Every major airline is reducing capacity, right? Wrong. Southwest
Southwest's plan, revealed last week, isn't linear. The low-fare pioneer says it will eliminate 31 low-profit routes and add 40 in markets where it attracts higher-margin business, such as Denver.
"We have a much different story to tell today than our competitors," CEO Gary Kelly said in a company statement. He also said that Southwest is still growing and chastised peers for adding fees.
He has a point. Over the past week:
(NYSE:DAL)said it would add a fuel surcharge of up to $50 to tickets bought with frequent-flier miles. Expect every one of the majors to follow suit, including United and Continental (NYSE:CAL), which recently agreed to a partnership that, when effective, will allow frequent fliers to redeem miles with either airline.
(NYSE:LCC)fired its skycaps. Over time, the carrier expects curbside check-in to be an automated affair. (Oh, goody.)
- Finally, let's not forget American, which began charging a $15 first-bag fee earlier this month.
Contrast all of this with what Southwest has planned: more flights and a $5 to $10 per-segment fare increase, its third this year.
By itself, that's a pretty unremarkable statistic. (Of course Southwest is raising fares; oil is more than $140 a barrel!) What's interesting is that customers are willingly paying more. Southwest's load factor -- a measure that determines how full, on average, its aircraft are upon departure -- rose to 71.4% though May, up from 70.1% a year ago.
Higher prices; more fliers. Talk about impressive.
Southwest isn't soaring. But, unlike far too many of its peers, it isn't dying, either.
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