Southwest announces new business select product


#1

Southwest Unveils New Fare
To Lure Business Travelers
By MELANIE TROTTMAN
November 7, 2007 3:23 p.m.

Continuing its push to draw more business travelers and boost revenue, Southwest Airlines Co. launched a “Business Select” product that will reward frequent fliers willing to pay the highest fare.

Starting Thursday, passengers purchasing tickets in the new “Business Select” fare category will get preferred boarding, a free cocktail voucher, and bonus frequent-flier award credits to earn free tickets faster.

Fares in the new Business Select category will be $10 to $30 more one-way than the current highest-priced tickets sold by the Dallas-based airline. Chief Executive Gary Kelly expects the new product, along with other tweaks in the airline’s fare structure, to generate at least $100 million more in annual revenue starting next year.

“This is the first step in what we call our implementation phase” of targeting more business travelers, he said.

Operating costs at Southwest, known for its low-cost model, have been rising and forcing the airline to raise fares more aggressively. Targeting more business travelers is a key way in which Southwest expects it can boost revenue. The airline’s lack of assigned seating has been a problem for many business travelers who have had to check in online or at the airport early, and line up at the gate early, to ensure getting a good seat. Passengers generally have to be in the “A” boarding group to ensure a window or aisle seat.

Southwest recently changed its boarding policy to avoid passengers’ having to line up so early at the gate. Starting Thursday, it will launch a new policy that guarantees “A” group boarding to passengers who have flown 16 round-trips with the airline in one year.


#2

Business Select overs 1.25 standard Rapid Reward credits less than 750 miles. 2.00 standard Rapid Reward credits for 750 or more miles one-way trips.

They are introducing an “A-List” for those who manage to fly 32 one-way trips in a 12 month period.

They are also introducing an enhanced class of Rapid Reward award called “Freedom Award”. It requires 2 Standards to 1 Freedom.

Pay Attention to all of the new rules.


#3

Still no first class or assigned seats. :confused:


#4

Save that for the other airlines :smiley:

If it means keeping cost down, I am all for waiting in line, selecting my own seat on the plane and the other very minor inconvienences.

Allen


#5

NOT TO MENTION THEIR GREAT SAFETY RECORD!!! :smiley: :arrow_right: :stuck_out_tongue:

Count me in the peanut gallery for sure… :smiley:


#6

The only time I’ve found WN to be notably cheaper than the legacies is last-minute short route fares, i.e. PHL to BOS or similar…


#7

No assigned seats doesn’t save them money or time anymore.

WN is just so in love with themselves that they won’t change it, even if it puts them at a competitive disadvantage.


#8

I think that this is an awesome idea.

There are alot of business travelers that fly with us, so this would be great for the airline.


#9

Did I get lost here or somethin’ - what do you think is a good idea - (flygirl whispers to SWA - I only call God awesome) :smiley:


#10

Do you have something to back this up? Time saved doesn’t always mean the gate end. What about administrative time saved?

Do you have something to back this up? I sure hope to be at such a competitive disadvantage as you state above and be profitable like SWA.

Allen


#11

Unassigned seating saves money in a couple of ways:

The ability to turn the aircraft faster (the average time between flights on Southwest is about 25 minutes, much shorter than other airlines).

The airline can have a similar and therefore more efficient booking system by not having to have a section in the process dedicated to selecting a seat.


#12

Your first point has been proven wrong by a test that United did when they changed to their assigned seating with tiered boarding (windows, middles, aisles) and showed it to be faster boarding than open seating (which requires that people seated in the middle seats boarding last to climb over the aisle seats seated before them). Unfortunately, turnaround times have more to do with factors other than boarding time.

The booking point is not material as it is only a few lines of code and requires very little maintenance at this point.


#13

In case you haven’t read any industry or business press, for the last year or so, every airline has been profitable. Many have been significantly more profitable than WN.

WN was only profitable during the downturn because of their fuel hedge. Looking at their revenue numbers, their revenue streams are fairly weak and now that the majors have readjusted their cost structure, WN no longer has any significant benefits on cost. They’re just limiting themselves by operating a “single” (really two) aircraft type, not effectively utilizing yield management, and not pursuing international flights (at least within North America). But again, as long as the company keeps making a profit, WN managers will stay in love with themselves and they won’t change anything, even if it means they could make more money.


#14

Here’s an excerpt from Loading an Airliner is Rocket Science :

Perhaps the simplest approach is the open seating plan famously practiced by Southwest Airlines since its earliest days in 1971. It may seem slightly quaint next to its more elaborate cousins, but it has helped make Southwest a turnaround champion that claims to take only 25 minutes on average to unload, clean and reload its 137-passenger Boeing 737s.

Southwests turnaround time is below those of our competitors, said a Southwest spokeswoman, Beth Harbin, who added that the range is 35 minutes to an hour for most airlines.

Southwests system is also cheap and uncomplicated, requiring almost no exotic technology. Customers get assigned to Groups A, B or C on their boarding passes, in the order in which the passenger checks in. Groups are called in alphabetical order, with passengers rushing to occupy the seat of their choice.

To show off the effectiveness of its simple system, Southwests scheduling department has come up with a what-if model, in which turnarounds take five minutes longer. To keep its current schedules of 2,773 daily turns for its fleet of 461 737s, the airline would need 18 additional aircraft costing a total of $972 million not including the cost of crews and maintenance workers.

Southwest has quietly done tests of so-called dual jet bridges in Austin and Dallas to accelerate boarding by loading passengers through two doors at once. But the bridges proved to be unreliable. The airline does use a different kind of dual bridge in Albany, but has found it only marginally better than single bridges.

Last summer Southwest began experimenting with assigned seating, Wilma-style boarding and other loading methods on flights out of San Diego because of the variety of short, medium and long-haul flights there.

Here’s something from Elliott’s blog on Southwest’s About-Face

Keep it simple. Southwest Airlines honors some simple no-nos: No assigned seats. No meals. No hassles. No problems. Do our Customers like the way we do business? You could say theyre simply nuts about it!

Later in the annual report, Southwest notes that its simple, quick, and efficient boarding procedures minimize our customers total trip time."

Here’s a comment on on the blog:

I completely agree with the open seating policy. After working for an airline that does not do this. I can see all the advantages of it. MUCH faster boarding and most important of all, EVERYONE is in the boarding area at boarding time. You do not have those last minute pax who think that because they have a seat they can get there 2 minutes before the flight leaves. Rarely do you hereSouthwest calling for final boarding because pax are missing. I now fly Southwest weekly on business and have found with a little forethought that I almost always get an A boarding pass. I believe Southwest will find that having assigned seats will add 10 to 15 minutes boarding time to their flights. This will not work with Southwests 25 minute turn around on their aircraft.

It’s worked for over 30 years. Why change it?


#15

If the airline says it [about themselves] then it must be true!

c’mon dude, this is all just PR marketing mumbo jumbo to justify their archaic “strategy”.


#16

Archaic or not, you as a passenger have a choice. Don’t like it?

Take another airliner. Very simple choice.

Allen


#17

Ah, now we see some of your (in)famous research. What you originally said was “Unassigned seating saves money.” Nothing in any of your so-called research says that at all. The first citation just says that it is “cheap and uncomplicated.” United was planning to go to an ABC system like SW when they started competing on the CAlifornia routes. They tested that against several other boarding approaches and found that the 123 system beat ABC. That is the only head to head test that I am aware of and it showed ABC is not the cheapest.

Your other posts are just PR, but perhaps that qualifies as research to you.


#18

ABC system? Do you mean open seating? What proof do you have that United tried open seating on its intra-California flights? This is news to me.

My experience is that they started out with the windows-middle-aisle seating system.


#19

Did I get lost here or somethin’ - what do you think is a good idea - (flygirl whispers to SWA - I only call God awesome)

Oh, I meant that rewarding our business passengers was good idea. Giving them free cocktail vouchers, A Boarding passes, ect.


#20

United did several tests running their original boarding system, the Southwest ABC seating and then their current 123 seating zones. First they did them in flight attendant training school, didn’t believe the results were correct and then repeated them with on actual flights with exactly the same results: the 123 seating zones boarded faster than the SW ABC open seating system.