Great article, and I feel Southwest airlines is still the low price leader. The article highlighted many great points, such as the overhead for being in larger airports (such as coming to Denver), the expansion of the number of cities served, and the high (and growing) demand for their flights by the traveling public (the old supply & demand free market theory kicking in). In fact if you add many of fees other airlines charge for the same service (bags, snacks, change fees, etc), Southwest regains the lead in most cases.
The most telling quote was this:
Before Southwest began flights to Greenville-Spartanburg, S.C., in March, the one-way unrestricted coach fare to Orlando was $830. After Southwest entered, it dropped to $206. Philadelphia went from $978 one-way to $290.
I remember the days when it cost $1,200 to fly out of Tallahassee, FL and from Tampa to Akron/Canton was between $700 and $900 round trip. Although $1,000 may seem to be a lot these days for a family of 4 to fly, it is still a relative bargain from what it could be.
In addition, the financial table provided in the article is telling. SW increased their net income by a measly 2% over the past nine years. However to accomplish this, they raised fares by 56% and increased the number of empty seats by 11%. What is eating the revenue?
- the number of planes increased by 54% (assets and maintenance labor)
- the number of airports served increased by 22% (gate fees/airport rent and customer/flight line labor)
- the number of miles traveled on the average trip increased by 28% (gas, beverage cart, snacks, aircraft weight (due to luggage), pilot labor (max # hours allowed means more pilot turnover)).
That said, the best way for Southwest to regain the uber low fares is to reduce its operating size (fewer cities, possibly including yours), pull out of major airports and fly out of nearby regional facilities, and go back to the short hops it used to do (fewer non-stops for us). Then the $49 fares can return. However, I prefer that not happen, since it means $800 fares for those cities not serviced by SW and a reduction in convenience for us (the traveling public).
In the end, I applaud Southwest airlines. I'm not a major fan, and I fly several airlines when I go somewhere. However, I think they are doing a fantastic job keeping fares very very low and keeping the large airlines (United, Delta, US Airways, and American) in check from hosing us over severely. Here's to you, SW!
