One of the biggest questions in the US airline business is what will happen to Southwest Airlines after its new activist investor makes anticipated changes. If you’ve flown at all, you'll know that the line has been a maverick since it began back in Texas. Will major changes bring greater profits, as Wall Street predicts, or will they ruin the brand for its many loyal flyers?
- No listing on third-party search systems.
- No red-eye flights.
- A funky seating system that assigns groups, not individual seats.
- Retained traveler value for canceled nonrefundable fare.
- Two free checked bags on each flight on any ticket.
Southwest has already announced some changes—it is now listing flights on the Google Flights and Kayak search systems, it will start assigning and charging for advance seat assignments, it will add some premium seats, and it will start flying red-eyes. None of these moves looks like a deal breaker. Having flights displayed on two of the post popular search systems should benefit all travelers, regardless of their attitude toward Southwest. Starting red-eye flights is not a problem in itself, but it could be if the resulting schedules eliminate attractive daytime schedules and force travelers who hate red-eyes to take them.
I get the seating change. Even though fares are set under the assumption that all seats are created equal, they aren’t: Middles are substantially worse than others, and exit-row seats with extra legroom are better. Southwest will now also charge more for “extra legroom” seats, presumably those exit-row and bulkhead seats that must necessarily provide extra legroom plus a few extra-legroom seat rows in front. I don’t see a move to “big front seats” per Spirit.
This is a tough one to figure. I know of several road warriors who say they’ve gamed the current system and would not like to see it go. On the other hand, many travelers complain about it. And travelers who don’t buy premium seats are likely to find ordinary seats tightened a bit. On balance, these moves aren’t likely to tilt the playing field, either.
But the other moves are fraught. The retained value feature has been important for many years to many travelers, and its loss could be damaging. Right now, it seems likely that the change will be limited to a new bare-bones, no-extras fare investors believe necessary to compete with similar offerings on other lines. I can’t argue, but the move could cost business.
The line in the sand or the Rubicon seems to be the line’s traditional policy of two free checked bags on every fare. Two free checked bags have been iconic with Southwest, and loss of that deal could move plenty of flyers to other lines. After all, for many travelers it represents a $60 to $80 round-trip fare difference in favor of Southwest—and that’s enough to move the market share needle.
At this point, the solution seems to be the Solomon-like one of retaining two free bags on all fares except the new bottom-bottom one. We shall probably see how this works out.
People in the airline business—as well as travelers—have a stake in the outcome. The big worry is that outside investors, focused on short-term profits, will turn Southwest into a smaller, weaker clone of American, Delta or United. They have as a glaring exhibit the near collapse of Boeing, which may never regain its lead over Airbus following the depredations of a short-term-focused management on a company in it for the long pull.
