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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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