Other Airlines Suit Up To Play Southwest's Game

Southwest Airlines chief executive Gary Kelly announcing the airline's Dulles routes last week. The low-fare carrier has a major presence at BWI.
Southwest Airlines chief executive Gary Kelly announcing the airline's Dulles routes last week. The low-fare carrier has a major presence at BWI. (By Win Mcnamee -- Getty Images)
By Keith L. Alexander
Tuesday, July 18, 2006

Over more than 30 years, Southwest Airlines has justly earned a reputation as the first carrier travelers look to for cheap fares. Its influence in lowering air fares generally can't be overstated. Any time the airline moved into a new market, its rivals were forced to bring their prices down. In 1993, when Southwest arrived at BWI, US Airways and United Airlines had to cut their prices by as much as 40 percent.

Now, however, the low-fare goliath is facing some tough competition of its own -- and its fares are not always the cheapest anymore, especially for business travelers, who often purchase tickets at the last minute.

Consider: A round-trip, nonstop flight from BWI to Fort Lauderdale leaving today and returning Wednesday was $476.60 on Southwest's Web site yesterday. The same route went for $178 on US Airways, according to Orbitz.com. A round-trip, nonstop flight to Denver was $644 on Southwest but $607 on United.

"We're not saying we will be the lowest fare every time, 100 percent guarantee," said Keith Taylor, Southwest's vice president of revenue management and pricing. "But we will say that Southwest has the lowest fares in the industry and the highest amount of seats at those fares."

Southwest does have more seats at cheap fares than other airlines, giving travelers more chances to get those seats. Other airlines have fewer flights and a wider range of prices, limiting chances for the cheapest seats.

Many travelers welcomed the news last week that Southwest would begin operating out of Dulles on Oct. 5, offering some attractive advance-purchase fares to select cities. The airline will fly nonstop to Chicago's Midway, Orlando, Tampa and Las Vegas for $79 to $99 each way for tickets purchased 14 days in advance.

For some travelers, finding cheaper tickets on Southwest is a game of chance. Michael Decker of Davidsonville recently bought three tickets to Midway from BWI for his family next month. Southwest offered a fare of $600 for the three, but when Decker tried to purchase the tickets, no seats were available at that price. The only seats for purchase cost $900. So the Deckers went with ATA Airlines for $469.

But for a trip to Phoenix, Decker's wife, Marilyn, found round-trip ticket on Southwest for $270 each. The next-cheapest ticket was on America West for about $400.

Michael Lippman, a consultant with Blue Raster LLC, a mapping company, said he assumed for years that Southwest was cheaper, and so he would rarely check prices on other carriers. But as the drive to BWI from Arlington, where he lives, became more costly with the rise in gas prices, Lippman started comparing the cost of tickets.

"They're not always the lowest. If you're able to purchase well in advance, that's when you have the opportunity to get the less expensive flight," Lippman said.

Southwest hasn't been immune to forces affecting the industry and driving prices higher. Fuel bills for all carriers have climbed sharply in recent years, with the cost of jet fuel eclipsing labor as the industry's No. 1 expense. Southwest, which has had some success in hedging its fuel costs, still faces an $800 million fuel expense this year. The airline has already raised its fares four times since Jan. 1.

Air fares were an average 9.1 percent higher across the nation during the fourth quarter of 2005 than in the comparable period in 2004, according to the Bureau of Transportation Statistics.

Southwest's fares aren't routinely the lowest prices anymore partly because competing legacy carriers such as United, Delta and US Airways have been aggressively matching or undercutting Southwest's prices. Those carriers used the bankruptcy courts to reduce their costs enough to better compete with Southwest at the ticket counter.

Also pressuring Southwest, other low-fare carriers such as AirTran Airways and JetBlue Airways have expanded along Southwest's routes, often matching -- and in some cases beating -- Southwest's fares.

"That gap that existed between Southwest and the other airlines has narrowed substantially," says Joe Brancatelli, editor and publisher of business travel site JoeSentMe.com.

Yet while Southwest's fares may not be as cheap as in previous years, the carrier still offers many perks that other airlines do not, such as no fees to change tickets or fly standby and refundable tickets. Also, Southwest, unlike many carriers, doesn't require a Saturday night stay for a cheaper ticket.

Northwest Flight Attendant Agreement: Northwest Airlines and the negotiators for its flight attendants union yesterday reached a tentative agreement. The accord comes after a week of intense negotiation and at least temporarily averts a strike by the airline's flight attendants. The agreement must be approved by the union's leaders and membership.

American Airlines' Mary McKee demonstrates the new, lie-nearly-flat business-class seat coming to American's Boeing 767-300s and 777s.
American Airlines' Mary McKee demonstrates the new, lie-nearly-flat business-class seat coming to American's Boeing 767-300s and 777s.
New Seats in Business Class: American Airlines yesterday unveiled its new business-class seats, which allow its top-paying international passengers to recline nearly flat and provide an in-seat audio and video system. The new seats will be available on Boeing 767-300 aircraft next year, as well as on the Boeing 777. Other carriers, such as United, Virgin Atlantic and British Airways, have a similar lie-flat seat design for premium passengers.

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