Southwest Airlines Continues To Uphold No-Fee Business Model
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July 30, 2018
Gary Kelly, Southwest Airlines Chief Executive Officer admits that the company is looking for new ways to increase profits, like the Sky Harbor expansion in Phoenix, AZ. However, the airline will not be going back on their current business model of providing many fee-free services.
The question of what was in the future to generate profits came up during a conference call with Kelly. Instead of changing what customers already like about the airline, the CEO is focusing on better avenues for growing the company. He made it clear that there was no need to sacrifice what Southwest Airlines is known for just to try to create new profit avenues. The company instead of focusing on other ideas like opening up flights to Hawaii.
Southwest hopes that they will be offering flights to Hawaii in late 2018 or early in 2019. Tickets should be available for sale closer to the end of the year. The Federal Aviation Administration is still working on the certification that the airline will be needing in order to be allowed to have longer trips over the ocean.
Most of the other airlines make a good deal of money on special seating. The spots on the plane that offer more room to stretch your legs for instance or are close to the exits, windows, or bathrooms, go for a higher fee. While many like the open seating option, other customers would like the promise of good seats. At this time Southwest is opposed to making seating assignments.
The other competing airlines also make a good percentage of their profits charging for baggage checking, but Kelly states that the company will not be adding the fee to their policies in 2019. Fees for changing tickets are also a common practice that Southwest does not participate in.
In 2009 Southwest introduced a new service that allowed their customers to skip up places in the check-in line with their early bird check-in. This gained them just under $400 million dollars a year while only costing each passenger $15. Then in 2013 they introduced another service that allows flyers to get to the beginning of the boarding line at the last minute. That fee varies by many factors but is usually under $50.
Kelly was clear that no changes would be made at this time or in the near future regarding these no-fee services that they offer.