Southwest Airlines CEO Gary Kelly made a statement in a TV interview where he said never say never when it comes to adding baggage fees at Southwest Airlines.

Before anyone over interprets:  He also said that there are no plans to do so in 2013.

He also said that he believed that Southwest’s customers would tell SWA if it wanted that unbundled fee added and he is absolutely right.  The customers will indicate to Southwest just how much of an unbundled carrier it wants it to be and that is as it should be.

It occurs to me that Southwest could soundly smack airlines such as Delta, American and United by lowering its fares and adding a baggage fee.  I doubt the revenue picture would change much at all on a per passenger basis but the fundamentally lower fares would put real pressure on the SuperLegacy airlines (with or without their lower costs.)  Why?  Because those carriers have a unique disadvantage against Southwest with respect to costs:  The SuperLegacy Airlines all incur the hub & spoke network costs that Southwest avoids.  And while Southwest pays some of the highest labor rates in the industry now, they also get the highest productivity in the industry as well.  That offsets those costs considerably.

Imagine you are American Airlines and Southwest lowers fares against you on the top 25 routes out of the DFW area and adds a baggage fee that is $5 cheaper than yours.  If I’m the AA CEO, I reach for the Tums.

Filed under: Airline Fees by ajax
No Comments »