Today’s Wall Street Journal provides an interesting read on Southwest Airlines. The headline says, “Southwest’s New Flight Plan: Win More Business Travelers.” Unfortunately, the story isn’t available on the paper’s web site unless you pay for it.
So, here’s the story in a nutshell: the airline wants to “wean itself from its reliance on budget travelers.” To accomplish this task the airline is trying to lure business travelers so it can raise fares. Here’s the catch: can it do it without maddening budget travelers?
That’s the meat of the story. But what’s really interesting are the details. The paper quotes an academic study that reports, “Southwest’s fares were lower only half the time when compared with fares of competitors selling tickets through the online travel site Orbitz.com.” You can find the study here and read the details.
This study, along with the Journal article, are two more blows for Southwest as it works to protect its low fare perception. What do I mean by that? Play along here for a moment and I’ll give you an example...
2007 began with a screaming full page advertisement in the Journal. The catch line said, “Fares as low as $49.” Who do you suppose the airline was? Southwest? AirTran? JetBlue? Wrong, wrong and wrong. The correct answer: American Airlines. Admit it—you thought it was Southwest.
According to well known aviation analyst Darryl Jenkins, of Embry Riddle University, Southwest is the lowest fare carrier in less than one-third of its markets. He says, “The illusion of low fare is better than a low fare and Southwest has the highest percentage of high fares of any airline.” If you’re skeptical about this, do a market by market comparison of fares and you’ll discover what Jenkins already knows: the mystique of Southwest has more to do with perception than low fares. Analysts say one reason so many airlines have been in bankruptcy is because they’ve actually been competing with Southwest.
Perhaps the bottom line challenge for Southwest, as it tries to appeal to business flyers, is maintaining the "illusion."