Southwest Introduces Transfarency to Try to Convince You It Has Low Fares

Southwest

Southwest had a media day last week, but since I was in Denver I wasn’t able to make it. The big announcement from the day? The airline is rolling out a big ad campaign centered around “Transfarency.” This appears to be a campaign to convince people that Southwest still has low fares. And to do that, the airline is trying to get people to ignore the total cost to fly and instead just focus on fees. Because when it comes to fees, Southwest is always the lowest. When it comes to the total cost to fly? Not so much.

If your first guess was that Transfarency has something to do with special fares for transgender people, you’re wrong. This is actually a mash-up of “transparency” and “fare.” You can probably guess where this is going. Southwest has been beaten up by many other airlines, because it continues to bundle two checked bags and change fees into its fares. Spirit, of course, is the most vocal about this with its Unbundle & Unbundle campaign. Southwest is fighting back, though these competing campaigns are just going to confuse people more.

Who’s right? Well that all depends. If you buy a ticket on Southwest, you’re paying for two checked bags and a change as part of your ticket. So if you plan on checking two bags and changing your ticket, Southwest will most likely be the cheaper option. After all, since everyone pays for those services, the people who don’t use them end up subsidizing the people who do.

Of course, if you have no checked bags and you won’t need to change your ticket, then it’s highly likely that it will be cheaper to fly another airline. Those airlines make people who use those services pay for them independently. So if you don’t need them, you aren’t subsidizing.

But Southwest has had such an incredibly strong brand as THE low fare airline for so many years, that it doesn’t need to always be the cheapest. As long as people think Southwest is the cheapest, that’s what matters. And that’s what this Transfarency campaign is all about.

If you go to Transfarency.com, you’ll see things like this, a definition for the word:

Philosophy created by Southwest Airlines in which Customers are treated honestly and fairly, and low fares actually stay low — no unexpected bag fees, change fees, or hidden fees. Created and practiced exclusively by Southwest Airlines.

I think it’s hard to argue that bag and change fees are “unexpected” these days. Maybe were this a campaign from 2009…. But what Southwest is trying to do is distract you from paying attention to the actual total cost of your ticket and instead trying to make you focus just on the fees. It gives examples on the website showing how Spirit can charge you up to $294 in fees while Southwest has none. But the reality is that you probably aren’t paying that much in fees, and you’re starting off a much lower base fare. Even if the fees are higher than Southwest’s (as they nearly always are), the total cost often won’t be.

Incredibly, nothing illustrates this better than a chart Southwest put into the media day presentation (via AirwaysNews) trying to show just how low its fares are.

Southwest Fares Aren't Low

What Southwest is trying to show here is that its fares remain below the industry fare level in 2000, but that’s not what I see. What I see is that in 2000, Southwest’s average fare was 43 percent less than industry average. Fast forward to today, and the fare gap has shrunk dramatically. Now its average fare is only 13 percent less.

I know, you’re going to argue that’s because of fees, right? But when you include ancillary revenue, the gap is less, yes, but Southwest’s advantage still drops from 45 percent to 22 percent. The point here? Southwest’s fares have just gone up a lot more than those of everyone else.

This means that if consumers actually do compare each option as apples to apples, then Southwest is less likely to have the lowest fare than it once was. So Southwest instead needs to keep hammering into travelers that it is the low fare airline, and it needs to make it harder to compare to others. The airline still won’t participate in any third-party booking sites. That used to be a cost-reduction strategy. Now it’s a revenue-protection strategy; making it harder to see what others are offering.

In that sense, this is a great campaign. It will probably help to get people to believe that Southwest is always cheap. But what consumers should really do is compare their options and pick the one that suits their needs best. Chances are less likely that’ll be Southwest in 2015 than they were in 2000.

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43 comments on “Southwest Introduces Transfarency to Try to Convince You It Has Low Fares

  1. The single fact of the credit card / companion pass combo makes them by far the cheapest airline for my own needs.

  2. Until their “transfarency” fare comes bundled with a seat assignment, I’ll continue booking through Kayak and consciously ignoring Southwest. It’s actually kind of tragic because I flew Southwest with a group (paid for by someone else, so I didn’t really have a choice) last year and thought the in-flight product was pretty good. Plus, as Cranky states, Southwest simply isn’t the cheapest between the two cities I fly the most.

  3. For an airline that shuns the hub model, it acts very much like one when it is the only carrier on a given route. Last year I tried to book BWI-Nashville on WN and couldn’t find anything cheaper than $900 round trip. I can remember when WN first landed at BWI in 1993 and advertised $39 and $69 everyday fares to Cleveland and Midway. They are a far cry from that airline now. I think WN is being squeezed on both ends – kind of like middle market department stores that went out of business. It has elements of the LCC model ( unassigned seating ) and the legacies (higher fares and looking more more like a hub airline). I really think the airline is at an inflection point in it’s history, whether it realizes it or not.

    1. they definitely realize it. There is little to no low hanging fruit in the domestic market to grow into (hence why they are now at LGA, DCA, and bought AirTran for ATL). They are expanding internationally. They have labor cost and work rule challenges that make them less competitive on the cost side as well as no longer having a big fuel advantage. On the consumer side, they are in that ugly middle and have smaller distribution. Interesting times indeed!

  4. Interesting analysis. Admittedly, I haven’t seen any of Southwest’s media day presentation, and thus have no background on what they are trying to achieve with the campaign. My consumer view, however, is that the campaign is not about low fares, but simply about highlighting that the other carriers have lots of fees (often not “transparent”) that increase the cost of travel. To me, what Southwest is playing here is not low cost, but honesty–i.e., the price you see on our website is what you’ll to travel; the price you see with other airlines is far less than what you’ll actually pay to travel. The name of the campaign seems to back that up–it’s not a “low cost” name but one that plays on transparency (or the lack thereof with other carriers). I’m no Southwest fan, but I think it’s pretty effective.

  5. When I lived in Houston Southwest was bar-none the low priced leader. If you wanted a cheap flight to anywhere in TX or neighboring states they were it. Years later when they came to MSP I remembered how they used to be and was excited to get some cheap leisure fares. Not so fast, they were par or more than DL, or SY. Granted, their network is now such that I could consider them for business travel but the prices match and no chance of getting even a domestic F seat. Usually work puts me somewhere where I end up flying them once or twice a year but I don’t have any loyalty to them.

  6. Cranky did a great job of addressing this. Living in Chicago, we have the rare luxury of choosing from three major airlines with a significant presence: AA, UA, and WN. In comparing rates to most of the domestic destinations where I fly, AA and UA are less expensive at least 75% of the time. If you carry one of their credit cards and qualify for free bags, there’s absolutely no reason to look at WN. The time I chose WN, however, is for those trips when there’s a decent chance 1) I might need to cancel the flight or 2) make any changes. In those circumstances I will gladly pay the extra $30-$50 for the flexibility as this is far less than the change fees imposed by AA or UA. I think MarylandDavid is spot on – WN is being pressed by both sides. Spirit et al are the true “low cost” carriers. And, despite changes to the legacy 3 mileage programs, I still prefer to earn miles that take me to Europe or Asia as opposed to visiting Grandma in Florida.

  7. The WN vs NK comparison isn’t accurate. Not everyone is going to check two bags, pick a seat, and bring a carry on – and the carry on isn’t $100 if you prepay for it. It is extremely misleading.

  8. Some people still like to check bags these days. So why fly another airline and pay over $50 to do so when I can fly southwest and do that for free. It’s just a matter of opinion but I think there are a lot of “southwest haters” out there and I don’t think it is justified.

    1. Vickie – Because it’s not doing it for “free.” The point is you should be comparing all options. You might find another airline has a fare that’s $100 less than Southwest. In that case, pay $50 for the bags and you still have $50 more in your pocket. What matters is the total cost, not the cost of fees alone.

      1. Cranky, is it an apples to apples comparison? Southwest does a lot of short stage-length flights and I wonder if that makes their average fare lower simply because they have a higher % of shorter (and therefore generally cheaper) flights. Perhaps the RASM comparison would be more interesting for us data dorks?

        1. noahkimmel – Are you talking in Vickie’s case? I assume you mean overall, but this shows as a reply to Vickie’s thread. Anyway, if you’re talking overall, it’s hard to know since this is just a slide that Southwest put out there and I know nothing about the underlying data. I don’t have time to pull RASM this week, but it could show something a bit different.
          Directionally, however, I think this is right.

  9. I live in San Francisco, fly out of OAK as much as SFO and am brand loyal to WN. That being said, I compare prices, and my wallet chooses as much as my loyalty. From OAK / SFO Southwest is always the cheapest option about 6 weeks out. It always beats United on one way ticket prices. It always beats Virgin America on the schedule. (VA has some weird arrival/departure times). Getting into the 4 week or less booking, NK can be cheaper, but every time I compare, and add in the cost of seat selection NK and WN are within a couple dollars of each other. Same week/same day bookings US Air (now AA) are often a couple hundred dollars cheaper. Don’t even get me started on the cost of non-stop UA flights from SFO to IAH. Which are usually pretty close to WN cost for OAK-HOU

    But all of the above assumes a few things. First that I am willing to fly OAK instead of SFO. I am 40 min from OAK, 15 from SFO. Second that I am willing to layover instead of non-stop ( SFO-DAL-LGA – really?) Is 2 hours on a 737 worth saving $200?
    With NK, you have to pay for a seat selection, with WN you just have to be able to check in at T24.

    The biggest win for Southwest is that I can rebook my ticket, any time, at a LOWER PRICE. I booked a OAK -SEA flight for $127, pretty good deal. I rebooked it a week later, same flight, for $101. Saved myself $26. Do that on any other airline.

  10. Cranky,

    Thanks for pointing out the facts for this silly campaign. I was wondering when you would also bring facts to bear on the ridiculous presentation they did both at media day and the Boyd conference about the “Southwest Effect” being “alive and well.” Some of the info there was misleading at best.

    1. Ted – Well, the effect isn’t the Southwest Effect anymore. It’s the effect of anyone who brings lower fares to a market. Lower fares = stimulation. Sure, Southwest was the standard-bearer in that regard for many years, but you just don’t see it as much anymore.

      1. Check fares to Belize now, compared to a year ago before WN served them. When I booked a trip SAT-BZE for this April last fall, there were no fares under $850 so I happily paid 35K UA miles. Now, since WN started service, they’re $300-$520 on legacy carriers. The Southwest Effect is alive and well, there just aren’t many places left in the U.S. for it to show up.

  11. I keep trying to find fares lower than WN, but I haven’t found them except the occasional 14-hour trip compared to WN’s 4.5 trip.

  12. I get tired of the argument that when the other airlines started charging for bags, it was such a good thing since if you didn’t check one, you weren’t paying for it. I don’t recall the fares on UA/DL/US/AA, etc. dropping by $100 when they made the change. It doesn’t seem like they stopped charging us for those bags in the airfares, rather just kept the airfares the same and started charging for bags on top of that.

    I’ll go through the trouble of checking WN’s site an the others for comparison. It takes all of 3 minutes in most cases. Being MSP based, DL seems to always be the most expensive, while UA/WN seem to be cheaper (connecting in most cases) and I ignore Spirit because of all of their silliness in bundling.

      1. That guy in that article doesn’t know how dynamic pricing works nor does he know how airline inventory works. Inventory management will show certain fare buckets, once those are all sold, next higher fare bucket will open up and price will go up. Now the only way to see if it was bait and switch would have been to go back to the start page and try to book again. Of the lower fare was shown again, then yes it would have been bait and switch and the agent’s excuse would not stand ground. But if doing the search for fare again had shown the higher fare, it would be clear that the higher fare was the only one actually available. All airlines’ systems are like that, they all work the same way. After all, it always says in booking conditions, fares are not guaranteed until ticketed. It’s the same thing as if you call up an airline and ask about a fare and it is quoted to you at 200 bucks but you want to pay cash so you go to the airport and by the time you get there the 200 dollars fare are sold out and only the next higher fare at 300 is available. But I guess that guy would call that bait and switch as well….

    1. I’m with “CP” above, this is about honesty and WN should be praised considering airlines are not taxed on the nickel-and-dime fees. The government should fix this by making tales based on a percentage on the all-in fare including the nuisance fees. And I agree that airlines didn’t cut fares, they just added fees.

      1. I doubt taxing on an all-in basis would pass legal muster. If anything we’ll see fees get taxed on their own, although I could see airlines keeping the nice round numbers of the fees.. (Or maybe not)

    2. Late to the party on this thread but the graph used by Southwest (shown above) seems to disprove your assertion since average base fares for the industry (excluding ancillary fees) have increased much less than Southwest’s bundled fares in the past 15 years. In other words, unbundling has allowed the big 3 to increase base fares less compared to Southwest.

  13. Brett – Without touching on any of your other points, an analysis taking at face value Southewest’s average fare chart comparing 2000 to 2015 might be overlooking one thing: while the slide notes that the average fare in each year is adjusted to Southwest’s average length of haul (a standard practice for airlines when doing this kind of analysis), one assumes that 2000’s numbers are adjusted to 2000’s average length of haul, and that 2015’s are adjusted to 2015’s. If so, in order to understand what has really happened in the last 15 years, one must account for any change in Southwest’s average length of haul versus the industry.

    In 2000, Southwest’s average length of haul was 663 miles. By June 30, 2015, it was 1002 miles, an increase of 51%. Perhaps that accounts for the lion’s share of the increase in average passenger revenue? Sure enough, if one looks at Passenger Revenue Yield Per RPM, since 2000 Southwest’s has increased 21%, or about the same as the the “Industry” fare change in the slide above. So, assuming the underlying data are correct, it seems reasonable to believe that practically the entire reduction in Southwest’s average fare advantage is because of its increased relative average length of haul.

    Now, it’s inarguable that Southwest’s fares are not as stimulative in 2015 as they were in 2000; just as it’s inarguable that the industry environment in 2015 bears little resemblance to 2000’s. Southwest has reduced short haul flying, and increased fares in those markets, significantly, while reallocating that capacity to longer haul markets where they could bring some sort of price advantage to the customer. Given the post-2007 environment, what alternative, really, did Southwest have?

    Disclaimer – I am a former SWA Employee.

    1. Edward – Unfortunately I have no idea where these numbers came from, so I don’t know how they’ve looked at this. But I think it’s fairly easy to see that in general Southwest fares are much closer to those in the rest of the industry than they were. The exact number? That’s certainly something up for debate.

  14. My husband and I fly a lot between Austin and Seattle and Austin and Las Vegas. Two years ago, Alaska had the best deal by far between Austin and Seattle. Not so such today. Although Southwest is not cheap (we used to fly them between Austin and Dallas all the time in the 70’s and 80’s), their “Wanna Get Away” fare is almost always a lot cheaper than the other options although I usually fly Alaska to Seattle anyway because it is a long flight and I don’t want to have to fight with the people who get on early and then save two to five seats for those they are flying with who did not pay to board earlier. Not worth my time or effort. Additionally, Southwest did away with the trays for the bulkhead seats so going to Seattle is a long way to hold stuff the whole way, like my Kindle or a drink. Heaven forbid I should like to read and having something to drink at the same time.

  15. I will agree with some of the others here that have pointed out that the ability to drive that fare price down if the flight goes on sale is really nice. Given you can only use the saving for more WN flying. But seriously that has not been an issue for me. I fly them about 4-5 times a year and have usually booked and then gotten the fare down about $30 per direction at some point when they run one of their sales. But you at least don’t have to worry about not hitting the best sale which I honestly feel like you do with many other carriers. Besides some of the flights like MSP-MDW which you can get for $49 all the time are unbeatable.

    I have been very fortunate to not have booked elsewhere months in advance when I was able to change the reservation to a different return trip and it being lower instead of higher.

  16. I am very brand loyal to Southwest. The service is usually better than the US3. The most important reason I am loyal to Southwest is Rapid Rewards. I have the Southwest credit card and have not paid to fly Southwest in years. If you can play your planning right the spend required for a reward ticket is lower than the US3. On the rare occasion I have had to book a last minute ticket and have a low points balance the situation is more complicated. Delta often has some incredibly cheap walk up tickets if you are willing to connect. In my experience Spirit at the last minute is not price competitive when the fees are added. Their infrequent schedule is the biggest issue. The ULCC airlines are best if you can book further out and are flexible with your dates of travel.

  17. As long as you know what you’re buying… Southwest can still be a great option. And always buy ON THEIR WEBSITE. I just bought 2 tickets Austin to Denver for $59 each – the $9 fare on Frontier with 1 bag and a seat assignment turned out to cost quite a bit more.

  18. I can buy that the apples to apples comparison between Southwest fees and others is the inclusion of two checked bags. So, if you aren’t going to check bags (which I hate doing since it wastes my time leaving the airport… and I only carry luggage that will fit on a CRJ 200…), it is legitimate to say Southwest has a product that is beyond the needs of a fare that does not include the baggage by an equivalent amount of the baggage fee.

    Where I have a problem is the idea that there is an economic rational for basically any change fee. One problem, also, is that the only people I have ever asked at an airline about this are frontline employees that just throw “rules” and “contract” and a bunch of pure BS at you when you ask. Where you say a change is bundled, I say WN has made an economic decision to not impute a bogus charge into their overall fare structure.

    WN can get myopically focused on their charging of a fare difference, but their rational is clearer for that than anything I have ever seen in support of the existence of a change fee, particularly now that they run $150 or $200.

  19. I Was looking at flights just yesterday from DEN to RSW, Frontier & American were both cheaper on just the base fare than Southwest. Just because of the decent time I chose American.

    November 1-8, 2015:
    Frontier: $113 (Depart:7:20PM-Arrive:11:59PM) **Round Trip** If you include the Fees at Frontier it went to $146.
    American: $260 (Depart: 9:25AM-Arrive:5:52PM) **Round Trip** Layover:DFW
    Southwest: $669 (Depart: 7:40AM-Arrive:5:25PM) **Round Trip** Layover:MDW

    Most of the time when I look at Southwest they are by far more expensive than American, Frontier or Delta on most domestic routes.

    1. That guy in that article doesn’t know how dynamic pricing works nor does he know how airline inventory works. Inventory management will show certain fare buckets, once those are all sold, next higher fare bucket will open up and price will go up. Now the only way to see if it was bait and switch would have been to go back to the start page and try to book again. Of the lower fare was shown again, then yes it would have been bait and switch and the agent’s excuse would not stand ground. But if doing the search for fare again had shown the higher fare, it would be clear that the higher fare was the only one actually available. All airlines’ systems are like that, they all work the same way. After all, it always says in booking conditions, fares are not guaranteed until ticketed. It’s the same thing as if you call up an airline and ask about a fare and it is quoted to you at 200 bucks but you want to pay cash so you go to the airport and by the time you get there the 200 dollars fare are sold out and only the next higher fare at 300 is available. But I guess that guy would call that bait and switch as well….

  20. I did a “dummy” booking check for fun today. MSP-SFO, dates 11/9-11/13.
    The lowest possible WN fare is 307.50 and the highest is $444 (of the “wanna get away” fares)
    Checking Expedia for the same dates, the lowest fare is:
    Frontier $331.20, higher than the lowest WN fee (no bags, seat assignment, food, drinks, etc.)
    Lowest Non-Stop is 399.70 on UA
    Delta, our fantastic hometown airline comes in at $410.20

    Single sample, I know, and I’m sure we can find examples where WN isn’t the cheapest, but it seems more often than not, from MSP WN is very competitive if not cheaper. If this were me, I’d probably take UA since I have lifetime *A Gold Million Miler and it is non stop.

    I often wonder about the dynamics of Delta at MSP. They always seem to be quite a bit more expensive out of here unless it’s a head to head route (MSP-STL, MSP-ORD, MSP-DTW) where there’s lots of competition. I wish JetBlue would start service here!

    1. Hub cities always have higher prices as the local traffic is subsidizing the connections. You are “paying” for the privelage of non-stops that MSP likely couldn’t support on its own. So non-hub carriers can get smart and cherry pick routes to be cheaper on.

  21. Once you have status on AA, DL, or UA; the amount of fees you pay decreases. Depending on your level of status and airline; you get free baggage, free same day changes, free access to the more legroom Y seats, and upgrades to F. So, WN loses that advantage among most people who fly 25,000 miles with one airline.

  22. If you keep saying something often enough, people will start to believe it, even if it isn’t true. This seems to be the strategy of Southwest. I used to fly Southwest more, but I have noticed a change when comparing all costs as this post has pointed out. I haven’t flown Southwest for some time now because of this. It is a good idea to compare all of your costs that pertains to you and your flight with each airline. You may find that Southwest is not the best deal.

  23. Brett,

    WN does not bake anything into its fares and neither does any other airline. As any pricing analyst for any airline. So your post due to incorrect information should be researched more. Southwest is not always the cheapest, no airline is always the cheapest, but I find for me they are more often the best deal. I’ll fly the other airline’s business class when the company will dish out the cash.

    You might also realize that airlines chase revenue… so if one airline’s fare is higher it could be that the airline can command it.

  24. I’m 30mins from OAK. I fly quite a bit, mostly the west coast, the southwest, and occasionally to MDW. I’m a loyal WN customer because it is always the lowest total cost because I’m almost always on a trip long enough that I need to check a bag. And I don’t have to worry that I might come home with more trinkets than I can fit in a carry on. And sometimes checking a bag is about *convenience* more than anything else.
    I prefer the comfort of Virgin, which sometimes has comparable fares to WN, but then I have to factor in the increased cost & time of getting to SFO, plus the baggage fee.
    I agree with the poster above who perceived Transfarency as relating to fees vs fares. I feel like most other airlines are not upfront about their fees

  25. Sorry still not the lowest from Dallas?, Texas to Akron, Ohio 154.00 before taxes I got a flight same places 102.00 before taxes.. so your not the lowest!!!!

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