Among the larger U.S. airlines, arguably no carrier has done more to reinvent itself than Southwest. In just the past few years, Southwest has designed and rolled out a new frequent flyer program; introduced a new fare structure; launched international flights; and most recently, rebranded itself with new logos and aircraft liveries.
Even as the company has made the changes, it has repeatedly sworn allegiance to its roots as an airline by and for the people, distinguished by its friendly service, low fares, and relative freedom from nuisance fees.
All of which has raised the question: Can Southwest have it both ways, pleasing both its shareholders (as a lean, mean profit machine) and its traditional customers (as a homey no-frills value-leader)?
One particular policy that Southwest-watchers have singled out as a key indicator of the airline’s likelihood of shifting too far away from its established corporate persona is its fees for the first and second checked bags. Or rather, its lack of such fees.
As other airlines gleefully bank hundreds of millions of dollars from checked-bag fees, the profit pressure on Southwest to follow suit has been intense. But so far, Southwest has resisted that pressure. And apparently that resistance will continue.
At the 2nd Annual Morgan Stanley Laguna Conference on September 15, Southwest’s chief financial officer Tammy Romo acknowledged that the airline is indeed “focused on growing our ancillary revenues.” But she went on to say that, “Our customers don’t like bag fees, so we don’t like bag fees. There are no plans today to charge bag fees.”
That’s good news, at least for the short term.
Longer term, Romo made reference to “incremental revenue opportunities” that will arise with the installation of Southwest’s new reservation system in 2016. She didn’t elaborate on the precise nature of those opportunities, giving Southwest loyalists reason to fret that the company is preparing for a fee fest. That may be. But at least for the next 15 months, Southwest customers can look forward to relatively fee-free flying.
Reader Reality Check
What must Southwest do to keep faith with its established customers?
This article originally appeared on FrequentFlier.com.
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