In some respects, Southwest takes a portion of the market that will never allow them to be a dominant carrier. They take the cream out of the market where they can deliver a product at a profit at a price point that doesn't drive pax into their cars (or to not take the trip.) SW flies customers than can justify the price SW HAS to charge to make a profit. United and the others in the final five (NW/CO/DL/AA) fly pax who HAVE to fly. The networks they have reflect that. The problem is that SW (and JetBlue) have become so large that UA/AA/ CO/NW/DL must provide a competitive price on so many routes that they are hamstrung in providing a profitable service. Airlines aren't inherently unprofitable. The value they provide to many folks (airborne commuters) exceed the price they charge for their service implying price power. But they are in the same market space as those that charge a price on a different basis and since it is a commodity, they loose that price power... Not sure how this is going to shake out, but time will tell. Matthew On 20-Aug-05, at 1:04 PM, David MR wrote: > Southwest has never pretended to be all things to all passengers. > It's job > is to get a person from one USA point to another USA point at the > lowest > fare possible. It does this by standardizing on one aircraft > type. You > don't have to have a 6 different pilot groups because you have 6 > different > aircraft types. Lots of money saved there. > > Many of the destinations served by United are fake destinations. > In other > words, they say they fly there but it's actually a different > airline that > does the actual flight (e.g. IST and MOD). > > With Southwest, you are apt to get to your destination faster, even > with 2 > stops enroute, than on a network carrier such as United when you > have to > connect at a hub. > > One of the advantages Southwest has over airlines with hubs is the > lack of > hubs. Taking United as an example (and this applies to all airlines > with > hubs), if bad weather hits Chicago or an aircraft incident closes a > runway > at Dulles, then flights throughout the network are disrupted. > > If you need to fly internationally, then fly United or Delta. If > you want > to fly domestically then fly a low cost carrier like Southwest. > As an > example, I recently flew OAK-ONT then LAX-HOU-OAK on Southwest. > The total > fare was just over $200. I checked the other carriers for a > routing of OAK > (or SFO)-LAX-IAH (which was actually closer to my destination in > Houston)-OAK. The lowest fare I could find was over $600. > > Of course, if you can write off the trip or have a business expense > account > I guess it really doesn't matter who you fly. > > Southwest's average seat pitch is about 32". With the open seating, > if you > get in line early enough you can get an exit seat with 36" of leg > room. > Most flights are only a 2-3 hours. Are you telling me that a > couple of > hours of "discomfort" are worth over $200? In my case, being 5"6, > I have > plenty of room at 32". > > David R > http://home.comcast.net/~damiross/books.html > www.sequoians.com > www.chanticleers.org > > -----Original Message----- > From: The Airline List [mailto:AIRLINE@xxxxxxxxxxxxxxxxx]On Behalf Of > Bahadir Acuner > Sent: Saturday, August 20, 2005 09:06 > To: AIRLINE@xxxxxxxxxxxxxxxxx > Subject: Re: NW-DL poss bankruptcy > > > Bob,=20 > Please tell me that you are not jumping in the group of people that = > consider > Southwest the next best thing since slice bread.=20 > > Granted that I am way more informed about airline travel than > regular = > Joe > Moe, but even some consultant folks are aware of the differences > between > Southwest and major airlines.=20 > > Let's leave the food discussion out of the question for a moment. > United = > has > the right package of products for me:=20 > - Conveniently located hubs (SFO, DEN, ORD, IAD, FRA, NRT) and focus = > cities > (SEA, LAX) with all these combinations I can get a 36 inch seat with = > decent > leg and elbow room.=20 > - Very ample destinations.. To this day the only place that I > couldn't = > get > seats on UA/UX carrier was XNA and thank god I didn't have to go > there. = > (But > after 2 months that project born dead UA started service to XNA) > - CRJ700s and ERJ170s have Economy Plus and F seats.. Show me another > airline that does that..=20 > - Southwest doesn't have international connection.. I fly to > Istanbul at > least twice a year.. UA gets me there in comfort, style with nice > connections.=20 > > - I consistently pay higher fares on United compared to Southwest, > even = > when > I am traveling for personal trips. (Just paid $427 for SFO-RIC > instead = > of > $337 on AirTran. No one can force me in a 737-700 with 17 inch > width and = > 30 > inches of pitch).=20 > > FlexJet, NetJets, etc. are not an option for me.. I am not a > executive, = > I am > a worker that happens to commute with airplanes.=20 > > To me 4 hours of drive is the breaking point between flying/driving > decision. Even in some cases I personally fly an aircraft, than > driving. = > I > really hate driving because except people in Quebec no one knows the = > concept > of fast lane, and that drives me insane..=20 > > Gone are the days of $2000 r/t tickets. Both United and other > "majors" = > have > reduced their cost structures to a point where they are pretty = > efficient. > So, I think they are going to be here to stay.. Some of the traffic > will = > be > converted to coach only service, but United is really being smart > about = > it > by putting Econ Plus on Ted flights.=20 > > BAHA > Fan of UAL > > -----Original Message----- > From: The Airline List [mailto:AIRLINE@xxxxxxxxxxxxxxxxx] On Behalf > Of = > RWM > Sent: Saturday, August 20, 2005 4:34 AM > To: AIRLINE@xxxxxxxxxxxxxxxxx > Subject: Re: NW-DL poss bankruptcy > > True enough, and this in part explains the comparatively higher=20 > penetration of train travel in Europe.=20 > > Still, there is no reason for network carriers to have gouged > people=20 > through "discriminant pricing" than: > > 1./ they stumbled across the economic theory, valid enough, but > 2./ they never updated 1970's (pre-deregulation) market research > into=20 > price/demand elasticity, and > 3./ they thought their service was un-substitutable and "worth it"=20 > (keep that KoolAid coming), and > 4./ they thought (hoped) they could get away with it, relying > perhaps=20 > on PT Barnum's theory of markets "There's a sucker born every minute". > > Of course, PT Barnum was an optimist.=20 > > And then came Southwest, the coup de gr=E2ce. > > - Bob > > > > > > Bahadir Acuner wrote: > > >> Yes,=20 >> But flying is an essential part of the economy. Distances are much = >> > higher > >> than any other developed country and if you are like me going to = >> > clients, > >> doing projects, etc. etc. there is no alternative to it.=20 >> >> Currently there is a not single soul in the project that I am >> working = >> > on > >> that is local to Bay Area. One guy comes from NYC, the other one >> from = >> > PIT, > >> another one from LAX, me from SEA, PM is from East Coast, etc. >> etc.=20 >> >> Tell them to drive and you will lose them..=20 >> >> The price elasticity of these people are much different than the >> folks = >> > from > >> Baltimore going to see uncle Herb in Dallas.. :)=20 >> >> BAHA >> Fan of flying the friendly skies of UAL >> >> -----Original Message----- >> From: The Airline List [mailto:AIRLINE@xxxxxxxxxxxxxxxxx] On >> Behalf Of = >> > RWM > >> Sent: Friday, August 19, 2005 2:45 PM >> To: AIRLINE@xxxxxxxxxxxxxxxxx >> Subject: Re: NW-DL poss bankruptcy >> >> Gerard M Foley wrote: >> >> =20 >> >> >>> Don't know if I've said this before here. If so, I apologize. >>> >>> It is quite possible that air passenger transportation in the >>> U.S. may = >>> > > >>> go the way of all other forms of public transportation - subsidy >>> or = >>> > quit. > >>> >>> The automobile is a fierce competitor. Although its actual costs >>> are=20 >>> quite high, a major part of the cost is the initial purchase. >>> Once=20 >>> the car is bought, it is very difficult to convince the owner not >>> to=20 >>> use it. >>> >>> The result is that the public transportation facility, rail, bus,=20 >>> subway, and maybe airline too, finds that there is no fare point >>> at=20 >>> which costs can be recovered. Drop the fare and the added >>> volume=20 >>> costs more than the added income. Raise the fare and the reduced=20 >>> volume won't pay the fixed costs. The public always has two other=20 >>> options - drive or stay home. >>> >>> Gerry >>> =20 >>> >>> >> >> Excellent points, Gerry. Indeed, Southwest is fully cognizant >> that its >> pricing affects the modal split between private and public ground = >> > transport > >> and travel by air. This is one of the reasons they only >> reluctantly = >> > raise > >> fares by $2-4 each-way, when network carriers file for $20 increases. >> Fundamentally different views of price elasticity and as a result, >> approaches to pricing. >> >> - Bob Mann >> =20 >> =20 >> >> > > --=20 > R.W. Mann & Company, Inc. >> Airline Industry Analysis > Port Washington, NY 11050 >> tel 516-944-0900, fax -7280 > mailto:info@xxxxxxxxxx >> URL http://www.RWMann.com/ > > This e-mail is for the designated recipient only and may contain=20 > privileged or confidential information. If you have received it=20 > in error, please notify the above sender immediately then delete=20 > the original e-mail. 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