What has the company done to increase revenue?

[KCFlyer]

Pineybob - U could learn something from SWA. On SWA's website, I can see what fares apply to what flights - outbound and return. There are only 5 fare buckets to pick from. On U or the others, They will "pick" a flight for me, but it may leave at 5:30 am or 11:50 p.m. If I "choose by schedule", then I'm at the mercy of the airline, and can only hope that I can find a fare that is close to what I am willing to pay.

True enough SWA might not have the lowest fare. But I would submit that many of the other airlines offering a lower fare are doing so at a loss. If you love your airline, you ought to pay for a ticket that allows them to make a profit...especially if you enjoy the perks of a "premier" upgrade. It costs them money to provide that, you know.

Smoke and mirrors? I can buy a one way ticket today anywhere SWA flies and not pay over $299. Can you do the same on U? UAL? How about AA? I can buy a 21 day advance purchase ticket and change my plans and only pay a fare difference. How much do you pay on the other guys before you even THINK about the fare difference? I can miss the flight entirely and still use the full amount of my ticket towards another flight - even if I "forget" to call them ahead of time. Can you do that on U? Seems to me that the only "smoke and mirrors" are the low fares offered by the others...heavily restricted, totally non refundable, and subject to what I would consider a substantial penalty ($100) for calling them 2 weeks ahead of schedula to tell them I can't leave on Friday...I now have to leave on Saturday.

Oh yes, if I need to go to Atlanta, I usually fly to Atlanta - meaning that I don't fly Southwest in those cases.

 

[ITRADE]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/31/2002 11:24:38 AM PineyBob wrote:
[P]Well KCflyer.[BR]Did the kitty cat wake up on the wrong side of the litter box? Little fiesty today I see.[BR][BR]----------------[/P][/BLOCKQUOTE]
[P]Don't worry Bob. KC thinks that Southwest is the cat's meow and this thread constitutes a kick at the cat. Hence, you see the fiestyness.[/P]

 

[Busdrvr]

"I can't recall the last time I saw a UAL ad or a U ad. I have seen some AA ads, but your marketing departments are failing you big time. If you're #1 you should be telling the world."

Funny thing about BK, the DIP guys don't want you spending "their" money on cutesy commercials

 

[KCFlyer]

[blockquote]
----------------
On 12/31/2002 1:52:48 PM ITRADE wrote:

Exactly, its up to the company to make profits. Its not my responsibility to make money for the company. I don't work for the company.
----------------
[/blockquote]

Hmmm...What happens if the airline you have a gazillion FF miles on liquidates? Your FF account is worth about as much as the stock. Then you've got to start all over again to become elite, as you will be just another plebian coach flyer.

You saw the "outrage" when U attempted to limit the "elite" privleges. At that point, folks didn't appear to want to pay for them. So, they relent and you still buy the money losing tickets. What would you do if the airline sold a ticket at less than "cost" but told you that you couldn't use the miles to earn any freebies? As I recall, that's what the outcry was all about. How about if they raise the lowest fare to cover costs, but restrict "upgrades" of any sort to full Y class tickets...but your company only buys the advance tickets? Would the outcry still be there? Or would you pay out of pocket to get that coveted F class seat? Again, you want elite perks at Southwest prices. Logic says that you can't have both. And, IMHO, despite the outcry of the elites, the other airlines, after exhausting every employee cost cut they can, will make the hard decision to implement such rules.

 

[ITRADE]

[P]
[P]
[P][/P]
[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/31/2002 211 PM KCFlyer wrote:
[P]
[BLOCKQUOTE][BR] [/BLOCKQUOTE][BR][BR]Hmmm...What happens if the airline you have a gazillion FF miles on liquidates? Your FF account is worth about as much as the stock. Then you've got to start all over again to become elite, as you will be just another plebian coach flyer. [BR][BR]
[P][/P]----------------[/BLOCKQUOTE]
[P][/P]
[P]You're making the assumption that 1) I have a gazillion miles on US (hint, I don't) and 2) that another carrier won't pick up the miles. The only time that I remember that happening was when Ansett went belly up. Unfortunately, with one remaining major player in Australia, there was NO incentive for Qantas to pick up the miles. If US were to liquidate, I'd bet you that the other airlines would be jumping up and down in their efforts to attract US FFs to their airline - offering everything from full credit for US miles to full credit for US FF status level.[BR][BR][/P]
[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/31/2002 211 PM KCFlyer wrote:
[P][/P][BR]You saw the "outrage" when U attempted to limit the "elite" privleges. At that point, folks didn't appear to want to pay for them. So, they relent and you still buy the money losing tickets. What would you do if the airline sold a ticket at less than "cost" but told you that you couldn't use the miles to earn any freebies? As I recall, that's what the outcry was all about. How about if they raise the lowest fare to cover costs, but restrict "upgrades" of any sort to full Y class tickets...but your company only buys the advance tickets? Would the outcry still be there? Or would you pay out of pocket to get that coveted F class seat? Again, you want elite perks at Southwest prices. Logic says that you can't have both. And, IMHO, despite the outcry of the elites, the other airlines, after exhausting every employee cost cut they can, will make the hard decision to implement such rules.
[P][/P]----------------[/BLOCKQUOTE]
[P][/P]
[P]Folks are willing to pay for their flights. They are not willing to accept the characterization of an airline V.P. who characterizes folks who do not have to pay walk-up prices as undesirables; especially when the carrier happened to have entered Chapter 11 protection not too soon before the proclamation.[BR][BR]Airlines cannot simply raise prices on whim. Price leaders force airlines to price at certain levels. That is why most reasoned people have argued that it is impossible to raise the revenue side of the cash flow equation - they must reduce costs.[/P]

 

[ITRADE]

Exactly, its up to the company to make profits. Its not my responsibility to make money for the company. I don't work for the company.

 

[ITRADE]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/31/2002 2:57:27 PM KCFlyer wrote:
[P]
[BLOCKQUOTE][BR]----------------[BR]On 12/31/2002 2:27:22 PM Busdrvr wrote: [BR][BR]"I can't recall the last time I saw a UAL ad or a U ad. I have seen some AA ads, but your marketing departments are failing you big time. If you're #1 you should be telling the world."[BR][BR]Funny thing about BK, the DIP guys don't want you spending "their" money on cutesy commercials . But suffice it to say UAL will have a new less "lexus-like" advertising campaign soon. as for U, what sense would extensive marketing in the KC area do? we don't see that many SWA commercials in DEN. [BR]----------------[BR][/BLOCKQUOTE][BR][BR]Busd...[b]ONE[/b] commercial would be more than they have now. come to think of it, [b]ONE[/b] ad for UAL would be more than we see today. The only airlines that we see advertisements for on a fairly regular basis are Airtran and Southwest. Hey...aren't they making profits? There are occassional ad's for AA and Delta. If y'all don't want to let folks know your here, well, that's business. Of course, KC's just a small little "spoke" on your big city schedules....no sense in marketing to us rubes...even though the per capita income in the area is great enough to allow for lots of discretionary travel - and the Southwest flights are running pretty full here.
[P][/P]----------------[/BLOCKQUOTE]
[P][/P]I've never seen ad for JetBlue - however they're making money. So, perhaps, commercial ads are not the be all to end all.

 

[KCFlyer]

[blockquote]
----------------
On 12/31/2002 2:27:22 PM Busdrvr wrote:

"I can't recall the last time I saw a UAL ad or a U ad. I have seen some AA ads, but your marketing departments are failing you big time. If you're #1 you should be telling the world."

Funny thing about BK, the DIP guys don't want you spending "their" money on cutesy commercials . But suffice it to say UAL will have a new less "lexus-like" advertising campaign soon. as for U, what sense would extensive marketing in the KC area do? we don't see that many SWA commercials in DEN.
----------------
[/blockquote]

Busd...[b]ONE[/b] commercial would be more than they have now. come to think of it, [b]ONE[/b] ad for UAL would be more than we see today. The only airlines that we see advertisements for on a fairly regular basis are Airtran and Southwest. Hey...aren't they making profits? There are occassional ad's for AA and Delta. If y'all don't want to let folks know your here, well, that's business. Of course, KC's just a small little "spoke" on your big city schedules....no sense in marketing to us rubes...even though the per capita income in the area is great enough to allow for lots of discretionary travel - and the Southwest flights are running pretty full here.

 

[ITRADE]

Woah....[BR][BR]Can't wait for the response....

 

[Busdrvr]

"I can buy a one way ticket today anywhere SWA flies and not pay over $299. Can you do the same on U? UAL? How about AA?"

Actually, i usually can. keep in mind the standard is "anywhere SWA flies". That isn't that many places.

 

[TomBascom]

You guys are such a hoot! (I'm sure I am too...)

1) Like it or not SWA clearly does some things very well.

a) They're profitable.
B) Their customers love 'em (yes there are malcontents, everyone has some...)
c) Their employees love 'em.

2) There's a lot of perception about SWA that doesn't seem to be true on closer examination -- especially the idea that they always have the lowest fare. (We all know they don't -- but we also all know that US & UA and so forth have fares on the very same flights that would make Herb blush to even think about offering.) But so what? "Perception is reality" and all that...

(Maybe, just maybe, there is more to their success than the stuff that those who wish they would go away focus on. Namely low cost and low fares. That really doesn't add up -- trying to emulate just that part of the formula hasn't worked for anyone else. Anyone remember Jack Welch fooling the hole world for years about how important it was to be #1 or #2 in your marketplace? Herb has done the same thing...)

2) Obviously very frequent business travelers aren't overjoyed at the thought of flying SWA.

3) OTOH quite a few do anyway.

4) Some people seem to think that "perks" like upgrades and assigned seating are hugely expensive and a cost that is burdening the poor suffering "major" airlines. These things must go or fares must be dramatically raised to subsidize them. (IMHO this is baloney...)

Does US (or UA) have to be just like SWA to recover and succeed? No, of course not. Are there important lessons that could be learned from SWA? I think so, let me suggest a few:

1) Know your customer.

Does anyone really believe that Ben and company have any idea who their customers actually are and what they really want? We're not the enemy. We're the reason that you exist.

2) Fair fares.

Close the gap between the low end and the high end. Bring the top fare within reach -- you'll sell a lot more of them.

3) Simple (and fair) rules.

Drop the bull. Kill the Saturday night stay rule. Make tickets fungible. It's our money -- give us control back.

4) Clear, consistent and reliable communications.

This is such a target rich environment that I can't pick a starting point...

None of this has to be done exactly like SWA. In fact most of it shouldn't be done their way. But they have a good solid model to learn from. Stop denying that there is something good there and try to leverage it for a change.

The present strategy of adopting managements twisted interpretation of everything that management has told us is bad about SWA because "customers asked for it" has obviously failed. It's time to open your eyes and see what they really do that actually works and to adapt it to your own customer base. You customer base is not their customer base (if you think that it is then just give up now...) Find out what is different and play to the differences.

 

[BillLumbergh]

OK....We've gone off the reservation on the US v. Southwest debate.[BR][BR]Reminds me of the old PlaneBusiness.[BR][BR]Anyhow, lets return to topic.

 

[sfb]

Actually, I imagine that Southwest's higher numbers of involuntary denied boardings are directly related to the story KCFlyer told with respect to the denied boardings on the MCI-SAN flight. While voluntary denied boardings are unregulated by DOT, there are DOT rules regarding involuntary denied boardings.

When an airline denies boarding involuntarily, but can provide substitute transportation which arrives within one hour of the originally scheduled arrival time for the passenger, the airline is not required to pay compensation. If the passenger is delayed by more than one hour, but arrives within two hours, the regulations require compensation (and this is monetary, not travel vouchers, if desired by the passenger) equal to the passenger's paid one-way fare, up to $200. If the passenger is delayed by over two hours, the mandatory compensation to the passenger is 200% of the one-way fare paid, up to $400.

Given that Southwest's *average* one-way fare paid is $83 (compared to $145 at US during 1H02), and given that they often can get involuntary DB's to their destination within an hour of the original itinerary's arrival time, it's easy to see why they are less reluctant to have involuntary DB's -- the direct cash cost to them tends to be lower. Interesting, though, that the total number of denied boardings on Southwest was only 38% higher in the July-September quarter (covered in the October DOT report) even while they carried 69% more passengers than US.

It is indeed true, if you need to go to Atlanta, then Southwest isn't the airline for you. What's amazing, though, is that in some places, people ARE willing to put up with two hours of extra travel time in each direction because the savings are so substantial. Take Memphis -- there's a limo service direct to the Little Rock airport (in spite of the "convenience" of the Northwest hub) because fares can exorbitant from MEM. If you want to fly to Chicago ASAP from Memphis, AirTran will do it via Atlanta for just under $270 one-way. The lowest fare on DL or NW is over $400, and the non-stop flights on NW are nearly $500! Meanwhile WN charges $180 one-way from LIT to MDW. There's an hourly bus service from South Station in Boston to PVD (and the bus is less expensive than a round-trip cab ride from downtown Boston to Logan) and the local transit authority in Boston plans to extend the Providence commuter line out to T.F. Green Airport. Clearly there are enough people who are willng to put up with some level of inconvenience in order to save money.

Some people are willing to put up with amazing levels of inconvenience to avoid Southwest, too. I remember Art at ISP telling one story of taking AA Eagle to BOS from ISP and connecting there to Eagle again to get to BNA. Instead of a non-stop flight on a 737 (saving at least two hours each way) on WN. And of course there was some sort of logistical snafu at BOS. Some people deal with the cattle call better than others, but it's inevitable that people are going to be sitting in middle seats on ANY full flights (unless it's an RJ or prop).

WN is all "smoke and mirrors" with pricing? What keeps a prospective customer from looking at Travelocity or Expedia or Orbitz in addition to the Southwest website? There's certainly a financial incentive for driving potential customers to the website -- avoiding expensive CRS booking fees. And the terms and conditions behind each fare on their website are far more clear to non-travel-professionals than the gobbledygook which Sabre or Worldspan spits out when you view the rules for a given fare (say, from Travelocity or Expedia).

I think that the employees at Southwest will get p.o.'ed only if profits increase dramatically while wages are stagnant. Right now, though, I think most of them are darned happy that the company has been able to continue to hire, rather than furlough, like most of their competitors. The conga line of competitors into the bankruptcy courts ought to be a sobering thought for employees of ANY airline. Do you think it's harmful to morale when the company hands out profit-sharing checks?

Oh but wait, I forgot, Southwest's employees all been brainwashed by the Cult of Herb, so that they're all willing to work for slave wages in return for the hope that they might be able to have a Wild Turkey with him in person one day.

 

[KCFlyer]

[BR][BR][BR][BR][BR]
[BLOCKQUOTE][BR]----------------[BR]On 12/31/2002 3:27:07 PM PineyBob wrote: [BR][BR][STRONG]In closing all I have to add is I don't like SWA "The Greyhound Bus With Wings". Like the F/A's tell me "I have Choices" and SWA isn't one of them. I am sorry but when I fly 125 segments, 102 on one carrier I want my butt kissed a little! I'd like to be able to fly someplace besides Albany on an award ticket. Say one of 20 some Carribean stops not to mention Europe. When "The Greyhound Bus With Wings" goes to those places and Hawaii too, I'll rethink my position.[BR][/STRONG][BR]But Bob...the issue is revenue. You apparently fare shop since you said you've "never found a lower fare on Southwest". So you must be flying on a reduced fare ticket. In fact, you must be flying on a ticket that is costing the airline money. But you expect some butt kissing because you fly a lot. Going back to econ 101 and the mighty "widget". Let's say you make widgets and it costs you a dollar to make one. Three years ago, you were able to charge $2 for your widget, and all was right with the world. Then came the downturn in the economy, and people were price shopping widgets. They were only willing to pay .75 cents for a widget, and despite your cost cutting efforts, it still costs you .90 cents to make one. But because I buy 125 widgets a week, I want a little butt kissing, because after all, I'm using your widgets. I could care less that it's at a loss - it's the volume that counts. You just need to find a way to cut costs more. It's no different with the airlines...You're price shopping them. They are looking for ways to cut costs, but you're not buying tickets that allow them to make a profit. And because you buy a lot of tickets (at a loss), you want first class upgrades, airport clubs, and miles to take that [EM]free[/EM] trip to Paris or Hawaii. It's not about SWA vs anybody...it's about the "elite flyer" versus the financially troubled airline. They can't afford to kiss your behind. Something has to give - what's it gonna be? YOu want them to cut costs - you can only cut so much before you don't have a product anymore. The answer is - you'll have to pay more. Or, some of those cost cuts have to impact the way your behind is kissed. U tried it - you hated it. The question then becomes, is that free trip to Hawaii worth the extra cost of the butt kissing, or will your company say that it's the fare that matters most. Forget SWA - think Airtran, ATA, AWA and JetBlue. They may not be the most glamourous in the world, but they do have low fares. And kissing the elites behind drives up costs of the likes of U, who can't compete on price, but must, because YOU demand it. [BR][BR]----------------[/BLOCKQUOTE][BR][BR]Mr ITRADE - you claim that the other airlines would fall all over themselves to make good on U or UAL FF miles to lure those "elites". In case you haven't noticed, they're in about the same shape - why on earth would they want to lure a bunch of folks who could care less whether they are making money on their ticket and who are price shopping fares, [STRONG]and[/STRONG] who expect a royal hiney kissing for gracing your aircraft with their presence. You'll never make money selling your product for below cost. I don't think the other airlines will find the cost of luring those elites to be worth it. When you think about it - their business didn't help keep an airline or two out of liquidation - why should anyone welcome that kind of business?

 

[TomBascom]

KCFlyer you're mischaracterizing the issue with the "elite" fliers. We don't (all) always buy the lowest priced tickets.

The problem we had with Ben was that he wanted to punish us on those occasions when we do. Basically we want uniform service -- when we're flying on a full Y and other higher priced fares we're carrying an awful lot of people on V fares. When we take a break and buy a V fare with the family (or whatever) we want the airline to remember that we also buy those other tickets.

Ben wanted to treat everyone like the particular fare that they bought on that particular day is the only one that they would ever buy. Just like the schedule has to be viewed as a network the customer has to be viewed over time -- singling out a single transaction is the wrong approach. The network is what needs to be tuned.

The point of a frequent flier programs (including Rapid Rewards) is to generate repeat business. For US Airways the "preferred" levels are all about repeat business business. "Repeat" shouldn't mean "exclusive" any more than "non-refundable" should mean "charitable donation". Instead of finding a way to encourage us to buy more expensive tickets (AA has such a method that would be simple to copy) Ben decided to try to bludgeon us into submission.

For the most part I believe that the business traveler is willing to pay something more than rock bottom -- but there needs to be value associated with that. Upgrades are a part of that. So are "free" tickets. Various services like preferred reservations lines, checking and seating are too. Things like laptop power in the seats play a part. Flexibility in travel plans plays a role too. Yes, this stuff costs money. No, it isn't killing them.

("Lounges" are a bit of a red herring -- someone always brings them up but most people pay for that. It's not a freebie except to a very few of the top tier fliers.)

The argument ought to be over how much that stuff is worth. I think almost everyone agrees that it isn't worth 8x to 10x a V fare. Is the right premium 50%? Maybe...

For a couple of months now I've been going out of my way to purchase unrestricted tickets when feasible. My basic rule of thumb is that if the unrestricted fare is no more than 50% over the restricted fare then I'll do it. This isn't possible in all markets and it's a royal pain in the butt to do the research (I ought to send U a bill for my time...) In the past I'd just take whatever the web site offered me if it fell within my budget for the trip -- usually a V or K (but plenty of other stuff finds its way in there...) Then I'd roll with it if changes were needed.

US was leaving money on the table nearly every time I bought a ticket -- not because I was going out of my way to screw them but because they so relentlessly steered me to the lowest possible fare. Why did I change? It wasn't because of Ben's tricks. It was because of a fortunate accident booking a trip.

IMHO US could do a lot more to make these fares easier to find and choose. And they could do a lot to encourage people to buy them using positive messages rather than beating us over the head and shoulders with rules and restrictions.

Just offering them would almost certainly make a big difference -- I wonder how many full fares SWA sells simply because they're sitting there on the screen right next to everything else? I'll bet that a measurable number of people buy them when other cheaper fares are there for the taking just for the peace of mind. And I'll bet that SWA knows how often that happens (but won't tell...)