Us Airways As Poster Child

[funguy2]

Even LUV admitted in an article (sorry, I know I read it, just can't remember where) that their main goal in going into PHL was to prevent other LCCs from getting a foothold so close to BWI, NOT to drive UAIR into a phrenzy (it just worked out that way).

I am sorry, but I don't believe this one bit. If LUV was "protecting" BWI, they could have easily added service to TTN, ABE, and or ILM. I think they wanted to get a jump on jetBlue at PHL, and saw the opportunity to create problems for UAIR. Let's face it... The execs at LUV have probably noticed that they have had nothing but phenominal success when it comes to competing with US Airways. BUT, LUV's execs are a class act, and even if this was their intention (to go after US Airways) they will never, ever admit it. They take no joy in putting other people out of work, etc, but it is their job to compete in the market, which they do vigorously. Come on... LUV's costs and fares "protect" BWI. They don't need a monopoly hub to be profitable (see MDW, PHX, LAS).

PHL is PLAINLY an airport contrary to LUV's normal M.O., since they normally choose outlying or underserved airports in large markets in order to turn their airplanes quicker and utilize their assets better.

This was their MO 10-15 years ago. Now they serve many major airports, many with facility and airspace constraints... LAX, MDW, and DTW seem to be at the top of the list.

 

[oldiebutgoody]

As I said, I did NOT make this up, but rather read it as a statement from their management (I don't remember where, but I'm sure someone can help me on this....please post a link or the article if you remember it as well.) LUV goes to LAX and has for years, they go to MDW instead of ORD (again, an outlying airport). DTW has NEVER had the traffic problems that airports like PHL, ORD, LGA and other majors have had. Your examples DO NOT support your theory.

 

[funguy2]

As I said, I did NOT make this up, but rather read it as a statement from their management (I don't remember where, but I'm sure someone can help me on this....please post a link or the article if you remember it as well.) LUV goes to LAX and has for years, they go to MDW instead of ORD (again, an outlying airport). DTW has NEVER had the traffic problems that airports like PHL, ORD, LGA and other majors have had. Your examples DO NOT support your theory.

I have been at MDW where you can watch the departure pattern for ORD, and have seen/experienced aircraft delays caused by its proximity to ORD. Hardly and outlying airport. MDW is only 16 miles from ORD, and certainly, if you've ever seen the skies above Chicago, you would have to agree that the airspace is quite congested.

LAX is the #4 airport in terms of aircraft movements in the USA. Hardly a small operation. It is run fairly efficiently, but to say its a small airport is ludicrous. I agree that it doesn't have the problems of ORD/LGA, but that doesn't mean its AMA.

I think Southwest will carefully pick the major airports/congested airports it chooses to serve. Obviously, LUV has thus far chosen to stay away from BOS and JFK/LGA/EWR/SFO. They must have seen something different at PHL.

I am not debating what Southwest management said. I believe you when you say they said it. Rather, what I am saying is that Southwest will NEVER admit that they are targeting US Airways, however their actions over the past 10 years leave no doubt in my mind that they are targeting US Airways (intra-Cal, BWI, intra-FLA, and now PHL). Now this could be because US Airways has traditionally had the highest costs and the highest yield, thus they make great markets to go into and undercut the competition. That would be a sound business plan to me.

 

[oldiebutgoody]

Any airline that operates in vicinity to UAIR that doesn't position itself to profit from it's demise is seriously mismanaged. LUV has very good management, and has also benefitted from a great deal of good luck (fuel hedging can go either way, but they made a killing this time). Same thing goes for airlines operating around oher legacy carriers.

 

[Ch. 12]

IMO, it was the fact that UAIR (preceded by U) had a near monopoly in PHL, with its large O & D base that allowed it to build to its present state in UAIR's system. Even LUV admitted in an article (sorry, I know I read it, just can't remember where) that their main goal in going into PHL was to prevent other LCCs from getting a foothold so close to BWI, NOT to drive UAIR into a phrenzy (it just worked out that way). PHL is PLAINLY an airport contrary to LUV's normal M.O., since they normally choose outlying or underserved airports in large markets in order to turn their airplanes quicker and utilize their assets better.

I also have much difficulty accepting this and would appreciate if you do have a link. I only found articles from the Philly Inquirer stating that it was a suprise (keep in mind...this is the viewpoint of the writer...a non-airline individual) that WN was entering Philly for the same reasons you stated (that is why I believe it may be the same article). However...there is no mention that they are trying to protect BWI from LCCs.

Southwest to start Philadelphia flights

(it may make you register but I couldn't do anything about that)

Another major issue I have with your argument is that if LUV is trying to protect the BWI area (which is BWI/IAD/DCA), how did FL, B6, NK, HP, and even ATA (to stretch a little) manage to get a foot-hold in one or more of those airports? That's pretty much all of the LCCs I can even think of in the US and if WN is so interested in protecting
BWI, why go to PHL rather than one of the other airports closer to the DC area that is being invaded?? It makes no logical sense.

What does make logical sense (and has been published in numberous articles) is that WN has extra $$ and they need to invest that into eqpt. When they do that, they need to expand. There are few markets left and they are having to go outside of their "norm" when entering cities. Entrance into PHL is logical b/c it helps capture more of the DCA-NYC cooridor. Until now, their NYC service has consisted of ISP. PHL is a nice complement to get those that actually are not on Long I. And the PHL hub is hurt by, as you say, U having a near monopoly on many routes.

So yes...while I agree and have read that WN mgmt specifically said that their goal at PHL is not to send U into a phrenzy, I don't buy the argument that they are protecting BWI which is already overrun with low fares from competitors. I follow the logical arguments.

 

[diogenes]

PI always advertised they were after DL and EA.

Agents on the ground knew they were after AL (with the purchase of Empire and the DAY hub).

Why? AL had the least competitive route structure in the US AND the highest yields.

As AL has not adapted to the marketplace, WN is taking the same advantage.

 

[ktflyhome]

I don't know if anyone saw this, but in USAToday they printed a statement that Southwest was offering packages to anyone in the company who had at least one year in order to save on costs. Sounds like their pocket books are getting thinner too. I think the fuel costs might be biting them a bit now.

 

[ELP_WN_Psgr]

Good observation, kty, but wrong conclusion.

What I gather from talking to folks is that WN's severance package has several purposes...but it isn't due to fuel costs (they are somewhere better than 80% hedged at $24 this year and $25 next year).

Where WN differs from other carriers is they think tactically but act strategically. other airlines think strategically and act tactically.

Southwest is ALWAYS....and I do mean ALWAYS...looking for ways to cut costs.

The post 9/11 period slowed down the inexorable growth that has allowed WN to keep their workforce somewhat junior in terms of seniority.

The severance package will allow some folks to jump ship who have some seniority...and to be replaced by new hires. The folks who are apt to leave are most likely folks who were contemplating a career change or who had gotten tired of their job.....and a little severance package might be just what they needed to assist them in moving on to their next career. Win-win...former employees leave on good terms with a lottle bonus, company gets to add new hires at more junior pay scales.

But the point I am wanting to make...it isn't a have-to deal. Just as a shark is constantly moving through the ocean, looking for its next meal...Southwest's management are constantly on the lookout for ways to cut costs without negatively impacting the way they do business.Southwest has given some pretty good pay increases in the last round of contracts.....so they are trying to apply pressure to hold the costs down. because they want to, because it is smart business to do that - not because they have to.

Make sense?

 

[jimntx]

I don't know if anyone saw this, but in USAToday they printed a statement that Southwest was offering packages to anyone in the company who had at least one year in order to save on costs. Sounds like their pocket books are getting thinner too. I think the fuel costs might be biting them a bit now.

SW may be a little over-staffed. They had to hire all those extra people after 9/11 (as we all did) and since their expansion has slowed somewhat they are looking at slimming down, but then they are always looking for ways to keep costs low. As opposed to waiting until they are up to their necks in past due bills.

Also, I know a couple of SW flight attendants who have been there since the beginning. They have talked about waiting until the company offered a package before they left. Because of the stock that they have bought since the beginning, they will both "retire" as millionaires. I've told them both that I always loved them best. That they were always my favorite.