Southwest Airlines raises fares

[flyover]

Nice analysis.

Now, here's the question. Do you think people will notice? Because that's the kicker. If they don't notice, and just pay up, Southwest wins. I think it is likely that will happen.

If they do notice, and stop flying, then it's a net loser. But I don't think that's going to happen. Hell, man people will pay $5 for a beer on that flight, I don't think they'll even notice.

Although I did go out Friday and see some dude act like a $5 cover was the end of the world, so maybe I'm just crazy.

The other thing that everyone seems to completely miss is that all the airlines have multiple levels of fares, including SWA. So you raise all the ticket prices by $10. Then your yield management goes to work trying to maximise revenue on each flight. If they see that few of the top price seats are being sold they open up more lower priced seats. Even though all the fares have been raised $10 you could conceivably pushback with more passengers and less revenue on the flight. This has been what the legacies have battled for years. SWA has much less exposure to having their passengers poached by other carriers, so they may actually see revenue rise out of a fare increase. Unfortunately for the legacies, that has often had the opposite effect.