Business History Books » Business Consultant » St. Southwest
St. Southwest
Question:
– Hide quoted text — Show quoted text ->: Icahn viewed TW merely as >: another company to plunder. In retrospect TW would have been better >: with Frank Lorenzo, who, despite his faults, is also a man who wants to >: run an airline, not an asset stripper per se. TWA was running from >: Lorenzo when it fell into the arms of Icahn. >eeeeeeek! you must be kidding!!! Frank Lorenzo is among the WORST of >the bunch! And he very much was an asset stripper. The Wall Street >Journal even chronicled his dastardly deeds which included shifting >assets of the airline to the parent corporation (e.g. planes, jetways, >other equipment) and leasing it back to the airline at a higher cost and >throwing debt onto the airline. This is what Frank Lorenzo did to >Continental and Eastern.
Yes, I know. It doesn’t change my position. I have seen that article and every other Wall St Journal article since the mid-eighties on Frank Lorenzo. I even have them saved somewhere. Frank Lorenzo was certainly not in it only for love. But the fact remains that he is an airline man to the bone, however much that may grate on some people’s sensibilities. He grew up under the flight path of LaGuardia and he as been in the airline business since he graduated from Harvard Business School. First as a consultant, then in control of Texas International, then Continental and we know the rest. He has always been a slick financial operator, and usually to his own benefit. But the difference is that he wanted to control the largest airline in the world, whereas Icahn doesn’t give a damn about whether he owns an airline or a chicken farm. RNA
Response:
>>By the way, did anyone notice the new Midway put all its routes on sale >this summer at $59 each way? I don’t know if it’s a desperate last >gasp >or clever marketing ploy, but they’re all on major business routes, and >I can imagine this will drain a few more dollars away from the >traditional >carriers. >Don’t you see?!! Midway could fill *all* its seats at these low fares >and still not affect American or United in any major way. It is simply >too small to be of any relevance. And in the process it will probably >attract leisure travellers, not the business travellers its service is >geared for. Unless it can spark a fare war (not terribly likely on such >lucrative routes as MDW-DFW,LGA,DCA,etc.) then this move only bleeds >precious cash.
Dude, don’t have a cow, man. Of course it’s a marginal effect. Still, it’s in the right direction. RNA
Response:
>Don’t you see?!! Midway could fill *all* its seats at these low fares >and still not affect American or United in any major way. It is simply >too small to be of any relevance. And in the process it will probably >attract leisure travellers, not the business travellers its service is >geared for. Unless it can spark a fare war (not terribly likely on such >lucrative routes as MDW-DFW,LGA,DCA,etc.) then this move only bleeds >precious cash.
But they have started a fare war. United is matching the fares for selected flights leaving at approximately the same time. It will hurt UA and AA.
Response:
>It just always seemed to me that HP wasn’t cheap compared even to TW, much >less WN….or, maybe HP has all but given up in STL…who knows?…I >don’t. 
To be honest, I don’t know if they’ve ever _TRIED_ in STL. They have three flights a day.. not an overwhelming presence, and were driven out of the STL- Columbus market about a year back by TWA and Southwest. Greg
Response:
: > : >I wonder why Southwest was able to avoid the destructive influences of Icahn : >and other evil corporate raiders who destroyed previously successful airlines : >like TWA and Northwest…. : It’s always been quite expensive to buy. And it has always had good : management, whereas many of the traditionals have been managed into the : ground, making them easy targets. : TWA and Northwest were bought out because they weren’t very agressively : managed. I would also make a clear distinction between the outfit that : bought NW and Icahn. The one that bought NW actually wants to grow an : airline, but had the stupidity to massively overpay for the airline, : which is why they’ve had so many problems. Icahn viewed TW merely as : another company to plunder. In retrospect TW would have been better : with Frank Lorenzo, who, despite his faults, is also a man who wants to : run an airline, not an asset stripper per se. TWA was running from : Lorenzo when it fell into the arms of Icahn. eeeeeeek! you must be kidding!!! Frank Lorenzo is among the WORST of the bunch! And he very much was an asset stripper. The Wall Street Journal even chronicled his dastardly deeds which included shifting assets of the airline to the parent corporation (e.g. planes, jetways, other equipment) and leasing it back to the airline at a higher cost and throwing debt onto the airline. This is what Frank Lorenzo did to Continental and Eastern.
Response:
: > : >But HP are no longer the dominant player in their old service area. : >Southwest is. And they are profitable because they left their creditors : >holding the costs for their previous expansion. I wish them well, but : >I also recognize they got the *&^% beaten out of them by WN, despite : >being a low-cost airline. : HP is "low-cost"? Depends on where you’re going, I guess. For example, : STL-LAS-SEA RT on HP was $415 last November, whereas STL-SEA RT on TW was : $384. Same fare classes and all that….redeye, Sat night stay, 14 day : advance purchase. Of course, TW was sold out at that fare class…. 
: It just always seemed to me that HP wasn’t cheap compared even to TW, much : less WN….or, maybe HP has all but given up in STL…who knows?…I : don’t. I fly my daughter back and forth to college, San Jose to Austin, TX. WN is never the cheapest, has the most stops and the worst connections. A big problem I have with WN is their lack of seat assignments. I usually get to the airport early for WN so I can get a good number. This is OK till you are on a connecting flight, as you may get to the second gate too late to get a decent number. Nothing is worse than peanuts in the middle seat of a crowded plane.
Response:
>But HP are no longer the dominant player in their old service area. >Southwest is. And they are profitable because they left their creditors >holding the costs for their previous expansion. I wish them well, but >I also recognize they got the *&^% beaten out of them by WN, despite >being a low-cost airline.
HP is "low-cost"? Depends on where you’re going, I guess. For example, STL-LAS-SEA RT on HP was $415 last November, whereas STL-SEA RT on TW was $384. Same fare classes and all that….redeye, Sat night stay, 14 day advance purchase. Of course, TW was sold out at that fare class…. It just always seemed to me that HP wasn’t cheap compared even to TW, much less WN….or, maybe HP has all but given up in STL…who knows?…I don’t. cpk
Response:
– Hide quoted text — Show quoted text ->One of the things that I think the old Midway did was try to run a >full-service type operation. I think the new Midway is trying to do >the same thing, and I don’t think it’s a good idea. A small outfit like >that is never going to successfully simulate being a big operation, so >it might as well make a virtue of its difference, and try to develop a >niche of its own. >I wouldn’t be so negative on a small upstart trying to out-service >the competition. Midwest Express is an example of an upstart which >grabbed a niche in the premium flight services area, and everyone >in MKE loves them. Kiwi is also another one that has grabbed market >share by providing good service. (Then again, look who they were up >against–CO at EWR. Yech. Really easy to outservice them.) >Or am I misinterpreting what you mean by developing a niche of its >own? (I assumed you meant low-frills, WN-style.)
A niche is a niche—whether it’s Midwest style or Southwest style. In the case of Southwest, the niche seems to be taking over the market 
Yeah: Midwest has done a great job of developing a niche of its own by providing premium service levels at a the usual fare level (or close to it). Old Midway’s problem was that they gave pretty much the same service level as anyone else, but without the clout that a big airline had. RNA
Response:
>>Southwest has already made mincemeat out of "low-cost" competitors, the >biggest casualty being America West. America West actually had operating >costs lower than WN at one point, but after debt was factored in, WN kicked >butt. Plus, of course, Southwest’s management is clearly stronger than most >new entrants. >I wonder why Southwest was able to avoid the destructive influences of Icahn >and other evil corporate raiders who destroyed previously successful airlines >like TWA and Northwest….
It’s always been quite expensive to buy. And it has always had good management, whereas many of the traditionals have been managed into the ground, making them easy targets. TWA and Northwest were bought out because they weren’t very agressively managed. I would also make a clear distinction between the outfit that bought NW and Icahn. The one that bought NW actually wants to grow an airline, but had the stupidity to massively overpay for the airline, which is why they’ve had so many problems. Icahn viewed TW merely as another company to plunder. In retrospect TW would have been better with Frank Lorenzo, who, despite his faults, is also a man who wants to run an airline, not an asset stripper per se. TWA was running from Lorenzo when it fell into the arms of Icahn. >This is why these airlines bought the big one…they were stripped, >demoralized, loaded with massive debt, and most important, they had their >competent managers replaced with incompetent ones.
That’s not clear. NW hadn’t had very impressive performance before its buyout either. Some of the new management’s moves have been quite innovative, like the growing association with KLM. Everyone else is playing that game now, but they got into it first. Their root mistake was paying too much. RNA
Response:
>One of the things that I think the old Midway did was try to run a >full-service type operation. I think the new Midway is trying to do >the same thing, and I don’t think it’s a good idea. A small outfit like >that is never going to successfully simulate being a big operation, so >it might as well make a virtue of its difference, and try to develop a >niche of its own.
I wouldn’t be so negative on a small upstart trying to out-service the competition. Midwest Express is an example of an upstart which grabbed a niche in the premium flight services area, and everyone in MKE loves them. Kiwi is also another one that has grabbed market share by providing good service. (Then again, look who they were up against–CO at EWR. Yech. Really easy to outservice them.) Or am I misinterpreting what you mean by developing a niche of its own? (I assumed you meant low-frills, WN-style.)
Response:
>Southwest has already made mincemeat out of "low-cost" competitors, the >biggest casualty being America West. America West actually had operating >costs lower than WN at one point, but after debt was factored in, WN kicked >butt. Plus, of course, Southwest’s management is clearly stronger than most >new entrants.
I wonder why Southwest was able to avoid the destructive influences of Icahn and other evil corporate raiders who destroyed previously successful airlines like TWA and Northwest…. This is why these airlines bought the big one…they were stripped, demoralized, loaded with massive debt, and most important, they had their competent managers replaced with incompetent ones. Glad to see that WN escaped this… cpk
Response:
>By the way, did anyone notice the new Midway put all its routes on sale >this summer at $59 each way? I don’t know if it’s a desperate last gasp >or clever marketing ploy, but they’re all on major business routes, and >I can imagine this will drain a few more dollars away from the traditional >carriers.
Don’t you see?!! Midway could fill *all* its seats at these low fares and still not affect American or United in any major way. It is simply too small to be of any relevance. And in the process it will probably attract leisure travellers, not the business travellers its service is geared for. Unless it can spark a fare war (not terribly likely on such lucrative routes as MDW-DFW,LGA,DCA,etc.) then this move only bleeds precious cash. Toby
Response:
>>By the way, did anyone notice the new Midway put all its routes on sale >this summer at $59 each way? I don’t know if it’s a desperate last gasp >or clever marketing ploy, but they’re all on major business routes, and >I can imagine this will drain a few more dollars away from the traditional >carriers. Good. > Yes, but it is only for a week. Interesting gimmick… lower fares to >$59 for a week and advertise that they are no longer serving peanuts because >of fares like that, and then still not serve them when the fares go back up. >Greg
But although they may no longer serve peanuts, I think they still serve at least a snack on each of their flights. One of the things that I think the old Midway did was try to run a full-service type operation. I think the new Midway is trying to do the same thing, and I don’t think it’s a good idea. A small outfit like that is never going to successfully simulate being a big operation, so it might as well make a virtue of its difference, and try to develop a niche of its own. RNA
Response:
>By the way, did anyone notice the new Midway put all its routes on sale >this summer at $59 each way? I don’t know if it’s a desperate last gasp >or clever marketing ploy, but they’re all on major business routes, and >I can imagine this will drain a few more dollars away from the traditional >carriers. Good.
Yes, but it is only for a week. Interesting gimmick… lower fares to $59 for a week and advertise that they are no longer serving peanuts because of fares like that, and then still not serve them when the fares go back up. Greg
Response:
>But although they may no longer serve peanuts, I think they still serve >at least a snack on each of their flights. >One of the things that I think the old Midway did was try to run a >full-service type operation. I think the new Midway is trying to do >the same thing, and I don’t think it’s a good idea. A small outfit like >that is never going to successfully simulate being a big operation, so >it might as well make a virtue of its difference, and try to develop a >niche of its own.
Providing full service flights has become somewhat of a niche these days. Certainly, YX has been fairly successful with it. Flying a full service niche at $59 fares, however, is not a way to make money. Flying a full service niche in a c high cost market is — if you can draw enough business travellers at full Y fares through your full service ptich. BEst,
Response:
Netters: I knew I’d be flamed for my recent post trying to temper the Southwest fever. My expectations were exceeded. These various comments and responses are directed at everybody and do not address a single letter. 1) You expect Southwest to jump into Chicago-LAX, charge $79 and kill UA and AA? Wake up from your stupor, folks. Southwest curently serves the Chicago-LA Basin market with multi-stop flights. Here’s the fares I was just quoted by an agent $299 ONE WAY no restrictions $179 ONE WAY 14 day advance purchase $149 BEST ONE WAY FARE seriously limited seating Now why would Southwest expend resoures to fly Chicago-LA nonstop (at least 2 or 3 planes full-time to provide reasonably frequent service) and charge $79, a fare cut of 47%-73%? Just to piss off United? Foolishness. Southwest can’t make money charging lunch-money fares, especially not on a 1750 mile flight. And don’t give me the business about "friends fly free", buisness travelers often fly alone or on non-identical itineraries necessary for that deal. Plus F.F.F. does not apply to all of the cheapest fares. (BTW…Midwest Expresss often meets or even beats that Best WN fare of 149 each way on the 1750 mile MKE-LAX route, they offer 1st class service, and have made money 7 years in a row.) 2) Like I said, this net is *not* representative of the larger traveling public, especially *most* business travelers. I travel on business too but I’d never assume that everyone is like me. Just because your uncle’s neighbor once flew from Philly to Phoenix via Kansas City and only got peanuts, don’t assume that no one offers food on long flights and don’t assume no one wants it. That’s a pretty sad attempt at logic, I’m afraid. The next time you are in an airport on a weekday, count the number of travelers in likely business attire and see if *anyone* is carrying a brown lunch bag. And don’t tell me you yourself do it or another guy in your office. I’m talking about the majority of business travelers. 3) Some companies do have policies requiring taking the lowest fare, but such policies are easily and often circumvented. If you read Business Travel News you’ve seen evidence of this. 4) A 737 is not comfortable when it is anywhere near full, including the consistant 90% load factors someone reported from LAX to PHX. No doubt about it. And if you have doubts, check out Consumer Reports Travel Letter, an independent source of seating comfort information. Southwest consitantly ranks very poorly in their reports. You can’t dispute the fact that any standard coach 737 is not a pleasant run when it is perhaps 2/3 or more full. At least if you are more than 5′6" or 135 pounds. 5) Of course Southwest is not new and has gotten press over the years. But if you follow USAToday, Wall St Journal, Forbes, Fortune, Business Week, etc. on a regular basis like I do, you can’t dispute that Southwest has become a media darling in the last several months, perhaps a year or so. If you need proof, compare the number of listings from the Reader’s Guide or simmilar sources, especially when the next one comes out. 6) How can you say that Southwest does not generate its own traffic to a significant extent? When markets like Chicago-Baltimore mushroom, doubling or tripling total traffic, where do you think these passengers come from? If a pre Southwest route has 70,000 yearly pax and after Southwest there are 200,000 per year, obviously these 130,000 had to come from somewhere! And in many markets *other than the California market* the entry of Southwest has *not* caused every other airline in the market to quit. Northwest, United and American still fly between Chicago and Detroit, and you can bet they don’t fly empty planes (as they would if everyone defected for Southwest.) 7) Even with the possiblity of breakneck expansion it will be a long time before Southwest serves most of the top 100 airports. So the problem of passengers not being able to use Southwest all the time will still persist. Now I know if you life in Oakland it seems WN goes everywhere. But when will you be able to get to Raleigh or Des Moines or Fresno or Wichita or Shreveport or Norfolk on Southwest? People do travel to these places too. 
Even if WN does penetrate the country in the next 5-10 years, they will never be able to turn a profit with their product in places like Evansville or Grand Junction or Laredo or Green Bay. There’s just not enough traffic going any one place to support frequent 737 service w/o the hub and spoke system. And Southwest refuses to interline and has no interest in an in-house commuter operation. Are we willing to accept the fact that therre will be no airline service on the entire great plains between Omaha, Denver, Spokane and Minneapolis? Southwest as it is today could not make money at any airport in that whole area. 9) No one has addressed the problem of frequent flier program loyalty and attractive free-trip destinations. I’m afraid that I don’t recall the exact figures, but American calculated that the top 2% of their buisness generated something like 20-25% of their total passengers miles. These are the 100,000 mile plus travelers, and they will not accept Baltimore as the top free-trip destination. These travelers are *fiercely* loyal to the 1-3 airline mile programs they use. And 20-25% of the #2 airline’s total revenue miles is a tremendous market that Southwest cannot tap under the current situation. (If anyone has the exact figures I’d appreciate them.) C’mon you guys (non-gender specific). It’s fun to dream. It’s great when your favorite *anything* is doing wonderfully as Southwest is. They are a great airline…I don’t hate them in the least even though you probably all think I do. But I think we will need a Southwest specialty board pretty soon because it is getting a little windy in this net. Recognize the assest *and* the liabilities, please. With an occasional check of reality there might just be some interesting, insightful dialog on this net and not just a constant blitz of Southwest propoganda. After all, I try to restrain myself about Midwest Express (usually). Okay friends, flame away. Dale Milwaukee BTW…that last post I forgot to close with my name. It, as this one, is mine and not written my Gregory D Margrett. Thanks!
Response:
I was feeling all alone on this net until now. I’ve been trying to put into words what I thought, but never like that. So, DITTO!!!!!! Boy, you’re going to get slammed now on this net now by the Southwest cheerleading team. I don’t think this computer can hold that much memory. BTW- while everybody writes about this during the next two months. I’ll be flying to Mexico City, San Juan, P.R. and Washington Dulles during the next three weeks, and you know what?, Southwest does not fly to any of these airports(which are major buisiness centers, except Dulles.)……
Response:
>I was feeling all alone on this net until now. I’ve been trying to put >into words what I thought, but never like that. So, DITTO!!!!!! >Boy, you’re going to get slammed now on this net now by the Southwest >cheerleading team. I don’t think this computer can hold that much memory. >BTW- while everybody writes about this during the next two months. I’ll be >flying to Mexico City, San Juan, P.R. and Washington Dulles during the next >three weeks, and you know what?, Southwest does not fly to any of these >airports(which are major buisiness centers, except Dulles.)……
You’re kidding! Really?! Far freaking out. This is a revelation to me, not to mention all the rest of us. Thank god you have brought enlightenment. I can now die a happy man. A clue for those who desperately need it: Southwest has never pretended, nor have I, that it is all things to all people. It has never pretended, nor has anyone else here, that it is (a) a commuter carrier (b) a long range carrier (c) an international carrier. What it is is fast, convenient, cheap and _profitable_ short range service. This is a combination that has so far eluded the traditional airlines. Having failed to beat Southwest, they are now trying to join it, from Continental, to USAir, to United. It’s the most interesting phenomena in the industry today. Now kindly move along, you’re blocking traffic. RNA
Response:
- Hide quoted text — Show quoted text – >Path: >hobbes.cc.uga.edu!news-feed-1.peachnet.edu!gatech!howland.reston.ans.net!a gate >!headwall.Stanford.EDU!rna >Newsgroups: rec.travel.air >Organization: Stanford University, CA 94305, USA >Lines: 33 >Distribution: na >NNTP-Posting-Host: sphinx.stanford.edu >I was feeling all alone on this net until now. I’ve been trying to put >into words what I thought, but never like that. So, DITTO!!!!!! >Boy, you’re going to get slammed now on this net now by the Southwest >cheerleading team. I don’t think this computer can hold that much memory. >BTW- while everybody writes about this during the next two months. I’ll be >flying to Mexico City, San Juan, P.R. and Washington Dulles during the next >three weeks, and you know what?, Southwest does not fly to any of these >airports(which are major buisiness centers, except Dulles.)…… >You’re kidding! Really?! Far freaking out. This is a revelation to >me, not to mention all the rest of us. Thank god you have brought >enlightenment. I can now die a happy man. >A clue for those who desperately need it: Southwest has never pretended, >nor have I, that it is all things to all people. It has never pretended, >nor has anyone else here, that it is (a) a commuter carrier (b) a long >range carrier (c) an international carrier. >What it is is fast, convenient, cheap and _profitable_ short range service. >This is a combination that has so far eluded the traditional airlines. >Having failed to beat Southwest, they are now trying to join it, from >Continental, to USAir, to United. It’s the most interesting phenomena >in the industry today. >Now kindly move along, you’re blocking traffic. >RNA
OK, OK, no need to get sensitive about this. It just seems to me that sometimes when the Southwest subject arises, the discussions can get a little biased. No offense intended. To me, these discussions are enlightning and fun. Apologies, -W PS- I admit the "Mexico City/San Juan service" comment was uncalled for.
Response:
>4) A 737 is not comfortable when it is anywhere near full, including the >consistant 90% load factors someone reported from LAX to PHX. >And if you have doubts, check out Consumer Reports Travel Letter, >an independent source of seating comfort information. Southwest consitantly >ranks very poorly in their reports. You can’t dispute the fact that any >standard coach 737 is not a pleasant run when it is perhaps 2/3 or more >full.
But, is any standard coach domestic aircraft a "pleasant run" or even "comfortable" when the aircraft is >2/3 full? I really don’t think so. The exceptions (in my book) are TWA with Comfort Class (which really does make a difference) and airlines like Midwest Express. >8) Even if WN does penetrate the country in the next 5-10 years, they will >never be able to turn a profit with their product in places like Evansville >or Grand Junction or Laredo or Green Bay.
That’s exactly what was said before Southwest started serving Harlingen Texas in the early 1970s. Braniff and Texas Intl. told the Texas Aviation Board (or whatever it was called — the agency which regulated intrastate air traffic back then). They claimed there was no need for Southwest to serve those cities, that there was already more than enough traffic to meet demand. Well, when they started flying there, passenger count went up something like 500% in one year. OK, Evansville may not be able to support 63 flights per day, but I could see smaller cities getting Southwest service in a somewhat limited fashion in the future. Example: Spokane, WA starting next month. Contrary to what you think, they believe they can make money there as Morris has. Also, regarding frequent flier programs… I’ll admit that the super frequent fliers probably do remain more loyal to airlines like American and United, but I would venture to guess that a greater percentage of passengers who travel on Southwest remain loyal to Southwest as opposed to with other airlines. Southwest is not trying to win away the top 1-2% of other airlines customers… they couldn’t since the top 1-2% probably do a lot of overseas travel. But, many, many people are enchanted with the Southwest way of business. Greg Greg
Response:
> But, is any standard coach domestic aircraft a "pleasant run" or even >"comfortable" when the aircraft is >2/3 full? I really don’t think so. The >exceptions (in my book) are TWA with Comfort Class (which really does make >a difference) and airlines like Midwest Express.
Why would TWA Comfort Class be so good? The only thing that changes with a full flight is the seat next to you is filled instead of empty. The seat width is more important in that case, and Comfort Class doesn’t improve that at all over the other airlines. Midwest Express would be comfortable, though. > Also, regarding frequent flier programs… I’ll admit that the super >frequent fliers probably do remain more loyal to airlines like American and >United, but I would venture to guess that a greater percentage of passengers >who travel on Southwest remain loyal to Southwest as opposed to with other >airlines. Southwest is not trying to win away the top 1-2% of other airlines >customers… they couldn’t since the top 1-2% probably do a lot of overseas >travel. But, many, many people are enchanted with the Southwest way of >business.
We’re not talking about the top 1-2% of frequent flyers. Lots of business travelers need to fly to one city one week, and another city the next. When Southwest only serves some markets, they can’t win loyalty of FF’s who would have to split their mileage between airlines. However, the customers who WN does grab are the FF’s who take a regular trip between the same cities, which CAN take away lots of FF’s, like someone traveling between branch offices. The other big hurdle FF programs create is the fact that many elite programs offer easy upgrades to first. Given a choice between WN coach and DL first, well, goodbye peanuts and soda pop. The problem WN has in that department is that other carriers are starting to sprout up all over the place. ValuJet is taking a hold in the South, so WN will not be able to expand there, or at least it would be very risky due to intense competition. The same hold true for other areas. I’m sure WN is not looking to fight with CO Peanuts. Of course, WN may be able to merge their way into markets just like Delta has done in the past, but not everyone will be willing to sell out. For example, ValuJet uses DC9’s. How will that fit in to WN’s maintenance? Kiwi uses B727’s. Ad nauseum.
Response:
>Why would TWA Comfort Class be so good? The only thing that changes >with a full flight is the seat next to you is filled instead of empty. >The seat width is more important in that case, and Comfort Class doesn’t >improve that at all over the other airlines. Midwest Express would be >comfortable, though.
It is an improvement in one of the two directions… front to back. I’ll admit that it doesn’t help side to side, BUT it is nice in my book to be able to cross your legs if you want.
Response:
>The problem WN has in that department is that other carriers are starting >to sprout up all over the place. ValuJet is taking a hold in the South, >so WN will not be able to expand there, or at least it would be very >risky due to intense competition. The same hold true for other areas. >I’m sure WN is not looking to fight with CO Peanuts. Of course, WN >may be able to merge their way into markets just like Delta has done >in the past, but not everyone will be willing to sell out. For example, >ValuJet uses DC9’s. How will that fit in to WN’s maintenance? Kiwi >uses B727’s. Ad nauseum.
I don’t see this as a problem yet. The long-term viability of these new outfits is unresolved to say the least. Southwest has a number of advantages over them, among which are rock solid finances, a loyal highly productive workforce, and newer, quieter, more reliable airplanes. Take Valujet: it flies old DC-9-30s, it treats its workforce in a way that is bizarre at best, and its finances aren’t on par with Southwest’s, to say the least. [Valujet hires non-pilots on a temporary basis, and only after many months will you be promoted to permanent worker status. The airline is so young that most of its non-pilots are still temporary, and so not receiving anything in the way of benefits and so forth. Compare with Southwest, which gets the same level of productivity out of carefully selected and highly motivated employees---I'd rather work for Southwest, thank you...] Southwest has already made mincemeat out of "low-cost" competitors, the biggest casualty being America West. America West actually had operating costs lower than WN at one point, but after debt was factored in, WN kicked butt. Plus, of course, Southwest’s management is clearly stronger than most new entrants. I think it’s premature to cast any of these outfits as major problems for Southwest. What they really are is additional, smaller problems for the traditional carriers. Valujet annoys Delta at Atlanta, while it faces Morris (now Southwest) at Salt Lake City, and Southwest at Dallas, and America West’s Columbus minihub worries Cincinatti. By the way, did anyone notice the new Midway put all its routes on sale this summer at $59 each way? I don’t know if it’s a desperate last gasp or clever marketing ploy, but they’re all on major business routes, and I can imagine this will drain a few more dollars away from the traditional carriers. Good. RNA