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New Fees Set to Tarnish Southwest’s Image

New Fees Set to Tarnish Southwest’s Image

Among U.S. airlines, none has managed to achieve such consistently superior customer-satisfaction ratings as Southwest. Over the past 18 years, Southwest has been rated first on each of the annual American Customer Satisfaction Index surveys, except for this year, when it came in second behind JetBlue.

The airline has fostered that outsized loyalty with a combination of simplicity, value, and fairness. A key feature of the airline’s strategy — one that touches on all three characteristics — has been its refusal to embrace the industry trend toward nickel-and-dimeing its customers with fees for everything that can be unbundled from the basic transportation product.

There’s no fee, for example, for the first and second checked bag. And there’s no extra charge to change a flight.

At a time when other airlines are generating millions of dollars in so-called ancillary revenues, Southwest’s relatively benign approach has been a welcome counterbalance to the industry’s increasing reliance on fees.

Southwest Fee-Free No More

But freedom from fees will apparently go the way of the DC-3 sometime in 2013. According to a report in Bloomberg, Southwest has divulged plans to implement two new fees, and increase some existing fees.

At an investor’s meeting in New York, Southwest’s Chief Commercial Officer, Bob Jordan, unveiled plans to charge unspecified fees for customers who fail to show up for flights without first cancelling their reservations, and for booking the most desirable seats, presumably those in exit rows and toward the front of the cabin. Without revealing specifics, he also stated that some existing fees would be raised.

The fee changes are expected to contribute to a $1.1 billion increase in annual revenue.

Fear Versus Greed

It’s hard to argue with the move’s hoped-for financial effect, projected by Southwest to be a doubling of the airline’s year-over-year earnings. That’s the greed part of the equation, and it’s a powerful motivator.

What Southwest should be in fear of is the degradation of its sterling image, and the loss of patronage that could entail.

Southwest’s popularity and its industry-leading profitability have always gone hand in hand. But the airline’s managers seem convinced that they can simultaneously erode Southwest’s goodwill quotient while boosting its profitability.

Have your cake and eat it too? That sounds more like magical thinking than a solid business plan.

Reader Reality Check

How will Southwest’s new fees affect your loyalty to the airline?

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  • keller23

    You’re kind of comparing apples and oranges. Southwest gets high grades for customer service. That won’t go away if some new fees are introduced. All airlines charge fees. If Southwest continues to have superior service, it can still differentiate itself.

  • keller23

    You’re kind of comparing apples and oranges. Southwest gets high grades for customer service. That won’t go away if some new fees are introduced. All airlines charge fees. If Southwest continues to have superior service, it can still differentiate itself.

  • Sai

    Doesn’t surprise me in the least. It wasn’t a question of “If”, it was a question of “when”. And I think that SW’s should no longer be considered a low-priced airline. If you actually look at some of their fares, it boggles my mind to see that they charge more than what the normal carriers like US Air, United, AA would charge. Whoever gave them the tag of low-priced airline must’ve been dreaming :)…

  • Sai

    Doesn’t surprise me in the least. It wasn’t a question of “If”, it was a question of “when”. And I think that SW’s should no longer be considered a low-priced airline. If you actually look at some of their fares, it boggles my mind to see that they charge more than what the normal carriers like US Air, United, AA would charge. Whoever gave them the tag of low-priced airline must’ve been dreaming :)…

  • bzbdewd

    Southwest is consistently more expensive than American Airlines.  We used to fly them a lot but in the last 8 months or so they are either the same price or more – often a lot more.

  • bzbdewd

    Southwest is consistently more expensive than American Airlines.  We used to fly them a lot but in the last 8 months or so they are either the same price or more – often a lot more.

  • http://www.facebook.com/meastorific Mark East

    How are they going to charge for specific seats when seating isn’t assigned on Southwest?

  • http://www.facebook.com/meastorific Mark East

    How are they going to charge for specific seats when seating isn’t assigned on Southwest?

  • http://www.facebook.com/people/John-Adams/100001568389233 John Adams

    These fees won’t affect most passengers.  It seems reasonable to me.

  • http://www.facebook.com/people/John-Adams/100001568389233 John Adams

    These fees won’t affect most passengers.  It seems reasonable to me.

  • PhotoRadarscam

    I would agree that a no-show fee is completely reasonable. It is a fee that I will never have to pay because I am diligent about canceling reservations. And I can see how that affects their operations. The premium seating fee is a concern though. This is a case of extracting extra money because some people are willing to pay it.

  • PhotoRadarscam

    I would agree that a no-show fee is completely reasonable. It is a fee that I will never have to pay because I am diligent about canceling reservations. And I can see how that affects their operations. The premium seating fee is a concern though. This is a case of extracting extra money because some people are willing to pay it.

  • http://www.facebook.com/maggie.stansfield.7 Maggie Stansfield

    $100 for an overweight bag, by even a few ounces is reasonable?  I totally agree with most about the no show fee.  But doubling fees for the sheer pleasure of greed just makes Southwest another legacy airline failure.  

  • http://www.facebook.com/maggie.stansfield.7 Maggie Stansfield

    Good question.  I’m assuming they will simply block those seats to anyone who doesn’t have a specific designation on their boarding passes.

  • http://www.facebook.com/maggie.stansfield.7 Maggie Stansfield

    $100 for an overweight bag, by even a few ounces is reasonable?  I totally agree with most about the no show fee.  But doubling fees for the sheer pleasure of greed just makes Southwest another legacy airline failure.  

  • http://www.facebook.com/maggie.stansfield.7 Maggie Stansfield

    Good question.  I’m assuming they will simply block those seats to anyone who doesn’t have a specific designation on their boarding passes.

  • http://www.facebook.com/maggie.stansfield.7 Maggie Stansfield

    You know, I’m wondering what is going on with them.  We fly them every single week.  They cancelled virtually all of their flights to Baltimore from Providence yesterday, leaving oodles of people stranded because they don’t reroute people on other airlines.  This morning, they cancelled yet another flight forcing us to use another airline, which didn’t seem to have any problems.  Supposedly, their 737s couldn’t fly in what they deemed “bad weather” yet the airports had no advisories and we flew on one of those US Air crop dusters, presumably a lesser airplane in bad weather, with no problem.

  • http://www.facebook.com/maggie.stansfield.7 Maggie Stansfield

    You know, I’m wondering what is going on with them.  We fly them every single week.  They cancelled virtually all of their flights to Baltimore from Providence yesterday, leaving oodles of people stranded because they don’t reroute people on other airlines.  This morning, they cancelled yet another flight forcing us to use another airline, which didn’t seem to have any problems.  Supposedly, their 737s couldn’t fly in what they deemed “bad weather” yet the airports had no advisories and we flew on one of those US Air crop dusters, presumably a lesser airplane in bad weather, with no problem.

  • http://www.facebook.com/maggie.stansfield.7 Maggie Stansfield

    Having flown them for years, I’ve seen their fares consistently rise.  But for the freedom to cancel and rebook without penalty as needs arise, they would be no different than the legacy airlines.

  • http://www.facebook.com/maggie.stansfield.7 Maggie Stansfield

    Having flown them for years, I’ve seen their fares consistently rise.  But for the freedom to cancel and rebook without penalty as needs arise, they would be no different than the legacy airlines.

  • http://www.facebook.com/maggie.stansfield.7 Maggie Stansfield

    A couple of years ago, SW frequent flyers had an uproar about their move to a points system vs. the old flight system they had for earning/awarding free flights.  Their reasoning was that folks who fly further distances were not getting full benefit of their rewards as much as those like us who just fly back and forth up and down the coast.  Fair enough.  Once they implemented the system however, it is obvious that is not the reason.  What I earn in points for a specific flight vs. what it costs me in points to earn a free flight for the same city pair is 5 times more.  Far different than what they represented when they made the switch.  Seems SW is banking on greed, not the good will they’ve built with their customers all these years to keep them going.  I can be as fickle as the next person.

  • http://www.facebook.com/maggie.stansfield.7 Maggie Stansfield

    A couple of years ago, SW frequent flyers had an uproar about their move to a points system vs. the old flight system they had for earning/awarding free flights.  Their reasoning was that folks who fly further distances were not getting full benefit of their rewards as much as those like us who just fly back and forth up and down the coast.  Fair enough.  Once they implemented the system however, it is obvious that is not the reason.  What I earn in points for a specific flight vs. what it costs me in points to earn a free flight for the same city pair is 5 times more.  Far different than what they represented when they made the switch.  Seems SW is banking on greed, not the good will they’ve built with their customers all these years to keep them going.  I can be as fickle as the next person.

  • http://profile.yahoo.com/3ZIGXSGGMZOF7JKADEAK7BLYU4 Sati

    This is totally OK considering that SW tickets are mostly less than the other airlines and there is no checkin fee for the first 2 bags (of course, weight consideration exists). the weight consideration exists even for international flights whose ticket prices are almost in thousands. Charging more for Early bird checkin by $2 is also worth it for people who consider that option. 

  • http://profile.yahoo.com/3ZIGXSGGMZOF7JKADEAK7BLYU4 Sati

    This is totally OK considering that SW tickets are mostly less than the other airlines and there is no checkin fee for the first 2 bags (of course, weight consideration exists). the weight consideration exists even for international flights whose ticket prices are almost in thousands. Charging more for Early bird checkin by $2 is also worth it for people who consider that option. 

  • Nate Keller

    I benefited greatly from the switch to Points.  I purchase full-fare or business tickets and am earning 10x multipliers on fares.  I’m averaging 4k points a roundtrip.

    I want all airlines to switch to dollars.

  • Nate Keller

    I benefited greatly from the switch to Points.  I purchase full-fare or business tickets and am earning 10x multipliers on fares.  I’m averaging 4k points a roundtrip.

    I want all airlines to switch to dollars.

  • http://profile.yahoo.com/55XPJFQVFHBL2MJBIVBP4UC4AA S

    Fail – SW tickets are often higher than even legacy carriers, many passengers have several options to avoid luggage fees – elite status, credit cards, etc.

  • http://profile.yahoo.com/55XPJFQVFHBL2MJBIVBP4UC4AA S

    Fail – SW tickets are often higher than even legacy carriers, many passengers have several options to avoid luggage fees – elite status, credit cards, etc.

  • http://www.facebook.com/edgar.numrich Edgar Numrich

    “Who is Maggie Stansfield??”

    Meanwhile, am not sure we’re getting (or WN is giving) the whole story yet.  With what is posted by Tim, count me in the group who are actually surprised a “no-show” fee wasn’t imposed long ago.  It’s bad enough when you don’t cancel a rental car, but for a seat on an airplane is worse than thoughtless.

    As to the “preferred seats”, just so long as WN doesn’t figure out which ones are on my list, it figures I’m safe.  Here’s a hint though:  it’s not those the fatsos grab nor the ones to which so many people are too lazy to walk.

    Finally as to overall “price”:  Would have to agree Southwest is no longer “the low price king”. 

    Unless you figure in checked baggage, and there it remains “no contest”.  As such, Southwest is still my #1 choice to anywhere they fly. 

    Period.

  • http://www.facebook.com/edgar.numrich Edgar Numrich

    “Who is Maggie Stansfield??”

    Meanwhile, am not sure we’re getting (or WN is giving) the whole story yet.  With what is posted by Tim, count me in the group who are actually surprised a “no-show” fee wasn’t imposed long ago.  It’s bad enough when you don’t cancel a rental car, but for a seat on an airplane is worse than thoughtless.

    As to the “preferred seats”, just so long as WN doesn’t figure out which ones are on my list, it figures I’m safe.  Here’s a hint though:  it’s not those the fatsos grab nor the ones to which so many people are too lazy to walk.

    Finally as to overall “price”:  Would have to agree Southwest is no longer “the low price king”. 

    Unless you figure in checked baggage, and there it remains “no contest”.  As such, Southwest is still my #1 choice to anywhere they fly. 

    Period.

  • http://profile.yahoo.com/HNPYKBYHLTSC4MMFJQM7HOILVQ Paul

    I love the fairness and democracy of flying on SWA. Charging a fee for a no show is a positive in my book as it creates a fairer system for travellers. Charging for premium seats fly’s in the face of the whole idea of al lfly equal. I like the A list and  loyalty programs and these programs would loose some benefit and the sense of fairness with a payty for premium seating model. 

  • http://profile.yahoo.com/HNPYKBYHLTSC4MMFJQM7HOILVQ Paul

    I love the fairness and democracy of flying on SWA. Charging a fee for a no show is a positive in my book as it creates a fairer system for travellers. Charging for premium seats fly’s in the face of the whole idea of al lfly equal. I like the A list and  loyalty programs and these programs would loose some benefit and the sense of fairness with a payty for premium seating model. 

  • http://pulse.yahoo.com/_Z3AVBBJN4I7SVPZIXW2S37LHQA photoohideustopublish

    The problem with airline fees is that they are untaxed.  The federal govmint should place all their excise taxes on the fees, same as ticket prices.  Local govmints need to put surcharges on the fees to pay for local infrastructure, same as on rental cars.
    No wonder govmints are in budgetary crises:  They weren’t before the airlines started the fee business model a few years back.
    Nobody
    “Maybe he just wanted to steal our wirecutters.  Did ya ever think of dat?”–Animal “Stalag 17″

  • http://pulse.yahoo.com/_Z3AVBBJN4I7SVPZIXW2S37LHQA photoohideustopublish

    The problem with airline fees is that they are untaxed.  The federal govmint should place all their excise taxes on the fees, same as ticket prices.  Local govmints need to put surcharges on the fees to pay for local infrastructure, same as on rental cars.
    No wonder govmints are in budgetary crises:  They weren’t before the airlines started the fee business model a few years back.
    Nobody
    “Maybe he just wanted to steal our wirecutters.  Did ya ever think of dat?”–Animal “Stalag 17″

  • LoyaltyUndone

    This is a frequent topic of discussion at my firm which has hundreds of loyal, but increasingly cautiously so, Southwest fans.  Southwest is slowly changing their tune as the old, founding guard rotates on and beancounters step up.  The new ones are slowly pushing the envelope and carefully being “still better” than the alternatives.  The times of feeling part of somethng great are slowly fading. They make money from and build loyalty by this loyalty.  No problem with no show fees – overdue, and why did they wait?!  The premium seats flies in the face of the Business v. Wanna Get Away fare, and early boarding fee option.  The FF program was a total misrepresentation and is making them hundreds of millions, though more of us are now going back to mixing in other airlines as we might as well build up on more than just one, as all are now more equal.  Notably, they still punish with fees on AirTran and this is certainly why the assimilation is being done slowly.  The key remaining loyalty topics are Bags Fly Free and cancellation without penalties, which will totally level the loyalty playing field back to the us against them that UA, AA, Delta, etc. have adopted and lose them loyalty, as then a one-way street.

  • LoyaltyUndone

    This is a frequent topic of discussion at my firm which has hundreds of loyal, but increasingly cautiously so, Southwest fans.  Southwest is slowly changing their tune as the old, founding guard rotates on and beancounters step up.  The new ones are slowly pushing the envelope and carefully being “still better” than the alternatives.  The times of feeling part of somethng great are slowly fading. They make money from and build loyalty by this loyalty.  No problem with no show fees – overdue, and why did they wait?!  The premium seats flies in the face of the Business v. Wanna Get Away fare, and early boarding fee option.  The FF program was a total misrepresentation and is making them hundreds of millions, though more of us are now going back to mixing in other airlines as we might as well build up on more than just one, as all are now more equal.  Notably, they still punish with fees on AirTran and this is certainly why the assimilation is being done slowly.  The key remaining loyalty topics are Bags Fly Free and cancellation without penalties, which will totally level the loyalty playing field back to the us against them that UA, AA, Delta, etc. have adopted and lose them loyalty, as then a one-way street.

  • LZ126

    If the flight is full, SWA can easily fill the seat of the no-show – either by charging somebody the walk-up fare, or “upselling” the seat to a passenger scheduled for a later flight.  And the no-show can use the credit towards a future flight.  There’s little revenue loss to SWA because of the no-show.
    But if they raise the early-bird fee, they should give us the option of choosing whether we want it on the outbound flight, the return flight, or both. There have been times when I was forced to pay the early-bird charge on a return flight with only 50 passengers because of the round-trip nature of the surcharge.

  • LZ126

    If the flight is full, SWA can easily fill the seat of the no-show – either by charging somebody the walk-up fare, or “upselling” the seat to a passenger scheduled for a later flight.  And the no-show can use the credit towards a future flight.  There’s little revenue loss to SWA because of the no-show.

  • LOBOF123

    EarlyBird checkin can be purchased on a oneway basis if you go back in and add it to your purchase after making the reservation and not during the booking path.

  • LOBOF123

    EarlyBird checkin can be purchased on a oneway basis if you go back in and add it to your purchase after making the reservation and not during the booking path.

  • LZ126

    Thanks!

  • LZ126

    Thanks!

  • http://www.facebook.com/profile.php?id=1011701449 Ken Kallusky

    I’ll be checking other airline fares for sure..ANd just give ol Bob Jordan 10 years and they will filing chapter 13 too..