With regards to SWA, AirTran and Delta in Atlanta, you got it wrong. What I wrote came straight form G. Hauenstein. I’ll take his word over yours any day of the week. Delta was already competing against an LCC with a lower cost structure than SWA. And eating their lunch. SWA could not match the AirTran fares on the routes they took over. They were losing money and that’s why they Dehubbed.
There was no competing LCC in PIT/PHL prior to SWA. As much as the ardent fanboys don’t want to admit it, SWA is no longer an LCC. Much like the 50ish hooker, still trying to woo johns with the coochie shorts, SWA is actually now a mainline carrier still trying to fool the public.
Understood that it came straight from Glenn, and I would take his word for it too. The dynamic clearly wasn’t sustainable for Southwest and so they chose to put those airplanes elsewhere in the system.
I hate to continue derailing the thread down the SWA path, but they are a low
cost carrier. As I said above, we can argue
fares until we are blue in the face - we'll have to pull actual average domestic fare data vs. anecdotes - but they undoubtedly have a low cost structure. Of the 3 LCC’s (SWA, ALK, JBLU), Southwest has the lowest costs when adjusted to identical stage lengths. They are not at ULCC-level, but nobody will reach that without going max-pax configuration.
The big players in the LCC business aren’t SWA. It’s Spirit and Frontier.
SWA is trying to compete with the legacies because Spirit and Frontier are apparently eating their lunch and it’s not because they want to serve ATL-MCO, they literally have to or they’ll get cut out of the market permanently.
The only real competitor that gave Delta a run for it’s money in ATL was Air Tran, but after the merger and entry of ULCC’s, their attack was effectively quelled.
Like ATL-LAX
SWA is $490
DAL is $486
Frontier is $282
Spirit is $274
I’m not sure I’ve seen anywhere yet that suggests SWA is getting their lunch eaten by the ULCC’s - some pressure, sure, but I’ve not seen anything to suggest they are getting crushed. They certainly haven’t launched a whole new segment of their cabin to compete with ULCC’s (yet), as each of the legacies have already done. And there is no chance they are flying ATL-MCO because they have to, they serve it because MCO is a “bottomless pit” of leisure demand that they can capture within their cost structure (and MCO is a hub on the other side for them).
As I said earlier, the ATL-LAX anecdote is nice, but I suspect DAL is matching SWA’s fares. We need actual domestic fare data to see what the true comparisons are, but I still suspect that on average, Southwest’s fares are going to be lower than the legacies. I am sure that in your RM departments, how Southwest is pricing in competitive markets is closely watched and matched. I will try to dig some actual concrete numbers up this weekend - we’ll see where it all shakes out.
Sheesh - I’m starting to sound like an SWA apologist (or worse, “fanboy”, whatever that may be). Just trying to bring some balance to an otherwise lopsided discussion. I’ll reiterate my broader position - this business is commoditizing. The carrier with the lowest cost structure will eventually win. Outside of Allegiant, Frontier, and Spirit, Southwest has the next lowest costs and an investment grade balance sheet - they run, and have historically run, one of the better airlines in this business. Delta has since caught-on after the bankruptcy/NWA merger and is a top-run (top-tier?!) airline. But everyone is going to eventually be in trouble as/if Spirit and Frontier continue to grow unabated.
