This weekend, we flew to Boston on a United Airlines flight. Kansas City doesn’t fly to Boston, directly. You have to stop somewhere (Chicago O’Hare for us). It’s a trip we’ve taken a couple of times now, since Rachel’s brother RJ has lived there for the last several years. Most airlines are still trying to find a way to operate profitable businesses. Without really delving into the numbers, Southwest Airlines, one of the only airlines with a reputation for profitability, is just barely profitable.
Because it’s a tough business to make money in, airlines are having to get more and more creative. If you raise fares and your competitors don’t, your volume is going to go down and you’ll be hurting even worse. Most people, including my wife and I, shop for airfare based on price. If you can get there in the same amount of time for fewer dollars, why would you do anything else?
One way many airlines are trying to make an extra buck is by charging you to check your bags. The first bag costs $15, the second costs $25. Obviously, this adds another way the airline can make money. If you’re going on a long trip, most people will pack a bag large enough bag that they’ll have to check at least one. This also offers an incentive for people to pack lighter. Less weight equals less fuel. I’d love to see a study on whether fuel consumption and weight have actually been impacted by the bag charge.
United also offered certain seats with additional leg room for an extra $39 per seat. These seats also happened to be closer to the front of the plane. We opted for the cheap seats. A lot of other people did, too. On our return flight, the plane was fairly full in the cheap seats, but the extra leg room seats were sparsely populated. A lady sitting near my wife and I asked if she could move up to one of those seats. The attendant told her no because those seats had an additional charge. I guess the airlines policy is to just leave those seats empty rather than accomodate their guests. I understand their thinking. If we let people move up into those seats, they won’t have an incentive to buy one next time. We want them to experience the pain that the smaller seats offer, so they’re not gambling for the better seat for free. On the other hand, I think it’s a little ridiculous to not let people move up once the plane is in the air. If you could make 15 people more comfortable at no additional cost, why not do it?
These extra costs are just a couple of ways the airlines are looking to save/make money. According to this article, some airlines are starting to charge for beverages as well. American Airlines and US Airways both charge for the first bag. I would not be surprised in the least to see this become the industry norm. Southwest, whose goal (according to their slogan and the book, Built to Last) is to be THE low cost airline has so far not implemented any of the upcharges mentioned. They don’t have assigned seating, don’t charge for your first two bags, and still give free drinks. You can’t buy leg room on a Southwest flight. They do have a program that enables frequent fliers to boarding group A status no matter when they check-in, but other than that they seat people on a first come, first serve basis. Still, with their peers looking for additional things to charge for, I can’t see them bucking what’s becoming the standard in the industry forever. Until they do, they’ll get the slightest premium from me whenever I fly. At the very least, I’ll remember to add $15-25 for checking bags to the price of any ticket I book that would involve me having to check a bag. Thanks for reading.
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#1 by Donnie on June 8th, 2009 - 1:43 pm
I think the extra fees are just a ploy to hide costs, and make it more difficult for the consumer (and flight search tools) to really tell who has the lowest cost airfare.
If United is priced $10 lower than Southwest, it will always show up on top of Southwest in a flight search, but then you have to know that particular airline’s baggage and fee policy to really know who is the best.
Just trickery all around. Roll the cost into your flight price, and stop trying to trick us, I say.
Good job Southwest. If I wasn’t at a Continental hub, I would choose to fly with them more. I love their boarding process and no assigned seating.
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Todd Metheny Reply:
June 8th, 2009 at 2:00 pm
Hi Donnie – I agree. Extra charge-ups and fees definitely make it harder to determine which airline is the cheapest. My fear is that these extra charges will soon become the standard in the industry. I’m going to fly with the ones who shun that practice (like Southwest) for as long as I can.
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#2 by Steve on June 8th, 2009 - 8:34 pm
It takes guts to do what Southwest is doing. Hopefully, they will remain profitable for a long while. I think they are fair. Even if Southwest starts charging for bag check-ins, I will still fly with them because they are the “lesser evil”, i.e., the last to join the gang. What I don’t get is… if Southwest can do, what can’t one of the others do it?
I hope the graduation went great. I am sure the PhD appreciated your presence.
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Todd Metheny Reply:
June 9th, 2009 at 6:20 am
In the book Built to Last by Jim Collins, they talk about how the best companies set a big, audacious goal and then throw all of their efforts toward achieving that goal. The goal listed by Southwest is to be THE low cost airline. I think their adherence to that mission has enabled them to avoid some of the unnecessary expenses that other airlines have had to take on. They’re efficient and simple. That’s part of what makes them great. Their prices inspire consumer loyalty, too. They don’t bother flying to Europe, or anywhere they don’t think it makes financial sense for them. They’ve limited themselves to flights they can be profitable on. I don’t know much about the business itself, but Built to Last does a good job of explaining why Southwest can be successful where so many others have failed. Leaf through it at the library if you like books like that. It’s a great one, both fun and easy to read.
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#3 by Steve on June 9th, 2009 - 6:08 pm
Todd, many thanks for the info. When I was writing the comment, I made a mental note to research why/how Southwest does it… so the book you have suggested will definitely help. Your quick summary is also helpful. I really appreciate it.
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Todd Metheny Reply:
June 9th, 2009 at 7:57 pm
No problem. If you read the book, let me know what you think of it. The book has its own language when it comes to businesses. I don’t know how many times I’ve heard people say, we need to quit time telling and start clock building – an analogy straight out of the book. There are a lot of things like that in Jim Collins’ books. I hear he has a new one out that’s on my list of things to read.
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#4 by Rachel on June 18th, 2009 - 7:54 pm
Well said. I think that Southwest started out as the cheapest airline, but has become the airline with the pleasant staff and no add-on costs. I hope that this seemingly new reputation keeps them from adding on costs as many of the other airlines are doing. I really will continue to try to fly with Southwest as long as things stay this way!
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