Revolutionary new business fare allows business travellers to board the aircraft first
Southwest Airlines, the leading US low-fares carrier and a model for low-cost carrier start-ups around the globe, is rewriting the book from which so many others have copied.
The Dallas-based carrier has launched a fundamental restructuring of its fares and boarding process, two important features of its business model which differentiated it from others. The airline has modified its "first-come, first-served" boarding procedure to give preference to its highest-paying passengers, those who opt for a new fare category dubbed "Business Select". At $10-$30 more, this fare type breaches the informal cap Southwest had on fares and puts it on track to bring in up $100 million more in annual revenue.
The new fare category is an attempt by Southwest to win back business travellers, which now account for 25% of Southwest's sales, compared to 40% a decade ago. Business Select customers also earn loyalty points more rapidly and receive a free on-board drink. Business flyers had long complained that if they wanted an aisle or window seat they would have to get the airport gate early and line up with other flyers for Southwest's so called cattle car boarding.
Southwest chief executive Gary Kelly swears that even though there will be "no more cattle calls", the airline is still "a democratic one" and "all customers are equal". Faced with a wind-down in Southwest's fuel-hedge contracts, Kelly has been searching for ways to boost Southwest revenues. These changes along with $40 million in enhancements to airport gate areas, in-flight entertainment that may be offered in 2008 and international codeshares are the first major steps. They accompany an increase in business-oriented routes.
Southwest is not alone in such rapid change. Denver-based Frontier Airlines has also modified its strategy by cutting back several routes to Mexico and ending its mini-hub in Memphis. Frontier is shifting capacity to business routes as it prepares for the delayed launch of its new turboprop unit, Lynx, which it hopes to get running by year-end.
Source: Airline Business
