Web Search powered by YAHOO! SEARCH  

Business   

TEXT SIZE: A A A A
email this
print this
SAVE AND SHARE


Winging It: Reader says Southwest has unfair edge

Readers of the previous column provided a couple of prize-winning responses, among the best I have received since I started this endeavor almost two years ago. I don't have the space to report on both today, so the second one will have to wait for next week.

As you may recall, much of the column focused on Southwest Airlines' policy of not charging fees for services that once were included in ticket prices.

We all know why fares and fees have shot up this year: Fuel costs were killing the carriers. Most airlines believed customers understood that and would accept "a la carte" pricing for checking bags, getting the best seats on flights and the rest.

Southwest has the opposite opinion, believing that it can capture more business by appealing to travelers who don't want to pay the fees.

In one of the messages, a reader who asked not to be identified because he works in the airline business (but not for Southwest), expressed opinions about Southwest that are probably shared by his fellow employees but seldom mentioned publicly. Like most businesspeople, airline folks don't criticize competitors openly, preferring to express their real feelings "off the record."

The reader argued in his message that Southwest was able to avoid charging fees only because of its decision to use futures contracts years ago to hedge its fuel costs. Here's what he said, edited for space:

"So while Southwest is now trying to create the public perception that every other airline is ripping the public off by a la carte pricing, it's clear that Southwest's pricing would be a lot more expensive if they were paying market prices for fuel. While that's business and the consumer benefits in the short term by lower fares, I am wondering if Southwest isn't engaged in a form of predatory pricing.

"By using their current advantage with fuel costs they can drive out the competition and monopolize more markets. It appears that they smell blood in the water in Denver with Frontier Airlines just as they did a few years ago in Philadelphia when US Airways was in bankruptcy."

The sentiments in the message are similar to a quote I saw in the Chicago Tribune in July, as oil prices were peaking. An unnamed executive with another airline called Southwest "a significant destructive force in the industry" because its fuel hedges allowed it to keep many fares low.

The reader also pointed out that Southwest has higher labor costs than other airlines, in part because it has not used bankruptcy or the threat of it to force pay cuts on employees as other carriers have. But once its fuel-cost hedges expire, the reader asserted, Southwest will have to raise fares or cut labor costs, and if it does the latter, its legendary customer service will deteriorate.

My response: I will be very surprised if Southwest doesn't find a way to keep its fuel costs low in the future, doesn't continue to have some of the industry's lowest operating costs and stops being a low-fare leader. The airline has a management and employees fiercely proud of that reputation and determined to keep it that way.

As for predatory pricing, Southwest has never gouged travelers on routes where it dominates, such as those in its home state of Texas. For instance, the lowest fare to fly Southwest on Oct. 23 from Dallas to Amarillo, Texas, returning the next day, is $168, tax included. American Airlines flies the same route from Dallas/Fort Worth.

The lowest fare between Philadelphia and Boston, a route served by other major airlines but not Southwest, on the same days and with the same advance purchase, is more than $400. And that's using connecting flights. Nonstop flights are more than $1,000.

Finally, I will really be dumbstruck if, after almost 40 years of creating one of the nation's most productive workforces, Southwest tries to slash wages and otherwise treat its people poorly. It's not in the corporate DNA. The airline was founded on the principle that keeping employees happy prompts them to provide better service, and its service record over the years is proof of how effective the idea has been.

That's my opinion. As always, I'm interested in hearing yours.

Not all the news last week was doom and gloom, at least if you are a travel consumer and not a service provider. In tough times, it seems, you may be able to bargain for lower prices.

Steve Lapin, a frequent-flying sales executive from Melrose Park (and a frequent commenter on the "Winging It" blog) reports that he is using an old technique to lower hotel and car-rental costs. Lapin makes his own reservations by phone.

When he told a Hampton Inn with a $110-a-night rate that the Holiday Inn down the street would be $80 for a comparable room, the Hampton Inn matched the lower price. The same thing happened, he said, when he told Hertz that Avis was offering a rate $20 lower for a rental of several days. Hertz matched it.


Contact Tom Belden

at 215-854-2454 or tbelden@phillynews.com.

  • Top Jobs
  • Top Homes
  • Top Cars
 
SEARCH JOBS
SEARCH CARS