Southwest Airlines is known — and beloved by many — for its “no-frills” pricing model. The airline has long been a low-cost favorite that has never stooped to “basic economy” status. In fact, its CEO steadfastly refuses to sink to that level. But now, the airline may be shaking things up to increase its own revenue, and some Southwest freebie perks may be getting the axe.
According to The Chicago Tribune, Southwest Airlines CEO Gary Kelly revealed the company is currently working on new ways to generate revenue. Though, he didn’t really go into specifics from there.
He did, however, note that the company would not be following other airlines in charging for things like checked bags, assigned seats and reservation changes.
“That’s not what we do,” he said on the call. Instead, he said, Southwest has “better opportunities that fit our brand.”
So, what could those opportunities be? As The Chicago Tribune theorized, the airline could finally be offering more perks to passengers, but at a price. As the paper noted, the airline could offer more perks like early boarding and drinks at higher price points. Adam Hackel, an Imperial Capital analyst, told The Tribune that a Southwest passenger may also be willing to pay more for priority screening or to get their baggage first after landing.
Jamie Baker, an analyst at JPMorgan Chase also shared with The Tribune that the airline could start charging more for ultra-first class space. According to Baker, there is an opportunity for the airline to charge just a bit more for guaranteed access to the first few rows near the front of the plane.
Lastly, The Tribune hypothesized that the airline could find more upselling opportunities with its tickets, including charging more for the right to cancel or change tickets. It may even — gasp — make canceled flights totally nonrefundable.
All of these changes are fine with Henry Harteveldt, founder of Atmosphere Research Group, which focuses on the travel industry, who told The Tribune, “As long as Southwest offers these as add-ons and the consumer sees they are appealing, and Southwest doesn’t take anything from its core value proposition, they have a reasonable chance of success.” He added, “It’s been timid and allowed itself to be held hostage by its legacy, as opposed to being innovative and saying, ‘We can keep our legacy and still innovate and add products that would appeal to customers.'”
Before Southwest makes any changes make sure to read up on how to decide if your seat upgrade is really worth the markup just in case they start charging.
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