Will Anyone Compete With Southwest On Fees?
Southwest has done a great job staking out it’s territory in the market. They are the airline with no bag fees and no change fees. Actually, they really haven’t done such a great job explaining the no change fees part, as most people I talk with really don’t get it. They either aren’t aware of the policy, or they think that they can make changes without cost. The reality is that there are no change fees, but they must pay the going rate for the new ticket at the time of the change, or receive a credit if the new price is less.
That said, Southwest has been expanding slowly, but inexorably to nearly every market in the United States. Unlike a traditional hub and spoke carrier, Southwest doesn’t enter a market to fly to one or two hub locations. For example, over at tiny Birmingham Alabama, Southwest flies non-stop to Baltimore, Chicago-Midway, Dallas-Love, Houston-Hobby, Jacksonville, Las Vegas, Louisville, Nashville, New Orleans, Orlando, Phoenix, St. Louis, and Tampa. This represents more destinations than all other carriers at that airport combined.
When Will The their Competitors Compete on Fees?
Thus far, only JetBlue allows all passengers to check a bag for free. There is no other airline that allows fee free ticket changes. As I have shown, Delta’s CEO really doesn’t care about Southwest as their competition. There have been some rumors out there Frontier may reduce or eliminate some change fees when they redesign their web site.
At some point, something has to give. The majors can compete with Southwest based on their first class section and their international routes and partners. That still leaves the domestic, coach market to Southwest if someone is to look at fares, fees, and non-stop routes.
Supply and Demand Versus The Airline Industry
The fact that these airlines will not try to compete with Southwest is not very surprising. I have always felt that this is the one industry that doesn’t really get supply and demand. Ultimately something has to give. The breaking point will likely either be in Denver or Atlanta. In Denver, Frontier, United, and Southwest are in a standoff, with United staking out the business travel market. That leaves Frontier to fight Southwest over the leisure market.
In Atlanta, Southwest is poised to become the major competitor to Delta once they complete their acquisition of Airtran. I don’t see Delta or United cutting fees first, so I expect all eyes to be on Frontier to make the next move in the fee wars.
