Southwest Raises Fare

[SoftLanding]

Except one mistake, SWA may be buying CALLS, not Puts, brain phart....

Busdrvr,

why would they be buying calls if SWA management believes oil will revert to mean?

You buy calls if you believe said product price is going UP, and puts if you believe price is going DOWN,no? (Well, that is if you intend to make money😉

🙂

 

[Flight]

anyone know if wn is working on more hedges for the future???

WN has a department dedicated to negotiating fuel contracts for the airline. These fuel hedges did not just fall out of the sky, they were crafted by a group of very savvy folks.
It goes without question, this group is working hard to negotiate fuel contracts far into the future.

 

[Busdrvr]

Busdrvr,

why would they be buying calls if SWA management believes oil will revert to mean?

You buy calls if you believe said product price is going UP, and puts if you believe price is going DOWN,no? (Well, that is if you intend to make money😉

🙂

A typical strategy is to buy "forwards" when the price is low, but when your "think" it's near the top, you buy calls as a means to get a little insurance just in case you're wrong, without locking in a price you think is too high


"It goes without question, this group is working hard to negotiate fuel contracts far into the future."

No offensive, but SWA locking in at prices above $65 a barrel would be the legacy carriers dream!! Trust me on this, they are NOT currently buying forwards, calls maybe, but NOT forwards

 

[ramper_in_las]

WN has a department dedicated to negotiating fuel contracts for the airline. These fuel hedges did not just fall out of the sky, they were crafted by a group of very savvy folks.
It goes without question, this group is working hard to negotiate fuel contracts far into the future.

thank you

 

[insp89]

WN has a department dedicated to negotiating fuel contracts for the airline. These fuel hedges did not just fall out of the sky, they were crafted by a group of very savvy folks.
It goes without question, this group is working hard to negotiate fuel contracts far into the future.

Better tell those savvy folks to get out the magic wand, Southwest fares are going up....

 

[KCFlyer]

Better tell those savvy folks to get out the magic wand, Southwest fares are going up....

And this is a bad thing for your airline? Odd isn't it that Southwest fares are going up before their hedges are all gone. Odd isn't it that even with hedges, other airlines are still pricing below Southwest. I wonder if, in the quest for market share, some of the financially distressed airlines will use this opportunity to capture that market share that is ever so important to profitablity. 🙄

 

[insp89]

And this is a bad thing for your airline? Odd isn't it that Southwest fares are going up before their hedges are all gone. Odd isn't it that even with hedges, other airlines are still pricing below Southwest. I wonder if, in the quest for market share, some of the financially distressed airlines will use this opportunity to capture that market share that is ever so important to profitablity. 🙄

KC,
Don't remember stating if fares going up at Southwest was a Good or Bad thing.
I still here a lot of people complaining about fares being too high.
Don't see what's so "ODD" about Southwest being forced to raise their fares in order to stay profitable.

 

[KCFlyer]

KC,
Don't remember stating if fares going up at Southwest was a Good or Bad thing.
I still here a lot of people complaining about fares being too high.
Don't see what's so "ODD" about Southwest being forced to raise their fares in order to stay profitable.

I know. People will complain about fares being too high...maybe that's Southwest's fault, as in the Sunday paper, of all the routes they list the lowest available fares, Southwest wasn't listed anywhere. Several "financially distressed" carriers were. IMHO, $309 for a walk up fare, and a fully refundable and changeable ticket, ain't half bad to fly from one coast to the other. I read an Atlanta based "consumer advocates" message board, and there are many, many posts from people who feel that anything over $200 for a round trip ticket from Atlanta to the west coast is a "rip off". Those folks might be putting a butt in a seat, and insuring that "market share" is protected...but are they really worth it?

 

[CSAR GYRENE]

WN has a department dedicated to negotiating fuel contracts for the airline. These fuel hedges did not just fall out of the sky, they were crafted by a group of very savvy folks.
It goes without question, this group is working hard to negotiate fuel contracts far into the future.

I've ben saying it quite often on these boards that SWA is doing something right! The "spend a dollar to save a dime" philosophy is killing the industry everywhere else.
keep up the good work.

 

[Borescope]

Is that the best you have SCAB?

Truth hurt does it?

The only thing Im absorbed with is seeing to it you SCABS are shamed for the remainder of your days

Who's ashamed Local 12 scab, I don't work as a mechanic in the airline industry, so you are going to spend a lot of time and wasted energy.

 

[Paul]

Gentleman, if I recall correctly this topic is about SWA's fare raises and decreasing fuel hedges. I do not recall mechanic or related being part of this topic. Get it back on track please.

Thank you.

 

[WNjetdoc]

******Crap, it looks like other airlines are raising fares as well, however I'm sure you SWA bashers will continue to spin every news report about SWA into how the airline is falling apart.*****

31 Mar, 06, Reuters:

Delta Air Lines said on Friday it will start adding airport fees to its ticket prices on connecting flights and match a separate fare increase by United Airlines.

The moves are the latest sign that airlines are getting bolder in trying to raise fares, which in recent years have failed to keep pace with surging fuel prices and have pushed most carriers deep into the red.

Delta, which is operating under bankruptcy protection and lost more than USD$500 million in January and February, said passengers could pay USD$3.00 to USD$4.50 on each leg of flights that connect through airports charging the fees.

For flights that involve connections at two airports, the charges could raise ticket prices by up to USD$9 each way, Delta said.

Separately, United said on Friday it had raised business fares by USD$50 each way in an effort to offset fuel costs. It also raised coach/economy fares USD$2 to USD$4 each way in markets where it faces low-fare competition and USD$5 each way in other leisure markets, said spokeswoman Robin Urbanski.

Delta said it matched United's price increase, while some other airlines said they were still studying it.

The rise in ticket prices comes close on the heels of a round of fare increases by the major US airlines earlier this month.

Roger King, an analyst at CreditSights, said he expects other airlines to match the fare increase and expects to see more such moves in the coming months.

 

[mga707]

******Crap, it looks like other airlines are raising fares as well, however I'm sure you SWA bashers will continue to spin every news report about SWA into how the airline is falling apart.*****

An amazing (and rare) instance of sanity in fares. Shades of AA's "Value Pricing" attempt of the early '90s...

 

[whlinder]

And again, up to a top fare of $319.

 

[Ch. 12]

Everyone makes it seem like raising airfares is an easy thing to do when in reality it is only the recent surge in fuel prices that have numbed the consumer enough that airlines CAN actually increase fares. Airlines have not been deliberately keeping fares down but have been unable to maintain increases in recent years b/c the consumer has been less willing to pay a real fare. Now that prices have more than tripled at the pump, a 10-20% increase in airfares does not seem so bad. If oil maintains historic and unprecedented highs, look for inflation in many other areas as well.

But believe me...all airlines...LCCs and legacies (well...let's exclude Indy Air from this) have tried to raise fares but it is the CONSUMER that has not allowed it until now. Mgmt of any carrier is not perfect but does not deliberately keep fares down to lose money. Air travel is no less immune to supply and demand than any other industry. But boy would it be nice if it were as easy as so many of you make it sound and that carriers would just charge $2000 per ticket and everyone would be profitable?

Here's to hoping that the one good thing of the oil price surge (airfares being allowed to increase) sticks.