When we look back in the distant future, I think we’ll remember today as the day that Southwest died. No, it is not going out of business, but its entire value proposition — everything that made it different — has disappeared faster than you can say “Elliott Investment Management.” For this, Southwest has earned the Cranky Jackass Award, but even that seems insufficient.
At the JP Morgan Industrials Conference today, Southwest will announce the following:
- First and Second Checked Bag Fees will be implemented for all tickets purchased from May 28 (elites and credit card-holders still get at least 1 bag free)
- Basic Economy will be introduced with Basic effectively taking over the pricepoint where Wanna Get Away is today
- Flight Credits will once again expire after 1 year from the date of ticket issue (Basic is 6 months from date of issue, so… why bother?)
- Rapid Rewards points will now be redeemed on a variable scale with no transparency (or, um, transfarency?) in what the multiple vs the paid fare will be
In other words, Southwest has erased every single positive differentiator it ever had. That’s especially true when you consider the other recent changes (not all of which are bad, mind you, but they were differentiators):
- No change fees became irrelevant when everyone else did the same thing
- Had to buy direct but you can now buy on Expedia and elsewhere
- Open seating is gone for travel next year
- Uniform cabin experience is gone when extra legroom seats get added later this year
- No employee layoffs changed last month
In the past, I haven’t been a big proponent of free checked bags, but as Southwest’s differentiators started to erode, I started to believe in that more. Whether it was something that mattered or not, this was a powerful marketing message that helped maintain the “we are different” aura. CEO Bob Jordan acknowledged that less than six months ago when he said free bags would stay at the airline’s investor day. But now, it’s gone. That in itself isn’t a problem. The problem is that there is nothing to replace it. With all the differentiators gone and nothing to replace them, what’s left?
The press release which will be on Southwest’s site today leans heavily on its people.
Southwest Airlines remains committed to its core tenets—amazing People who deliver great Hospitality to all Southwest Customers, a strong network with the most nonstop flights within the U.S., and a loyalty program that gives real value to Rapid Rewards Members.
Sure, Southwest has great people, but they are going to be deeply unmotivated after seeing the gutting of this company. They will also not make up for the fact that so many policies have been made so customer-unfriendly in such a short period of time.
The reality is that this move takes Southwest back to an old-school way of thinking that more successful network airlines have tried to minimize: choose us based on price and schedule, because that’s pretty much what we’ve got.
Again, I am not suggesting that all of the changes that have happened in the last couple of years are bad. To me, the extra legroom section and assigned seating was the right thing to do, but what Elliott and the new board members have hastily forced upon the airline since that fateful investor day has been universally ill-advised. The only thing that differentiates Southwest now is negative.
- no ability to redeem points on global partners
- no long-haul network
- no First Class
- no lounges
- no access to smaller regional destinations
As we discussed on The Air Show recently, Southwest’s failure to change under previous CEO Gary Kelly had put the airline in a bad place that just primed it to be torn down by an activist investor like Elliott. Elliott came in pretending to be interested in improving Southwest, but everyone who saw a wolf in sheep’s clothing was right. Elliott only cares about Southwest until it can extract a nice gain on its investment. Then it’ll walk away and Southwest will be a shell of its former self.
Perhaps most surprising is how quickly the Elliott mindset to race to increase profit at all costs has infected the airline. Clearly the majority of the Board didn’t bother to put up a fight, but that’s what happens when you have so many new board members. It can go off the rails quickly when you don’t have enough people who understand the core that makes the airline work. It’s breathtaking how negative this all is.
It also seems pretty clear that CEO Bob Jordan has no actual power. When he presented the transformation plan last September, it was the view of an airline trying to evolve but still remain uniquely Southwest. Now Bob looks like a liar, having said things then that just a few months later he is completely reversing. Chances are he isn’t actually a liar. He just didn’t realize at the time that the Board would be running the show, and he would just get to be a figurehead. I can see now why Elliott decided not to push harder for Bob’s head even though they originally wanted it. They could just turn Bob into their puppet and get the same result.
So again, why would anyone fly this airline now? It falls back to price and schedule, and schedule is where Southwest does best. If you live in Kansas City, you’re probably likely to fly Southwest more than anyone just because of where the airline flies. It does have its own fortresses around the US, primarily secondary airports in big cities (Love Field, Midway, Hobby, Oakland, Baltimore…) and all those former midwestern hubs where others have left (St Louis, Kansas City, Indianapolis, Pittsburgh…) But this doesn’t leave it with any notable growth opportunity. It no longer holds a significant advantage for attracting customers.
As someone who worked in pricing at America West twenty years ago, this turn of events is so outlandish that it’s hard to believe it’s real. We spent so much time just trying to figure out how to compete with Southwest, because the airline was just that good. We even dropped change fees for a time in some markets, because we thought that might help in the fight. It didn’t. But now, competing with Southwest just seems… easy. That’s a remarkable — and terribly sad — thought.
The Southwest we’ve all known and LUVed for more than 50 years is dead, and the new Southwest has nothing going for it except for a shiny, new Cranky Jackass award.
140 comments on “The Day Southwest Died”
Yes, WN waited so long to change that it could not adapt incrementally – it has taken a complete tear down of what was WN in order to stand a chance at surviving.
WN’s egalitarian notion that all passengers should be treated the same was wrong to the core. People pay different amounts for the same routes and have for years, even on WN. They shouldn’t be getting the same product.
WN still has enormous financial strength during the process of adaptation but their timing of this latest round of product changes could not be worse in light of DL’s commentary about domestic weakness. It will take much longer for WN to turnaround and other financially weaker carriers face even more challenges.
WN is losing share in many markets where it is not significantly larger than other airlines including the medium sized cities which are essential to WN’s network. That is likely to continue. Domestic weakness only focuses other airlines to look for more of WN’s backside to extract.
There is never a dull moment in the airline industry. WN will come out of this unrecognizable to what it was before
It will come out of it the American version of Ryanair. That’s the goal.
What happened to your airline Herb?
Ryanair copied WN’s model except that they charge for everything.
RYAAY’s costs are much lower than LUV’s in part because WN has paid at or near the top of the US industry.
LUV was the highest market cap and most profitable airline for years. RYAAY is worth about 50% more than LUV now.
LUV has to gets its revenue up to levels high enough to cover its costs while RYAAY is the disruptor for the European airline industry.
RYAAY is doing what LUV once did.
Ryanair serves a marketplace where neither toilets, nor water are free. People in Europe are used to being nickled and dimed for things that we Americans are used to getting for free. And still, most actually revile Ryanair….but take them anyway because of pricing and no choice (in many cases).
Things are different here and what WN seems to be doing will not work, aside from somehow lining the pockets of the d-bags at Elliott.
Ryanair and EasyJet also serve captive markets in many cases for both leisure AND even business.
You literally cannot fly between certain cities, both domestically and even connecting to intra-Europe or long-haul international routes on the network carriers because they don’t operate anywhere except O&D from the capital/hub city or perhaps two cities in certain cases.
Toilets, Water, and even an extensive collection of newspapers are free in major European Airports like FRA, MUC, MAD, etc
RIP SW Air? There now is really no reason to put up with all the negatives of SW–unfortunately KC (MCI) has limited alternatives, but I’ll be booking Delta twice for every SW flight given these changes. I hope Elliot Mgt chokes on this vs taking it to the bank, but the fin market seems to be happy with the change…and they don’t fly SW!
Bull cookies. Loyal customers dont mean anything. Cranky is 100 % correct. American business used to mean, create a good product at a good price, people will buy it, and stay loyal, and the company will be profitable. None of that means anything. The Schlitz beer syndrome.
“ WN’s egalitarian notion that all passengers should be treated the same was wrong to the core. People pay different amounts for the same routes and have for years, even on WN. They shouldn’t be getting the same product.”
Well, WN has had some sort of an elite program for years. They certainly didn’t treat everyone the same. And different fares have offered different benefits. The “egalitarian notion” probably disappeared together with the hot pants.
It’s very surprising that they didn’t get a chance to implement their recently announced major changes (e.g., assigned seating, extra legroom) and see how those changes along with the recent layoffs and other cost cutting measures improved their financial performance before implementing these draconian changes. The former changes were primarily seen as a necessary and overdue evolution. These changes, however, are completely negative from every single perspective except the bottom line. Somebody pour Herb a stiff drink.
Or build up their redeye schedule. With the slow deliveries from Boeing, an extensive redeye schedule is like getting 50 free planes. For example, most of the country is on daylight savings time until November. Phoenix is now 2 hours ahead of Chicago and Nashville, the same as California. This is a perfect opportunity to offer more redeyes. Even Ohare should work as a redeye from Phoenix, the strong demand in that market, with connections from smaller California cities added in should make a redeye and an early morning return from Ohare profitable. These latest changes are nothing more than a way to chase away long term loyal customers.
American operates up to two red eyes a day from PHX to O’hare.
That’s the point, American and United have offered zillions of redeyes from the West to Chicago for decades, OJ took one over 30 years ago after his dirty deed. I frequently took redeyes from Las Vegas to Chicago in the 80s and 90s.. Southwest could more effectively compete with American by offering redeyes to Chicago instead of 2 or 3 flights that arrive in Chicago between midnight and 2am. That would be innovation, but would ruin the fun of attempting to get an Uber ar 2am. Southwest better quickly realize that these changes will chase away existing customers much faster than they can attract new customers. Read; declining load factor.
While this may mostly be due to Garry Kelly’s time at the top, Bob is going to go down at the guy that wrecked WN.
Herb will need a case or two of Wild Turkey to absorb all of the draconian changes that the Elliott has wrought on WN. Their days may now be numbered by either a bankruptcy or merger. This is good news for Frontier and especially for Spirit as they emerge from bankruptcy.
Seems like we’ve entered an(other) era of mega rich people breaking things they don’t own for personal enrichment/entertainment in general
How many of these board members do we think have ever flown Southwest? Heck, how many have flown in an economy seat or even a first class seat in the last decade?
Southwest stock is worth the same amount today as in 2014. The shareholders have the right to want a return on their investment. You are welcome to put your money into the company too.
This argument is so tiring.
Never mind the stockholders. Average citizens have the right to good. and fair service at their airport. If Southwest could not use publicly owned airports, such as LAX, Southwest would not be worth anything.
Although I didn’t invest money in Southwest specifically, I paid my tax money into the airport in the form of aviation grants, security measures, air traffic control, airport construction bonds, etc.
While I don’t totally disagree with the sentiment, Southwest (like other airlines) would pay landing fees and leasing fees to LAX. The capital improvements to the airport come from these operating and leasing revenues, not the city general taxpayer fund. It’s not like they got a free ride.
The company has paid out dividends every period since then, and has increased its dividend amount by over 100x in that period.
The shareholder’s rights have been well-tended to.
CF,
If you do not innovate, you’ll die. Business 101. Their Musa Air model should have died decades ago.
But this is the opposite of innovation.
I never knew Lamar Musa founded Southwest. I always knew a Lamar Muse founded Muse Air, which was taken over by Southwest.
Angry Bob – But Southwest didn’t innovate here. It just followed what everyone else is doing. That’s the whole point of this post. It is no longer a leader.
This has all the innovation of putting a dial telephone on the airplane.
Ooof. Surely celebrations all over the industry.
Spirit and Frontier now with a path to profitability. Breeze and Avelo with a path to growth. The 4 (including AS) global airlines with a path to more share in hubs.
I wouldn’t celebrate too quickly my friend, this is the canary on the runway for the industry. Take heed of Tim’s comment above.
Saw a video on YouTube yesterday from “Retail Archaeology” on Macy*s & yet there’s a similar theme occurring with another activist investor/ private equity firm trying to rest control of the business in a way similar to Sears & we know how that will play out.
No celebration at all by me, I want a healthy industry with competitive differentiation, and this further commoditizes the product offerings across the industry.
But all the OAs had a competitor who’s entry level price point included baggage. For the customer base needing a bag (and not having loyalty) that was quite a competitive product. Now it’s not. OAs are instantly more competitive.
And Spirit and Frontier have A321s instead of those contraptions from the former Seattle Airplane Company. Charging for bags on domestic flights isn’t innovation, it’s just a money grab that most customers hate. And the level of innovation in these changes goes downhill from there. Try something innovative like jumping the pond in MAX9s with about 150 5 across seats to evade the £250 Air Passenger Duty on premium economy.
You forgot the rallies that were cut to save a few dollars.
And hey, they can cut back on marketing, no need to promote “we’re the same as everyone else.”
Fly us because you don’t have a choice!
Brilliant.
The new travel fund policy really stinks to me. I was hoping other airlines would start copying this, or at least increase the expiration time. The bag fee can be somewhat minimized, since at least 1 of their credit cards pays for itself.
This would be a *HILARIOUS* time for someone like United to offer free checked bags again
I was actually thinking the same thing this morning! Either United or Delta.
A sad day for WN. Luv lost today…
I’ve flown WN a lot over the years. Why? They are the dominant carrier at my home base (BNA) and because they were different. I always loved the “Southwest Experience.” Of course I was looking at it from a pax experience perspective. And a certain nostalgia for the old ways. (Nuts! was one of the first business books I ever read.) The robber barons obviously thought differently.
Pouring one out for Herb tonight…
Never LUVed SW. Festival seating condemned to being an extension of Disney and Carnival. The real story here is the destruction that Elliott wrought, and the fact that they’ll be gone once the juice dries up, as Cranky points out. Prepare for four more years of this sort of carnage. At least SW flyers will be able to pick which seat they can watch it from.
The Cranky Jackass award returns from the dead with a vengeance….
NYT is quoting this post. Congrats.
Thanks, let us know when the WSJ quotes Cranky today.
And NPR, the Economist, Financial Times, the Guardian, BBC, and maybe Washington Post.
The share price today is the same level as it was in 2014. Southwest suffers from high costs (industry leading wages) with little revenue growth. While not a fan of the changes as a customer, the business needs significant overhaul. If the Southwest model was so successful, Elliot would not have been able to push change. It turns out Southwesr fliers had it too good.
After 40 years of flying Southwest, United will be celebrating. Why should I fly LUV from Ohare with the slashed schedules when United has like a thousand flights. A few connections on Icelandair isn’t even remote competition for the big 3 alliances. Take the Lufthansa group alone as an example. Hopefully there will be enough blowback that these changes will be revoked.
Its going to be the same story at DEN. Frontier is upping their game here with more connecting flights on the LCC end and United has really gone gangbusters with the new gates on the west side of the A Gates along with all of the new nonstop routes on the full service legacy side. WN is becoming the monkey in the middle that will eventually get crushed with all of these changes.
It is difficult for Southwest at DEN or other hub airports. That is part of the reason they withdrew EWR years ago. Southwest does well offering non stop point to point flights outside of hub cities. A lot of people who do not live in a captive hub, want to fly a connection.
This is true- just hard to see how Southwest wins in any market where it actively competes against United or American (comparatively few markets where they compete against Delta or JetBlue). What exactly do they now offer that United or American won’t if you have a choice?
When you factor in the checked bag fees, slightly higher fares?
Yes, redeyes, options to fly to Europe and South America, better seating, maybe cutting back to one free bag, but this is corporate suicide. The other side of Southwest’s problems, in case you forgot, is that Boeing is about 200 MAX7s behind what they contractually owe Southwest. That means routes and cities cut or not added and fuel and maintenance heavy 700s that should be parked at Mojave are still flying.
I know my experience isn’t everyone’s, but flying out of DEN, I’m not going to be picking Southwest much. Southwest was already normally more expensive than other options. Sometimes, it still made sense with free checked bag and/or the schedule. But now, I can buy basic economy with a United credit card, get a free checked bag, and still be ahead of what I’d be paying with with Southwest. This is without mentioning Southwest’s inferior operations as well.
I’ve never been a Southwest loyalist, but these changes are going to give me even less reason to fly with them.
Another DEN flyer here, and I primarily use UA and get free bags on UA. Last year or so, WN flights typically more costly than UA flights, sometimes $200+ more.
Typically more flight options and frequencies on UA and with cost savings, absolutely no incentive to fly WN. The assigned seats and extra legroom would have been a reason to keep comparing fare and schedule, all these new changes really mean not so much now.
I fly out of DEN as well. Mainly to West Coast. “Basic Economy” + United Credit Card (only some!) gets you a free carry-on, but not a free checked bag. I find Southwest fares comparable or much cheaper if you are more than two weeks out. What I liked about southwest was that their boarding process was more efficient than United’s, their regular seating was just large enough for me, whereas I need United’s economy Plus to fit my knees comfortably (depends on the plane, and that is a crap shoot), and most of all you are pretty much guaranteed overhead bin space on Southwest because people check their bags. I just hate the seat up-selling with United when you choose your seat. What always puzzled me is that Southwest did not take advantage of their unsold seats — I am routinely on planes that are less than 2/3 full (that is also nice, but how can you make a profit with that?). So it looks like they will try with their new flexibility on redeeming Rapid Rewards. At the end, just google “airlines are banks” and you will see the true motivation.
The email from Jordan to Rapid Rewards Members reads like someone announcing the death of a family member.
Just as AlITAlia has become synonymous with Worst Airline Ever, the Cranky Jackass award will eventually be known simply as The Elliott.
As an A-list preferred and companion pass holder. This airline now offers me nothing! Why stay with Southwest, only if the companion pass remains in place will I continue to fly it. Cost wise, I can consistently beat the airfare that Southwest charges me, however, the companion pass Provides the benefit. Having been a Premier flyer with Southwest, for over 20 years, I think this airline is soon to be dead!
Keep in mind the free bag policy benefits you even if you are not checking because it has the effect freeing up more overhead space. Also, Midway is not a fortress hub in fare terms because for at least half of Chicago, O’Hare is just as close. I live equidistant so I now have zero reason to flySW except to use up my points
Midway is horrible, with those barely mile long runways immediately surrounded by houses. The main advantage is avoiding the long delays and endless taxiing at ORD. Unless you’re south of the Eisenhower and inside 294, Ohare is more convenient.
RIP to the airline I used to love to fly. You just transformed into another instance of the airlines I disliked.
Interesting that nobody is mentioning the impacts of the CBAs. Certainly wasn’t the only, or even the greatest factor, but at least worthy of mention.
Yup. Elliott isn’t the only stakeholder who is demanding more than the underlying business can deliver.
I have been a loyal SWA customer for many years. It is the only airline I use for at least a decade. I liked SWA because it was different than all the others (open seating, bags fly free, no change fees, great employees, etc.) Instituting bag fees makes SWA the same as every other airline. This is the end of Herb Kelleher’s vision and a sad day for loyal SWA customers like me. Now asking myself, do I sell my SWA stock?
Go for it, you probably won’t suffer any capital gains, and more likely will be able to tax loss harvest!
Mrs. Near DFW and I were hodling for a home run with $LUV. We are not selling right away, but now we hope to sell for just a small profit. We are waiting to see what happens with the stock market as well as with $LUV stock this quarter. I guess the trick here is not to sell at the top, but to sell just before Elliot gets out.
Here from the NYT, adding to this peanut gallery since they’ve got this new system where you have to request comments to be opened on most articles.
With bags fly free gone and assigned seats in, I can’t find a reason I’d pick them over Delta, American, et al, and I live in Baltimore, one of their bases. The standup routine they do during the takeoff isn’t even that great, and Spirit is still there for barebones trips.
In Baltimore and the other airports they dominate, you’ll still pick them because, unless you’re flying to a hub city of a legacy carrier, Southwest will have the only nonstop. They’re literally counting on this, it’s their only remaining differentiator.
St Louis here. You speak the truth.
You were used to it already with TWA and AA!
Is there really much difference in economy products (all are 3×3 with close to the same seat width and leg room in main cabin) not to select the flight that fits your budget and schedule? Southwest is becoming similar to the legacies in policies. Unless you are flying F, the product isn’t much different between all of them.
I agree with you to a point, with one major exception. The seat pitch / legroom in some of the basic economy products does differ significantly, at least to me (and I’m not even 6 feet tall).
28″ on airlines like Frontier/Spirit vs 30″/31″/32″ on Delta/JetBlue/others may not sound like much, but when it’s the difference between my being contorted for 3 hours vs having just enough space to doze a little (especially on morning flights), it’s a difference that matters a lot to me. I’m cheap, but I’ve started to see the value in flying airlines with a few more inches of legroom, or (especially on those with tighter spacing) “buying up” to basic economy seats with a bit more legroom. I recently paid an extra ~$90 each way for exit row seats on Spirit and it was worth it.
That said, it seems like we’re seeing a race to the bottom on seat pitch for basic economy, and I expect the legacy airlines to continue to tighten seat pitch a bit more. (shrug)
Sorry, I should have clarified that I was referring more to Southwest/legacies vs ULCCs. Southwest vs legacies, yes, very similar.
I have no words. I’m just stunned. I never had a problem with fees that LUV added. Because they actually added value. Until the recent changes with paying for assigned seats, they never took away what was previously free and put it behind a paywall. At this point, they’re like the 3 legacy carriers without the international or alliance presence. It’s very sad to see.
Bob Jordan–the Marco Rubio of the airline industry.
I’m going to toss this out there which will likely bring from ire from those who are labor for SW. I believe Gary Kelly really screwed up by thinking that stringing SW employee contracts way out past their expiration was a good idea. I felt sorry for the employees with expired contracts being strung along. When SW had to start locking the contracts down for Customer Service, Mechanics, Ground, Baggage, Flight Attendants and Pilots it was after a big spike of inflation. The employees do deserve to be paid fairly, but timing of the market didn’t work out for the airline. Plus once Delta locked down their employee deals, that set the pricing for the whole industry. This is all part of the operational financial squeeze for Southwest.
As a semi-regular flyer of SW, I was glad to see the changes announced last Fall because as a business traveler I prefer the less boarding drama the better. Brett has pointed out with todays changes, there’s no differentiator of the airline to make it stand out. I’ve cut back some of my business travel primarily due to Zoom/Teams and expense cutting. My plan this year is to become a free agent from the airline status roundabout and buy exactly what I need.
Southwest was actually the 2nd of the big 4 to settle with all of its labor behind DL.
WN long has relied on a stronger relationship with its employees which is probably why they decided to settle long before the revenue situation improved.
Whether settling before AA and UA settle(d) gives WN any goodwill in the midst of all of the changes that are taking place is anyone’s guess.
DL started the whole post-covid labor escalation process and it undoubtedly knew the impact of its much higher labor rates on other airlines including WN.
Let’s see how it all shakes out but let’s also not forget that UA still has to settle many labor contracts and their labor cost growth will be much higher than any of the other of the other big 4 airlines. AA is now taking hits to earnings because of its labor settlements.
the product may not be much different for most economy passengers on the big 4 within a year. It comes down to market strength. Let’s not forget that WN still carries more domestic passengers than any other US airline and has a very strong balance sheet to lean into during the transition.
This won’t be easy but they will get through.
Paraphrasing what was said before “Rumors of my demise have been greatly exaggerated.”
Congrats to The Elliot Group for reaching levels of brand destruction not seen since Icahn and TWA.
Or Lorenzo and Eastern
Let’s not forget Eddie Lampert and Sears. Not an airline but still pretty epic (in a bad way).
Remember when JetBlue was unique as a LCC? They lost it too, about 15 years ago. Sad to see – I think WN eventually merges and go away completely as a brand.
If their website makes it easier to purchase a ticket without the nonsense of popups, adds, and questions as other carriers do (are you sure you don’t want to upgrade?) then this should be fine. I don’t like to spend 20 minutes negotiating with the website once I find a workable fare. However, I do think the first checked bag should be free, charge for the second. And please, don’t charge for carry-ons!
You forgot a couple of other negative differentiators: no real food available, no seatback screens, and no way to charge your phone for most of the fleet! Until they fix these, they’re not competitive for any flights over a couple hours.
Yup. They will be strong in like the intra-California market or for short haul but you can forget about the Hawaii or long haul for me.
And their wifi is the worst of any airline. Very unreliable.
Yup! Southwest just lost this customer!! ?
So CF/gang, which WN focus city/‘hub’ is the most vulnerable to feel the wrath of the public with these changes?
My guess would be MCO. Having checked bags included in the fare is a major differentiator compared to the airlines they’re competing with on most routes. Families check bags more frequently, and are less likely to be frequent travelers with status or co-branded credit cards.
If I am comparing a Southwest flight to Orlando vs. Spirit, Frontier, etc. there is relatively minimal reason to prefer Southwest except for schedule and redundant options for IRROPS.
F9 has no wifi on board, doesnt give free snack or drinks, doesnt have seats that recline, and does not allow a schedule change if they modify your flight under 4 hours. Southwest still gives you the option of a travel credit and a 14 day window if they modify you flight by even a few minutes.
I think families flying infrequently with kids care less about most of the amenities you mention, and more about the per-person fare. Differences in ticket prices really add up when you multiply by 4 or 5 people.
On every trip I’ve booked to MCO, Southwest’s fare was way higher than Spirit or Frontier, but after accounting for checked bags the total cost was close. If they charge for bags without dropping the fare, then I’m much less likely to consider them.
Oakland, there are SO many other choices, and 2 other airports that are *close* by that can provide options.
AS or even Avelo can come in here now with a vengeance, under cut the price, and go gangbusters.
Adding to a market with the plan of undercutting a entrenched airline isn’t the AS MO at all.
So many choices? Doesn’t WN have about 80% market share and very limited service from all the other majors? AS is shrinking, not growing…
https://www.flyertalk.com/forum/alaska-airlines-mileage-plan/2187860-flight-reductions-oak.html
And Avelo has 16 aircraft total.
DEN. F9 is growing and flowing connections in DEN which will help eat WN’s lunch on the low end. UA has explosive growth and a robust network on the high end. The middle is not a good place to be.
Good question. I don’t have the numbers, but I’d think whichever hub relies the most on connecting traffic (BWI or BNA?). Sure, WN might be able to keep getting by on point-to-point in all the mid-sized cities where there’s basically no competition, but there’s absolutely zero reason to ever take them as a connecting option now over the big 3. Would be curious to see where most of their connecting traffic is now vs. how it holds up 1-2 years from now.
There should be a futures market to bet on the date when SW abandons this disastrous change and reverts back to Herb’s model.
David C – It’s really a mix of where Southwest has real competition and where it has less utility than that competition. Denver seems like a possibility. But I think it’s more likely to go the other way. Southwest will have to rally around its big hubs because it can’t really go into new markets.
AS has grown quite a bit at SAN recently, I could see them doubling down there or even taking a hard look at SMF. Relatively high-cost cities are going to be harder for Southwest to compete vs legacies. Cities like OAK they’ll be ok because it’s the secondary airport. But I’d be quite nervous if I was Southwest looking at the map and places like AUS, TPA, MCO, or basically anywhere in California
Probably most of the big hubs they operate as competitors out of. PHX, DEN, LAX and MCO now that there is really nothing to offer over any other carriers they will probably lose some of the market share.
I’d say FLL because of the cruise ship passengers. Cruisers almost always check bags, and WN’s value equation compared to bag fees on others was a big draw for them.
Checked bags weren’t only free to be kind to customers, it also helped operationally as WN could turn aircraft faster and boost utilization, keeping costs low.
They definitely have failed to innovate over the past decade while legacies found new and novel ways to generate revenue, I think they’ve been squeezed geographically too running out of places to grow in the L48. Hawaii was a logical extension but they may have overextended attempting to fly inter-island.
In major hub cities now they have no positive differentiation. I used to periodically fly WN if they were cheaper and/or I needed to bring bags, now there’s almost no reason to choose them over United out of Denver. Maybe they can juice more revenue from the MCI’s and PIT’s of the world, but it hardly seems worth it. My question now is where does the next wave of growth come from? What are they doing that’s better than anyone else? It feels like they’re cutting off any notion of a future just to improve a few quarters of performance – exactly Elliott’s playbook
United will be laughing all the way to the bank. In Denver UA and LUV fly out of the same remote airport. However, in the Bay Area, United flies out of SFO, Southwest is stuck in Oakland. In Chicago United flies out of ORD, which is more convenient for 75% of Chicagland passengers. I won’t even talk about that puny mile square airport from 100 years ago. And in Washington, United flies out of IAD, right next to all those offices in Reston and Herndon and is on the METRO Silver Line. Southwest is somewhere near Baltimore.
FYI, Southwest flies out of all three Bay Area airports: SFO, OAK, SJC
Yes, but the bulk of their flights are from OAK, which they dominate.
SW has effectively lost my family as customers with this move. For a family flying with kids, particularly on a vacation, the free bags were a very important differentiator for us, and generally why we flew them. We could certainly deal with the ‘seat for all’ boarding process.
Over the years, they have drawn back their flying to PDX. And, the loading / seat drama has definitely gotten worse. We ended up buying the boarding group upgrade in recent years, but they continued to jack the price up on that. And, their fares have gotten much higher as well – no longer what I would consider to be ‘low cost’ – probably the same as the Big3 in most markets now.
Doing away with the free checked bags is the nail in the coffin for me. Why would I fly them when there is now no meaningful ($) difference? Relying on a ‘great experience’ is not going to cut it, particularly when you have no way to control what that means, how its delivered, or ensure that every staff member is on board on every given day. At this point, the ‘Big” or ‘Legacy’ airline group needs to be re-named the ‘Big4’ – SWA is not a ULCC or LCC in any sense of the imagination.
I am hoping that Elliott is quite satisfied with this outcome. They will likely see a passenger decline as a result.
Sad, but not surprising.
The environment has changed so much that I am surprised Southwest was able to hold on to its long held traditions this long.
Today is a watershed moment toward getting the word “Enshitification” added to the dictionary in 2025.
Oh, the joys of activist investors & the pain then inflict on employees & customers. Charging for bags is a bad move!
Charging for bags is the correct move and why all other airlines do it. It pushes customers to sign up for their cobranded credit card to get a free bag and drives ancillary revenue. Had Southwest made some basic changes as the market changed, they may not have gotten Elliot as an activist investor.
It might have been the correct move 20 years ago when the four legacies were making the change, but that ship has sailed.
I’m based in San Diego. Southwest certainly dominates here consuming nearly all of the gates at terminal 1, although Alaska Airlines has been growing its footprint over time; started right before COVID, was paused, and is now resuming.
Most of my travel is less than 2 hours, where SW’s cattle model is tolerable for these short flights. I can grit my teeth and handle 3 hours, but more than that pushes me to legacy carriers.
What I’ve appreciated the most with SW over the years is 1) frequency of flights to the places I normally go (SFO/SJC, LAS, PHX, DEN, AUS); 2) Wanna Get Away fares that are normally the same as competitors’ Basic Economy fares (but Southwest has allowed cancellations for flight credit without expiration); and 3) friendly crew and 4) an easy-to-use loyalty program where I have been frequently A-list level or better, allowing same-day changes after midnight without a change in cost.
This announcement makes SW the same as all other legacy carriers, without a true first-class cabin. Why would I continue to fly SW? There is no longer any differentiation.
I am Lifetime Platinum on AA (not a great service airline, but gets me to Europe and East Coast cities), and I love flying Alaska (probably the only airline with more friendly and service-oriented FAs than SW). I’m going to consume all of my flight credits on SW and then move most of my short-haul travel over to the Oneworld members. My SW travel is will probably decline 80-90%. Elliot’s push is going to backfire. The ghost of Herb is going to make sure of it.
I heard the same thing after Southwest’s Christmas meltdown a few years ago. People claimed they would never fly them again. It turned out Southwest carried a record number of paxs the following year. People complain, but will adapt to the changes.
That pain was fleeting. The aggravation of these changes will continue every time you fly WN.
My brother and his family were1 flying to Florida during the meltdown, but we realized this was a one off meltdown. Other airlines have all had meltdowns, maybe not as bad, so we cut Southwest some slack. This is a deliberate attempt to passengers who pay anything other than the highest fares, and business select fares are high. Frequently higher than a first class seat on United. What’s next, getting rid of the companion pass, or heavily restricting it? Wake up Elliot fools and realize that you are alienating a huge, loyal customer base that has taken decades to build.
Very interested to track Alaska’s continued growth at SAN. Congrats on the DCA non-stop!
@Cranky, you need to come up with a different award. The Jackass Award has (mostly) been focused on airlines that are simply incompetent (sto parlando a te, Alitalia!). This is far worse. Any suggestions for names for the new award category?
I’d say Southwest would be the inaugural recipient, but methinks it should be awarded retroactively to Boeing for screwing the entire industry, especially those that standardized on a Boeing-only fleet (SW).
Worst Airline Ever Award has been focused on general incompetence such as Alitalia, Jackass has been for various negative changes that airlines have instituted
Even before this whole thing with Elliott, the issue I had with SW was the points earned are only good on SW. With no other alliances and what not, it didn’t make sense for me to do much of my flying with SW as the points can’t be redeemed for international flights or upgrades to business.
Fortunately I was able to give my stack of points to my family to go to Orlando during school breaks, but that will be a thing of the past with the new, opaque redemption system. If points are only good to go to Omaha on Tuesday, Rapid Rewards will be totally worthless.
Luv’s Labors Lost.
Longtime Southwest loyalist and former intern here; my heart hurts. This is so difficult and sad to watch.
LAX. I flew WN:
1. If they were the only nonstop in the market and I couldn’t waste time connecting(MKE-LAX)
2. If they had a flight at the right time I needed compared to legacies
3. If their competitor only offered a regional jet on the same route
4. If it was a short flight (LAX-PHX)
5. If I was flying the family on miles and points, and found an attractive redemption compared to legacies (HNL-LAX)
Sometimes WN is over represented in my travel, but I never felt any particular loyalty or desire to fly on them, and immensely disliked the open seating. As a niche player though they certainly had, and likely still have, value for me. With all the changes I think it remains competitive in reasons 1, 2, 3, and 4.
Bob Jordan just put Herb’s bar napkin into the gawdy 1970s red candle sitting in the dark corner and watched it burn to nothing. I bet the cemetery he is is buried in has seen some 5.0 earthquakes from him turning over is his grave multiple time today. They just took the leased 737-200 and blew it up. I used to travel a lot for business and for my company, there was only one choice for flying: Southwest. I was so loyal to Southwest, I would fly with a stop on my SEA to ONT route (going home) rather than fly direct on Alaska for the same price. I loved everything about Southwest: no assigned seating, free checked bags, getting my can of Coke Zero, my A-List designation, companion pass, etc. But as Henry Hill says at the end of Goodfellas, “and now that’s all gone.”
I knew the end was coming when they stated talking about tinkering with open seating. An “overwhelming amount” of people prefer assigned seating. I asked all the frequent and unfrequent flyers I know and they all said open seating is the main reason they fly Southwest. Can I meet this “80%” that wants assigned seating and let’s have a chat.
Farewell Southwest 1971-2025
Thanks for writing this, Brett. My transition away from Southwest had already begun, this only speeds it up. Sure, I’ll still fly them when it’s convenient or the timing is right. They dominate KC after all. But I’ve been flying the other guys a lot more and it hasn’t been as bad as I would have expected.
Anyway, you hit all of the points I would have made. Good luck to them.
I’ve just come off a 3h30 Ryanair flight. Claiming toilets are not free is the biggest load of rubbish I’ve seen on here in a long time. The route I flew has 2 network airlines selling tickets but both involve going via hub and taking an additional few hours and at a MUCH higher price. Ryanair did it non-stop for US$20 (yes, 20 US Dollars). I paid nothing extra, nothing. No, no funny-money loyalty points – what I get instead is to spend much less and have more money in my bank account.
Domestic flying in the USA has become uncompetitive – everyone is so focussed on credit cards, loyalty schemes, etc that they have forgotten what this business is meant to be about – namely Mr J Doe wanting to go from Dallas to Denver at a time and price that suits.
When Southwest was founded it was clearly cheaper than the rest – now, not so much. Everybody seems to prize difficult-to-spend points above cash in a bank account. Southwest needs to compete not just on price and schedule, but also on network… you should not need to go via Atlanta and pay for the “privilege” when you can save time and money by flying direct with a low-frills carrier.
We are not talking about starving orphans in a famine-stricken country. Much of what I read on here sounds like those who resent Reagan abolishing the Civil Aeronautics Board.
It was Carter that implemented deregulation.
As 33 yr employee some of the changes needed to happen 20 years ago. 3 time WN evaluate making all these type of changes since post 9/11.
They hesitate every single time because of the overall cost to Retrain employees was such a big expense and the cost to seriously invest in a new IT system scared the old WN. They always opted to Dumb everything down because it cost less in the short term. We did it with Morris Air and later With AirTran.
We were making consistent profits so the lack of vision constantly got blurred.
While WN did champion some innovations in the first 54 years. We got happy seating on our laurels perfectly fine with the thorns poking in our back sides in the last 20 years under GK.
We extensively studied AirTran and were all set to make a significant switch their business model adopting seat assignments. But merging in the Bags fly Free concept while adding a Big Business Select up front seat. But again the over retaining cost it as easier to just Dumb them down to the early 2000’s WN. Instead of adding a real Business class we added A1-A15 which failed almost immediately once the scammers understood you could just buy cheap and ask for pre boarding and still get the first rows every time. And since we didn’t enforce no seat saving Row 1-9 were packed full of Seat savers further diluting upgradable boarding process.
Bags Flying Free concept was the hope it would eliminate the huge problems with Having to check bags in the Jetway. Even with the bigger over head bins We Still check a massive amount of baggage in the Jetway.
Hopefully these changes aren’t too little too late and
Or they don’t sink the ship.
It used to cost WN $10 fly the plane and
Make $100 dollars profit.
Now it cost us $100 to fly the plane and make $10 dollars profit. Technically We make 1.1% profit while We used 9.89% of that to buyback stock to appease Elliot’s profit margins .
This either has to work out to get the wolf out of the henhouse or WN will be on a fast track to chapter 11 re-organisation.
While back in September the new Seating brought a level of exciting Times ahead for everyone. It now seems more like a level of excitement turned Into like when you see a tornado approaching the layoffs are the warning sirens going off and you don’t know if you’re gonna get a direct hit and nothing but carnage and chaos will lay in its wake or will the sky’s clear to a new beginning .
Scary times.
Nobody is addressing the elephant in the room: with bag fees come slow turns due to passengers bringing the kitchen sink on board slowing down boarding and deplaning, plus extra people to handle and load gate-checked bags.
They will first go through an operational nightmare (they’re doing all of this during the busiest of seasons), then will have to drastically increase turn length (which will reduce aircraft utilization) and add people at gates — in other words massively bad PR and an explosive increase in costs.
This stock looks like a sure sell to me.
Yes, these are a lot, of changes to make in a short time – and perhaps better to do them one at a time rather than lots of things in one short period. However… Southwest is on a burning oil rig in the middle of the sea. They’ve spent so long trying to decide what to do, that they no longer have much choice about how to do it. The company will have to find a solution… and necessity is the mother of invention.
The goals have changed. It’s no longer about revenue and passenger/market growth. Those days are over. It’s now about maximizing cash flow, operating margin and efficiency as fast as possible. Strategy and differentiation don’t matter now. Leverage scale where you have it, cut where you don’t. The future of a consumer meaningfully differentiated airline is some combination of benefits and value equation we don’t fully see in the market currently. DL and UA are best positioned to figure that out. SW should have been figuring that out over the last 15 years, but didn’t try. Now time to pay. Sad day. I haven’t flown Southwest in years. Definitely won’t start now.
I feel horrible for everyone there who was failed by Gary Kelly, I truly believe that Bob Jordan didn’t want to do this and that if Elliot would have not stepped in Jordan would have made similar or better choices, sadly his hand was shoved which leaves me to believe that there was no way to stop this from happening unless the board coup failed.
Now you’re just some airline that I used to fly.
While Southwest Airlines is the last major airline in the U.S. to not charge for checked bag fees in economy class, there are still some airlines remaining in Asia such as Air China, Air India, IndiGo, Japan Airlines, Malaysia Airlines, Thai Airways, and Vietnam Airlines that do not charge for checked baggage in economy class if the weight of the checked bags do not exceed the free baggage allowance.
Plenty of airlines don’t charge for one or two checked bags on some or all flights, but none of them are in competition with Southwest.
Anyone know when and where the funeral will be yet?
March 15. She would’ve been 58.
Frontiers of Flight Museum.
Glasses of Wild Turkey are complimentary. BYOB otherwise.
Attire: Hot pants. Knee length white boots preferred.
Please sign the condolences book as you arrive. It will be in the form of a stack of white napkins.
This is hideous. Too bad that corporate raiders are allowed to get away with ruining what was until now the best airline in North America. Open seating and two free checked bags were the two major attributes that caused Southwest to stand out from all the other airlines in the USA and Canada. Two free checked bags were a big enough deal for me that I flew Southwest whenever possible/practical.
I have not had any occasion to fly since the Fourth of May 2021. Should I find it necessary to fly there is no special reason for me to choose Southwest unless the “all in” price of air ticket + checked bags + carry on bag (free for now on Southwest) + possible seat selection so I can get a window seat ends up being the best price for wherever I may need to go, unless the lowest “all in” price is some sort of outlandish schedule such as a 15 hour layover or something like that. I might even look at Spirit and Frontier to see if their bundled fares might be worthwhile and I have NEVER flown Spirit in the past and I don’t have much good to say about Frontier.
What can be done? Perhaps the federal government could rework the tax structure such that first and second bag fees as well as carry on bag fees are punitively taxed with a clause requiring airlines to eat the cost of the taxes and explicitly prohibiting the airlines from trying to pass on the cost of the tax to consumers. Or perhaps an explicit ban on carry on fees and first and second checked fees. Or perhaps it is time to abolish the stock market. Shut the stock market down. Permanently. The needs of workers and consumers should be given more importance than any shareholders.
Have you considered moving to Cuba ? I think you might like it there
This comment is a perfect example of why Southwest needs to make these changes. Catering to someone who has flown once in the last four years is a great way to go out of business. I flew 121,000 miles last year and 367 of them were on Southwest. Why? Because it’s stinks for a frequent traveler. Open seating is a roll of the dice, there are no plugs in the planes, and the IT is poor if you need to do anything milldly complex. All of Southwest’s perks were nice in the 2000s, but they are woefully behind the times in every way for anyone who doesn’t live in CA or TX.
“Or perhaps it is time to abolish the stock market. Shut the stock market down. Permanently.”
Umm.. NO.
I’ve been very diligent at investing and growing my hard earned money throughout my life. Now that I’m retired, my investments are an important part of my income. They’ve enabled me to move to a new state, buy a new home and car, and lead a comfortable life. None of this would have been possible without the fantastic increase in my personal net worth that was made possible by the stock market.
What Dale should have said is regulate the stock market like it was from 1933 until recently. The US economy grew tremendously during the era of regulation, houses got bigger, families got second cars, took more vacations etc. An unregulated stock market is a formula for disaster. Remember 1929? 2008? Then there was Boeing’s recent deviation into financial engineering with stock buybacks. 2 crashes and a door plug blowout later, Boeing’s lack of attention to aircraft engineering has turned Boeing into a sad shell of it’s former self. Boeing’s lack of investment in new aircraft has resulted in fewer flight options and a less fuel efficient fleet. Airbus has been able to be complacent with its endless A321 backlog, because Boeing doesn’t have a real competitor. A 797, aka 757 replacement, would have opened up endless routes from US to Europe and South America, not to mention routes around the rest of the world. The focus on quarterly profits and manipulation, see Tesla, while neglecting quality of life is destroying this country.
The egalitarian thing worked when you are the only player in a city pair and your “product differential” is peak vs. non-peak. It took 4 1/2 decades for the Bigs to figure out how to compete without degrading the brand by cramming more seats in old planes and naming it something cute.
As their network and operation.become more complicated they can’t cling to the days of the 30 minute turn and $49 EW all inclusive from MSY to AUS or SMF to LAS. This should have happened organically a decade ago. Unfortunately management AND labor were living in the 1990s where everyone else’s disarray made WN lookn like a well oiled perfect machine.
In the past, a customer choosing Southwest could justify its downsides (no assigned seats, the check-in race, etc.) with “at least my bags were free,” along with a few other benefits (though, like no change fees, those have eroded).
With these changes, flying Southwest is now just objectively worse than other carriers. For typically about the same price, you will get:
–To pay for your bags,
–To pay for your seat, if you want a good one,
–A frequent flyer program with less utility for your miles,
–To (most likely) get on an airplane with no power, while the vast majority of AA/UA/DL planes have power,
–To have zero buy-on-board food options,
–To get on an airplane with more seats for the same amount of bin space than AA/UA/DL (due to all-economy layout),
–Actually, to get on an airplane with *less* bin space, since WN hasn’t invested in expanded bits like AA/UA/DL,
–All while more passengers than ever try to carry-on, thanks to no free checked bags.
And, you’ll run a higher chance of being delayed or late.
But at least the flight attendants will have a casual attitude and make jokes!