Southwest Airlines CEO on Staying Profitable

[lreynolds]

to watch the video, please visit: http://www.cnbc.com/id/15840232?video=1468691551&play=1

[Anonymous790]

I sent comments to Gary in hopes that he would read them. Unfortunately-- i only get some customer service rep quoting company policy when I offer up valid suggestions. I offered valid suggestions on how to attract and keep more business flyers---Staying profitable? But not listening to customers w/ legitimate requests/suggestions--that cost SWT nothing to implement. 1. I suggested that A-list members be allowed to switch flights in the same day if a seat is available w/out the Massive Premium(or any fee) being charged. This facilitates the business flyer having more flexiblity to leave earlier or later as a perc for being an A-list member--equates to more money for th airline b/c travelers that normally would fly other airlines for this priviledge would consider SWT as their airline of choice. I work for a major corporation and I know many frequent flyers who avoid flying SWT b/c their status on another airline allows them that flexiblitiy. IT IS FREE to the airline to do this, but the response I get is ---"sir --it is out policy not to allow such changes regardless of status." In other words --to bad. That really seems like a poor answer and a poor policy. 2. Allowing A-list members boarding priority in all instances--including the change of a flight w/in the 36 hour window. MOST othe airlines allow this. SWT does NOT. WHY??? IT is FREE to the Airline to allow this. Thanks for hearing my concern.

[blusk]

Thanks for your comments Anonymous, and you certainly aren't the first to raise these issues. I have been responding to Customers for 15 years about this topic. The requirement to request the new fare for same day changes is a longheld tenet that goes back to Herb Kelleher who felt that very strongly about this issue. He felt that those paying full fare deserved more flexibility than those on advance purchase discounted fares. It is important to note that there is no change fee or premium involved only the difference between the discounted fare and the fare in effect at the time the change is made. Many of our Customers realize that this requirement is the "trade-off" if you will for our no change fee policy. On Southwest, if you buy an advance purchase discounted ticket.and decide not to use it, you have the ability to use the entire amount of that ticket toward the purchase of another ticket that is flown before the one-year expiration date. You probably have heard this before, but it is important to repeat. To allow the kind of changes you seek in regard to fares, isn't really "free." It is certainly understandable for you to question why would charge the difference in air fare for Customers traveling on a discounted fare when the Customer could be filling a vacant seat on an earlier flight in order to “free” a seat for an additional sale or use on a later flight. It is important to explain that, in order to ensure a profitable flight, we must consider flight forecasting (using historical data to estimate the number of Customers who will travel on a flight) and revenue management (making sure that the sale and use of discounted rates balance with the essential revenue from Anytime Fares and Business Select Fares). Reviewing this information determines how many discounted fares we can offer on a specific flight while still maintaining our profitability. Also, discounted fares enable us to count on a Customer honoring his/her reservation, so we consider these sales “firm” (since these fares require the Customer to travel on a specific flight and date in exchange for the discounted price). Quite honestly, if we allowed Customers who purchase discounted fares the flexibility to travel on any flight that they choose, there would be no incentive to ever purchase our Anytime Fare or our Business Select Fare. Good business policy is not always popular, and we acknowledge that this rule has ruffled many a feather. We’ve looked at this issue from every possible angle, and we still find more reasons to support the rule than to relax it at this point in time. However, one thing I have learned is that nothing is permanent in the airline industry. As to the A-List request, it is a combination of system limitations and fairness. And with all due respect, I don't know of any other carriers that have the same situation as we do--open seating and the A-List. Carriers with assigned seats can certainly offer premium members boarding at any time without affecting other passengers preassigned seats. (I don't know of any carrier that will take away an already assigned seat to give it to a premium member.) With Southwest, the A-List helps determe the better choice of seats. We open checkin 24 hours in advance of local flight time. The A-List is processed at that time. The problem is that many business-hour flights may have large numbers of A-List Customers. They have a right to the best boarding pass number they can get on their original flight. (And some of them may have B-numbers on these flights, due to large numbers of A-Listers.) If another A-Lister were to come to this flight, we would have to do one of two things. The fairest thing might be be to rerun the checkin process, but that would void all of the already assigned boarding passes and in effect take away a better seat from someone already checked in on a flight. Or the other cause of action would be to let an A-Lister from a different flight use his/her boarding position from their original flight, but that wouldn't be fair to the other A-Listers who wqould have their boarding positions negated.