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Southwest – Not the Low-Fare Leader You Thought

Southwest – Not the Low-Fare Leader You Thought

For several years, it has been my suspicion that the so-called low-cost carriers (LCCs) — in particular Southwest, JetBlue, and Virgin America — could no longer be counted on to reliably fulfill their traditional roles: provide consistently cheaper fares in exchange for lower levels of service and fewer perks.

With the reorganizations of the full-service carriers, the LCCs’ cost advantage has largely evaporated. And as the mainline airlines were scaling back on amenities, the LCCs were bulking up on full-service perks to better appeal to the most profitable segment of the travel market, business flyers.

Virgin America has industry-leading inflight entertainment systems and its own airport lounge. JetBlue’s Even More Space seats trump the mainline carriers’ Economy Plus offerings. And Southwest is trying to recast itself as a viable option for business travelers with pricey unrestricted fares and frequent flyer benefits that disproportionately reward road warriors.

Ah yes, Southwest. The airline that once proclaimed, “You are now free to move about the country.” The real message: We’re not fancy. But we fly most places you need to go. And, by golly, we’re cheap.

Notably, Southwest doesn’t sell its tickets through the likes of Travelocity, Expedia, and Orbitz. That means consumers must research both Southwest’s site and one or more of the online travel agencies to get a full picture of comparative prices. But many don’t bother looking beyond the Southwest website, because of the entrenched perception that Southwest’s fares are lower than the competition’s.

But are they really?

A study by Topaz International, a company that conducts airfare studies on behalf of corporate travel departments, shines some much-needed light on the question.

In a study based on 100 city pairs, Topaz found that Southwest’s fares were the lowest only 40 percent of the time for flyers who carried on their bags. “Most business travelers that Topaz International has spoken to and interacted with during our 35 years of travel consulting are more likely to carry on their luggage in an effort to speed up their trip and get both to their destination and home when completed. In this case, while Southwest Airlines can be the lowest cost alternative, 60% of the time they are not.”

Directly addressing the widespread assumption that Southwest remains the low-fare leader, Topaz’s warning to its corporate travel manager clients was clear:

It is imperative for corporate travel managers to better understand their programs and constantly monitor airfares to ensure their tools and suppliers are providing the best value to the corporation and to the travelers. This is a clear example of why perception does not equal reality when it comes to airfares and the best alternatives for business travelers.

To the extent that it’s based on its heavily promoted Bags Fly Free policy, what there is of Southwest’s pricing leadership is likely to erode further. The company recently signaled its willingness to abandon its fee-free approach in the interest of increasing profitability.

For travel consumers, the message is that there is no one-stop solution when it comes to getting the best ticket price. A visit to Southwest.com should still be part of the research process. But better prices may well be found elsewhere.

Compare. Compare. Compare.

Reader Reality Check

Do you still assume that Southwest’s fares are the lowest?

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  • http://www.facebook.com/jonlnichols Jon Nichols

    Studies like this don’t put anything into context. That they were cheapest 40% of the time, given that there are at least 7 airlines with significant reach is pretty impressive. What was the percentage 2 years ago? 5 years ago? The study appears to be shopping for non-refundable fares on other airlines; certainly business travelers are much more sensitive to this, as plans change quickly.

    I fly Southwest a lot. They are not always the cheapest, but they are almost always close, and the lack of bag and change fees almost always put me over the top. It’s sort of like Amazon.com. They are often not the cheapest, but they are close enough that for a lot of products, it’s usually safe to just buy with them instead of spending too much time shopping around.

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

    Jon Nichols’ comment merits serious attention. However, it is unclear what “direction” Southwest management intends to take those of us who, for years, “wouldn’t consider flying anyone else”, and where the trade-off of no seat assignment in return for free checked bags, very-rewarding award plan, quick turn-around, and both competent and pleasant employees were all plus-factors to consistently very competitive fares.

    Awhile ago, someone wrote here that the clock-work successes in fuel-hedging that went straight to the earnings bottom line — and enabled fee-free benefits — are a thing of the past. And, maybe so more than we know.

    In any event, to the extent Southwest continues to morph into “just another legacy carrier” is likely to open the door to more competition ~ some of which will fail. But, it only takes one new one to succeed.

    For years, I thought Southwest had that lesson down pat. Not so sure, now.

  • penncomm

    I am fairly loyal to Southwest. However, simple common sense means that you compare. Who doesn’t do that? Plus, their award availability is, I’m certain, one of the best. Unless it is last minute, I have never had an issue cashing in my FF miles on Southwest for any destination. Not sure if that was calculated into this “cost analysis” of Southwest, but it is a VERY important way to calculate the “value” of an airline in my mind.

  • http://twitter.com/Jamesteroh Jamesteroh

    Many frequent flyers don’t even check a bag so the checked bag fee doesn’t matter. If you fly a legacy enough to get status they give you a free baggage allowance that is a lot more generous than Southwests (I get 2-70 lb bags for free on Delta and 3-70 lb bags if I am upgraded). I know Southwest advertises no change fees (which is rumored to be changing soon on lowest fare bucket tickets), but if I want to fly on an earlier same day flight on Southwest, even as an A-list select member you have to pay to upgrade to a full fare ticket, on a legacy if you have status you fly the same day on an earlier flight for free. If you have a lecagy credit card they will usually waive the bag fee as well.
    I used to fly Southwest a lot but the changes to the RR program were enough to make me stop flying them and flying a legacy exclusively. I get an assigned premium seat, a good change at an upgrade, IFE on most long hauls. Another thing the lecagy’s have that is a big time saver southwest doesn’t is TSA precheck. I have saved a LOT Of time with that benefit.
    Southwest can be good for the casual traveller who has no status and no airline credit card who is checking a bag. As a business traveller who flies 2 to 4 times a month, Southwest isn’t for me anymore

  • ithinknot

    The free bags is what really draws me, and probably a lot, of travelers to SW. But if the new program for SW is to cater to business flyers and ignore everyone else, I fear for the free bags program. If they do away with it, SW will just be other crappy airline. I really hope this does not happen.

  • http://www.facebook.com/GRALISTAIR Graham A. Howarth

    I 100% agree with everything you said. Sometimes for leisure Southwest are extremely convenient point to point. As an example I can get from MCI to SAN leaving Friday night and arriving late Friday. I cant do that on a legacy.

  • cowboyinbrla

    Frequentflier.com/Tim Winship has always had a bias against Southwest. I suspect that it comes from the underlying presumption of this site and its management that “elite status” is the be-all, do-all, end-all of airline travel, even as the airlines which offer it devalue it year after year after year.

    Yes, *if* you carry on your bags (and thus don’t need the free-checked bags), Southwest is only cheaper 40% of the time. That means Delta, United, American, US Airways, JetBlue, Virgin America, AirTran, Allegiant, Frontier, and Spirit – COMBINED – can only come up with the lowest cost 60% of the time, and only if you don’t count their checked bag fees. Who wants to bet that Delta, United, American and US Airways don’t hit the lowest fare 10% of the time?

    As for his sarcastic and pompous comments about Southwest’s “pricey unrestricted fares and frequent flyer benefits that disproportionately reward road warriors”…..

    Well. As for the former, a walk-up, unrestricted nonstop New Orleans to Chicago flight on Southwest, with full refundability and no change fees, is about $850 each way (again, with two checked bags). United wants $1290 for the same deal. American wants a minimum of $1378 and as much as $1900 – COACH – for the same pair. So much for the “pricey” bullshit.

    And with regard to the frequent flier benefits – ahem. It seems to me that inherent in the name “frequent flier program” is the concept of flying frequently – with those people being the ones you want to reward so as to keep their business. I realize that sites like this and people like Tim have made a career – literally – out of gaming the systems for benefits by finagling credit card sign-up bonuses and other ways of maximizing miles (not that there’s anything wrong with doing so; but bear in mind that anyone who benefits from such a system is going to resent losing the ability to game it accordingly) – but an airline’s goal with a frequent flier program OUGHT to be ensuring customer loyalty, with the best rewards going to the customers who are most profitable for you. Which is why the revenue-based model Southwest pioneered – more points for more expensive tickets – makes complete sense, except to people who think buying a deeply discounted $400 transcon fare ought to be considered just as valuable to an airline as someone who pays $2,500 or more for the same flight right before the flight takes off.

  • nomad

    Unfortunately I’ve never been able to find a fare on Southwest that was competitive with the legacy airlines and I fly some 100k miles a year – leisure only.
    I would like to try them for once and experience what their product is like, just to compare and be able to form an opinion.
    However, I just tried to find a flight to IAH to connect to my KLM flight, but even that does not seem possible – they only fly into HOU.
    Impractical to use it seems and only meant for “Kettles”

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

    Besides your getting up on the wrong side of the bed today, you clearly represent a reason to fly coach where chances are good you’ll be in the front of plane annoying other people. (And Tim is both very helpful and a nice guy. You could learn from him.) Happy Landings!

  • Devin Holum

    I have often noticed that their fares aren’t so good anymore. I am willing to drive a little further to use the less-congested airport that LUV flies out of (in Houston), but their fares disincentivize me.

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

    Its true. I have flown SW between two specific points every week for the past 6 years. At first, the fares started creeping up on my route because SW realized that it was a major commuter route to the DC area. They remained low most of the week but on Mondays and Fridays, it got much more expensive. In the past couple of years, those fares didn’t creep, they soared to the point where the inconvenience of flying into BWI is no longer practical. Its true, changes and baggage are still a bonus for flying SW but commuters usually have set work schedules and don’t worry about baggage. I flew SW so much that I was a companion pass holder for 5 of those years. Today? Not even an A list member.

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

    With respect to SW’s Rapid Rewards, ditto. A couple of years ago, when they switched to the same kind of point system as that of the legacy airlines from their old program, their reasoning was that the old program was unfair to long haul flyers who spend more money. Granted, long haul flyers may spend more occasionally. Short haul flyers like the kind SW was formed to attract, spend less money all the time. The reasoning ended up being a total fabrication as irrespective of where you fly or how you earned your points, it takes 10 roundtrip flights now, not the old 8 to earn a free flight and even then, it is fraught with gimmickry to the point where you end up paying far more in points value than you ever would paying for a flight with them or another airline.

    I found this out on a trip to San Diego, one of those prized long haul flights SW craves. It cost me more $$ to hopscotch my way across the country and back in a middle seat with a pack of peanuts and a coke than it did to purchase a First Class ticket on another airline, in a wide seat, and a hot meal. That was a real eye opener for me and forever busted the SW bubble. To me, simply put, SW had a great think going but it totally abandoned loyalty for pure greed.

  • mark marsiglio

    The study and this article both miss an important point about the impact of low cost carriers – legacy carriers compete with Southwest only in the markets served by Southwest. If the study were expanded to include other similar markets (using distance and demographic) that are not served by Southwest for comparison the results would likely be more striking. I would like to see the average of all carriers’ flights to and from a market without a low cost carrier presence compared to similar markets with carriers such as Southwest.

    If you can’t tell, I live in a market that is served only by legacy airlines and I often feel like I am subsidizing travel for those in markets with low cost competitors. The typical price I pay for a 300 mile flight is $500 round trip (7 day advance, non refundable, coach).

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

    Except that SW now serves more markets than it ever did, particularly with its merger with AirTran. For me, it has always flown in and out of San Diego and hands down, I found a much better fare easily for a better class of service. A 5 hour flight is a 5 hour flight and you can spend it with a bag of peanuts squished in a middle seat or against a window, or you can spend it relaxed, with a movie, and a fresh drink in your hand. No extra fees.

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

    It used to be. It has changed drastically to mimic that of the legacy airlines and I’m finding that the gimmickry involved in using those points often makes it untenable to use them, particularly for a short haul flight worth $150. They still offer all of these great promotions and coupons but if you use them, you forfeit the requisite points so I often don’t bother with that either.

  • http://twitter.com/CathyHurley Cathy Hurley

    I enjoy flying Southwest, but price is my main concern when I fly. Unfortunately, the other major airlines have well beaten Southwest’s prices the last several times I have flown. I would prefer to fly SW, but I am not going to pay extra to do so.

  • dsliesse

    I stopped thinking of Southwest as the lowest-fare airline years ago. I don’t fly them, myself, but have plenty of friends and relatives who do. While they may not always have the lowest fare, I believe that the average ticket price for the whole cabin is lower than most legacy carriers (i.e., there’s a lot less of the “4 seats available at price A, 10 at price B, 6 at price C, 8 at price D, 120 at price E” nonsense — and I mean nonsense from the passenger’s point of view, not management’s).

    My observation is that they did destroy their frequent flyer program, but only one airline I’ve heard of does it right in a logical sense: rewards based on dollars (or pounds, or Euros) spent, perks based on the number of trips (not segments, but trips). Miles flown is no indication of how loyal a passenger is; someone flying OMA-CHI ten times has fewer miles than someone who travels LAX-SYD once, for example, but undoubtedly has spent a lot more.

  • Stuki

    When oil was $20/barrel and fuel was cheap, a small share of a ticket’s cost, went to pay for fuel. Hence, a larger share went to pay for all the other costs. Costs that no-frills, one plane airlines like Southwest pioneered minimizing.

    With $100+/barrel oil, even minimizing every other cost, you still won’t be that far ahead percentage wise per ticket, as more and more of a ticket’s price goes straight to Saudi Arabia or wherever. Hence, percentage wise, compared to carriers with more complicated and costly ground operations, Southwest has less of an edge than before, even setting aside the fact that the others have hardly been sitting still. In fact, as an example, at a high enough fuel cost, the inability to optimize fuel burn per route by picking the most efficient plane, will cost you more than you gain from the efficiencies of one-plane, similar parts etc..

    Southwest is still good cost wise, but the difference is simply no longer gigantic enough that the legacy carriers cannot beat them at least some of the time, for those willing to shop around.

  • Stuki

    I’d, and I believe many if not most business travelers, would prefer SW to charge for checked bags, and use the proceeds to reduce fares across the board. Those traveling to and from conventions with bags full of samples and AV gear excepted, I suppose.

    A favorite feature of Southwest, is that every plane is the same, and their overheads are sized exactly large enough to fit those new “wide body” rollaboards (realistically 50% larger than the old ones) wheels in, once you are behind row 5. Every darned plane. Which makes traveling with one of those rather large bags extremely convenient and predictable. No gate checking because one of the planes on your route can’t fit the bag etc., etc. Combined with the ability to board early (first to pick row and empty overhead) on “business select” for a pittance, almost all lightly equipped (which is most, for most people) business travel can reliably be done with tight connections and unwrinkled suits. Noone else does this as well as Southwest.

  • http://www.facebook.com/mouseketeer1283 Debi Brown

    I agree with you. WE fly Southwest often but this May 12 the ticket was cheaper on Delta even with a checked bag. My friend just flew out on Airtran today and had to pay for checked bag. Is’t it with Souhwest???

  • Ed Gehringer

    The new Rapid Rewards program is less valuable to me for a reason that no one has mentioned: the number of points it takes to book a reward flight is directly proportional to the cost of the flight. With the legacy carriers, I can check whether it is “cheaper” to fly for dollars or miles (I usually use 1 cent/mile to make this comparison). If dollars are cheaper, I pay in dollars. If miles are cheaper, I pay with miles. With Southwest, the ratio never changes. Rapid Rewards has become simply a discount program. There are no inefficiencies to be exploited to get oneself a better deal.

  • pauletteb

    I’ve gladly spent up to $100 more NOT to fly Southwest. The phony perkiness of the FAs has always annoyed me, and even with Early Bird boarding, it’s still a cattlecar process. Lately I’ve been able to fly directly into Reagan National on USAir cheaper than SW into hellacious and horribly out-of-the-way BWI, even with a checked bag.

  • pauletteb

    Sarcastic? Pompous? You must have been looking in the mirror as you typed your post.

  • BMG4ME

    I did assume it until my last trip when I found that Southwest was double the price of American. Since I prefer American anyway I wasn’t complaining.

  • bpaine888

    The more inexperienced the flyer, the greater the perception that Southwest is the cheapest flight out there. Pros know…the once a year people only know what they heard, maybe years ago

  • Richard W Ekdahl

    I live in Tulsa and hve found Southwet fares to be at least $100 more per trip than American! I don’t even bother to check Southwest fares anymore.

  • tolbuck

    Totally AGREE. There is Something about Southwest that I have Never been a Fan of. And Employee attire is PATHETIC.

  • http://www.facebook.com/people/Kenny-Baldwin-Jr/1355048410 Txcavi

    Richard who are you comparing? EVERY time I check SW there tickets have been lower than Most carriers. Then if you add on the bag fees the SW is the way to go. I hope you know that if you plan ahead it is cheaper. Do a comparison. Do a flight from your home town to the East or West coast ( Whichever is further). Three months ahead and see who is cheapest. I have no doubt SW will be when you factor everything in. I have flown quite a few times in my life and I just love SW.

  • Richard W Ekdahl

    Read the post again – I said AMERICAN – try Boston from Tulsa on WN and on AA. I am Platinum and never pay bag fees. Since I havde gtaken the trip TUL-BOS-TUL at least once a month for 5 years, I can assure you I have looked for lowest fares: Lowest: AA then DL, and finally WN.

  • ed

    employee attire ?!? thanks for the laugh

  • ed

    i was checking austin to nashville , AA was $150 less than SW for roundtrip. i only carry on anyways. however, AA stops in dallas, with a 2 hour lay over, that stinks. SW flies direct. i went AA anyways and will have a few beers. but i do NOT like DFW