WN in MSP
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luver41
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- Nov 19, 2003
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Southwest isn't afraid of providing service in MSP and will do so, in my opinion, at some point in the next five years, maybe sooner if Northwest goes under. There's just more and better low-hanging fruit at this point. Southwest is in the enviable position of having more demand for service than it has planes to provide that service.
Since they prefer to get planes directly from Boeing that are built to their specifications, there are only so many planes they can get every year. Seems to me that they are adding somewhere around 35 new aircraft this year.
I'm sure someone can provide the exact number off the top of their head, since I'm too lazy to look it up.
SWA is smartly growing while the fuel hedges are still here. Nearly a 70 million dollar loss this quarter without them has that airline looking a lot like JBLU. They should do all they can to take market share with that dwindling advantage in place, because once it is gone...
Look back at JBLU's press a couple of years ago, and now??
JBG
KCFlyer
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- Aug 20, 2002
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Look at what SWA has done the past few months....started raising fares. A foreign concept in the airline industry. The truly funny thing is that the other carriers who don't have the hedges don't really seem to be matching fare increases - they still operate on the "sell seats at a loss and make it up on volume" strategy.
Heck...Jetblue has been catching hell on Airwhiners.net because they actually raised fares...and now cost more than United or Delta or American on many routes. Now, Jetblue had a lot of startup cash, and they seem to be proving that old adage that to become a millionaire in the airline industry, you have to start with a billion dollars.
But SWA still has 3 years left of "below market" fuel prices. They've already announced some price increases. They are working behind the scenes to trim costs and increase productivity. But you still seem to be operating on the assumption that SWA would be charging the same fares today had they not had hedges in place. I don't think they would. But I DO think that if they were pricing as if oil were $70 a barrel...the competition would be pricing as if it were $50 to capture market share.
luver41
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- Nov 19, 2003
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SWA's fuel hedges are a function of its superior management as compared to other airlines. Don't expect the superior management to disappear when the fuel hedges do.
SWA will set ticket prices where it makes a reasonable profit, notwithstanding the pricing actions of other airlines.
coolflyingfool
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- Aug 20, 2002
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There is a LOT of brand loyalty to NWA in MSP and DTW. SWA has enough to deal with now on its plate with PHL, DEN, PIT, and opening up the new station IAD. They will get to MSP soon, I am sure of that. Just a matter of when they want to start that batlle. just my thoughts.........
Flying Titan
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- Oct 14, 2003
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I thought it was pretty clearly - and correctly - stated above that it's not a matter of being afraid of anybody. Rather, SWA has made money for decades by choosing the best available markets. Sometimes that means moving into another carrier's hub; often times it means going into a market that is overpriced, underserved, and up for grabs.
Don't worry, SWA will get to MSP at some point in the next few years. Something tells me that NWA would rather that happen later than sooner.
Of course, the best way for NWA to make sure that SWA doesn't come knocking on the door at MSP would be to provide a rational fare structure for the people of MSP and to turn a profit. Any idea when that will commence?
Don't worry, SWA will get to MSP at some point in the next few years. Something tells me that NWA would rather that happen later than sooner.
Of course, the best way for NWA to make sure that SWA doesn't come knocking on the door at MSP would be to provide a rational fare structure for the people of MSP and to turn a profit. Any idea when that will commence?
I agree that fuel hedging was very good management. When the price for a SWA ticket is the same as one on UAL, AMR, or Alaska - SWA's management will not look nearly as intelligent to you.
Every business plan has strengths and weaknesses. SWA is based on being cheap, getting from A to B with no frills at low cost. When that low cost is no more due to rapidly rising labor costs and no more fuel hedges - SWA is going to have to operate in the real world with the rest of us.
The numbers show that trend and the gap is narrowing. Unless SWA employees take big pay cuts now it can't be stopped. If Oil goes down it will accelerate. You can't make SWA service better, give their jets more leg room, or fly into better airports with less stops-unless you want your CASM to go up. SWA has it's own problems to be sure, they are only going to get worse with time.
They are smart to buy jets now and grow as they still have an advantage. Besides just like JBLU a lot of those new deliveries can be used to retire older jets if need be.
Good Luck...no one is blessed in this industry, most SWA advocates scoff as if they are a golden-child company that could not possibly face problems. You have to compete, we all took big compensation cuts, you will to if you want to continue to show a profit.
JBG
KCFlyer
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- Aug 20, 2002
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It sure wouldn't...that'd mean Southwest would have to lower their fares.
Why do you blow your credibility with one false statement like that? Just like before, you will get no debate on the issues when you are a blind cheerleader.
JBG
PS- I suppose you think your Dad is tougher than everyone else's as well....
ELP_WN_Psgr
Senior
- Nov 29, 2003
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JBG: I know KC. He's not as smart or good looking as I am but he is generally pretty knowledgeable about Southwest Airlines Co.
Here's the real deal, Hoss.
Not in every market...but in a whole lot...Southwest commands a fare premium when you look at the average fare.
That does not mean Southwest's fares are the highest. That means that their lowest fare is not the lowest and their highest fare is not the highest in any given market, but the mix of tickets (Southwest sells more full-Y tickets, on average, than other carriers) ends up with Southwest having a slightly higher average fare than many (albeit not all of) its competitors.
Besides...even if you take fuel out of the equation...Southwest's CASM is still 1 to 2 cents lower than its competitors with an average stage length roughly half of what everyone else runs.
The ultimate bottom line is that Southwest will do what they did this year....when the price of the fuel hedges went up and so did the average cost of a gallon of Jet A to Southwest. Take modest fare increases to offset the cost of the fuel.
Fuel hedges are not the only cost advantage Southwest enjoys. There is a lot of productivity built in to the single fleet type. Probably more than anyone would believe.
I'll give you one more fun fact. Southwest has a CASM of 6.43 cents ex-fuel. JetBlue's is 5.40 cents. Average stage length is 617 for Southwest and 1248 for JetBlue. What that means is that head-to-head...on a route of exactly the same length, Southwest probably enjoys a tiny cost advantage over JetBlue. The wonder child of the industry, the non unionized airline with the wages to prove it...has, in reality, a higher CASM than a mature carrier like Southwest when you compensate for the average stage length.
It may be easy or fun to say things like "nyah nyah nyah Southwest, your hedges are going away" but the real deal is the same management that coordinated those fuel hedges also spend a few hours, every now and then, looking for and implementing other ways to keep the lid on costs.
KCFlyer
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- Aug 20, 2002
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Naw...my dad's dead, so he most likely could get beat by anybody elses dad.
Why is it that just a month or so ago, y'all were proudly proclaiming that Southwest wasn't the cheapest fare? Did your arguments lose credibility in that short time? How come, when I price a flight from Denver to LA over Memorial Day Weekend, the best I can get on Southwest is $332 but I can get on a United flight for $240? Or how about LA to Seattle on the same dates...Best I can get on Southwest is $375, but United is $273. Now, I'll admit that math wasn't my strongest subject, so I had my kid check my math, and she agreed...Southwest would have to lower their fare to charge the same as United. Rah Rah sis boom bah.
I agree that SWA has been raising fares the past few months, but the REAL SECRET is that they have implemented TIGHT YIELD MANAGEMENT. So, not only have the fares crept up $10 or $20, but also the number of seats available at those fares has declined considerably. Right now, SWA is having a summer sale, but on many routes for many dates you can't get a seat at those prices.
I should mention that many of the other carriers are NOT selling their summer seats lower than SWA. LAX may not be the appropriate comparison market. Certainly, SEA is extremely expensive this summer. Airlines want $375 to go from PHX to SEA!!! I guess that I won't be taking an extra trip this summer like I usually do. We'll see if the airlines are actually able to sustain these higher fares or if there will be additional fare sales.
KCFlyer
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If they want to stay out of bankruptcy court, they will sustain the higher fares. If they worry too much about market share...count on a fare sale.
LAX is a big market. My point was not to show the great travel deals out of LA, but to demonstrate to the all knowing UAL pilot that it would indeed be necessary for Southwest to lower fares to match United. My question is...is that a part of the United "road to profit" strategy?
