New Southwest Airlines Fares

Today Southwest Airlines announced a change in their fare structure. They have "simplified" their fares, and now only offer three fare choices.... Business Select (most expensive), Business, and "Wanna Get Away." This is a very unusual choice for an airline, because a lot of airlines like to keep their travelers confused about how the fares are structured. Having different fare types allows them to manage their revenue better (see my August post).

I had someone say to me today, "Southwest is no longer Southwest!" The legacy carriers have been schooled by Southwest and other Low Cost Carriers over the years, and it appears now that the schooling has been bi-directional! And that Southwest Airlines' announcement of their new program changes for the purpose of "benefiting" business travelers is an obvious step in the direction of taking advantage of business travel, much like the legacy carriers have done through the years.

I disagreed, and here is my response:

Actually.. In my opinion this is vintage Southwest. I have to clarify this by saying that I did work for Southwest for a few years (I even spent some time in their Marketing Department), so my thoughts on this subject might be a little biased. But while there I did learn a bit about Southwest history and culture.

Back in the 70s Southwest only had 3 fares. Full fare, Discount, and Sale. Part of their business model was to focus on a simple fare structure that allowed their travelers and employees both to save time.

At one point one of their competitors came out with a sale specifically designed to start a price war with Southwest. Southwest knew they couldn't compete with their competitor by lowering the price.. So they came up with an alternative. They offered a competitive "sale fare", but
they also began offering a free bottle of liquor any time someone purchased a full fare ticket. Business travelers were happy to pay the full price and get their bottle, and Southwest was able to drive the higher cost tickets. In fact, this was so successful that Southwest became the number one distributor of alcohol in Texas.

So now Southwest is looking at a similar situation. Their incredible fuel hedges are starting to expire, and this is going to drive Southwest's costs up significantly. They have two options... Raise their prices across the board, or encourage people to buy the higher fares. They are still offering the low fares ("Wanna Get Away"), but are trying to get people to buy the more expensive tickets to drive revenue.


Having said all this... If you want to look at whether Southwest is still Southwest.. The question is not necessarily about the pricing, but about their culture. Are the flight attendants still singing and dancing their way down the aisles? Are the employees still the playful, irreverent, people who make it fun to fly? Are they making the airport/travel experience more enjoyable than at other airlines? That's what defines whether Southwest is still Southwest.

Just my two cents.. What do you think?

Nate