
http://hosted.ap.org/dynamic/stories...02-09-05-45-56
Some time back I mentioned that SWA had committed to flying RNP routes system wide, and fleet wide. Not just a few places and a few aircraft like a handful of other airlines. Well time marches on, and after three years of preparation, here it comes.
"Next week Southwest Airlines Co. changes the way it flies, a major milestone in the push to modernize the nation's air travel system. For passengers, the last 20 minutes of a flight may feel more graceful as planes glide in without revving up engines repeatedly.
On April 6, the airline will change out the cockpit software in two-thirds of its fleet, giving pilots different instruments and a new look to displays. The radical upgrade, which took three years of preparation and required retraining 6,000 pilots, will enable Southwest to fly precise satellite-based navigation approaches to airports. That should save fuel, cut noise and reduce delays.
"On April 5th we fly one way. On the 6th, another way," said Jeff Martin, Southwest's senior director of flight operations."
More here.
http://online.wsj.com/article/SB1000...404043090.html
"Liberalism: Moochers Electing Looters to Steal from Producers."
Is this the same satellite navigation that airlines/FAA/Congress/small aircraft owners have been arguing about for more than a decade (who pays for it, what planes have to use it)?
I don't know, have a read of these and then you tell us....
http://rgl.faa.gov/regulatory_and_gu...der8260.52.pdf
http://www.naverus.com/
http://www.mitre.org/work/tech_paper...41/05_1141.pdf
http://www.youtube.com/watch?v=AHF9rPWFXzw
http://www.aviationtoday.com/av/cate...ach_14443.html
http://en.wikipedia.org/wiki/Require...on_Performance
http://www.aopa.org/advocacy/article...11nextgen.html
http://findarticles.com/p/articles/m.../ai_n13454174/
Last edited by TexasPlus; 26 April 2010 at 03:18 AM. Reason: fix typo & link
"Liberalism: Moochers Electing Looters to Steal from Producers."
Southwest Airlines fined $200,000 for its handling of oversold flights
02:51 PM CDT on Tuesday, April 27, 2010
By TERRY MAXON / The Dallas Morning News
tmaxon@dallasnews.com
Southwest Airlines Co. has been hit with a $200,000 fine for violating federal rules on how it handles oversold flights, the U.S. Department of Transportation said today.
http://www.dallasnews.com/sharedcont...t.250604b.html
From the bottom of the page linked above:
Arnold_ziffel
11:56 PM on April 27, 2010
It sure seems like Southwest has been the target of nit-picking by regulatory agencies. Standing side-by-side with their bretheren, their corporate behavior on any issue is head and shoulders better than the others. And, they have consistenly behaved that way since 1971. The most they should be asked to do is properly compensate those who were inavertently cheated, with a little langiappe added on as an apology. To fine the the carrier seems harsh, unnecessary, and counter-productive to both the industry, and their company. Comparatively speaking, AA should be fined for simply existing!
"Liberalism: Moochers Electing Looters to Steal from Producers."
TP/Arnold? Are you suggesting that it is ok for WN to screw over passengers but other airlines must be punished for the same behavior?
The DOT said Southwest failed to give written notice to those bumped involuntarily and did not give them "appropriate amount and type of denied boarding compensation in a timely manner."
What exactly are they accused of doing? Promising someone money and not remitting it? They announce desire for volunteers and people go get the vouchers. Does the trade not close at the desk?
It does if you volunteer to be bumped. Southwest was fined for not following the proper procedure when someone is involuntarily bumped.
LoneStarMikeIf an airline cannot persuade enough people to give up their seats, it must give a written statement to people bumped involuntarily that explains their rights and how the airline picked them.
In a consent order, the DOT said Southwest failed to give written notice to those bumped involuntarily and did not give them "appropriate amount and type of denied boarding compensation in a timely manner."
American Report CardAOL's Mystery Flyer goes undercover to find the friendliest flight attendants and the most helpful service. Follow the journey on Twitter.
No hot food, no pillows and blankets, and on some flights, no complimentary water. What's left? The one thing that can turn a long, meal-less coach flight from an ordeal to a joyride is...friendliness: helpful airline personnel and flight attendants with a positive attitude.
Over the next few weeks, I'll be traveling coast-to-coast on ten of our country's busiest airlines as AOL's Mystery Flyer. And I'll be looking to answer one really important question:
http://news.travel.aol.com/2010/04/2...ndliest-skies/
http://news.travel.aol.com/2010/05/1...s-report-card/
Southwest Report Card
http://news.travel.aol.com/2010/05/1...s-report-card/
Other airline Report Cards can be found at the bottom of the first link
"Liberalism: Moochers Electing Looters to Steal from Producers."
Heard this on the radio today. In an apparent effort to further "improve" flight attendants moral, AA management ended the latest talks in more than two years of negotiations. The union APFA said flight attendants showed that they are going to walk out, with nearly 97 percent voting to authorize a strike at the end of the 30-day clock.
"Liberalism: Moochers Electing Looters to Steal from Producers."
LMAO! Guess American will be grounded in 30 days.
Socialism - bringing a greater good to a greater many, one golden parachute at a time.
The 30-day Strike Countdown Clock hasn't started yet.
American, flight attendants end latest talks without a deal
Until the NMB releases both sides from mediation, the 30-day Strike Countdown Clock cannot begin and both sides have not been released from mediation yet.American Airlines Inc. and the Association of Professional Flight Attendants late Friday ended five days of mediation without reaching an agreement.
What's next is undetermined -- the National Mediation Board mediator didn't set the next round of meetings.
The union said it will renew its request to the board to release the union and airline from mediation and to start a 30-day clock ticking toward a possible strike.
Also see
Analyst downplays potential for strike by American Airlines flight attendants in the near future
LoneStarMikeAirline analyst Michael Derchin sent out a research note Tuesday saying he didn't think the National Mediation board is close to declaring an impasse in the contract talks between American Airlines and Association of Professional Flight Attendants.
Last edited by LoneStarMike; 25 May 2010 at 12:51 PM. Reason: added current article from today
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