The Dallas Morning News Aviation Blog has a story about new Southwest Airlines CFO Tammy Romo indicating that Southwest would be looking to tighten up restrictions on the Wanna Get Away Fares that are Southwest’s most affordable.  This occurred at the JP Morgan Chase Transportation & Defense Conference and one questioner indicated his own experience with these fares and the fact that he was asked for no additional money to change a ticket.  Surprise was expressed that there was money being left on the table as he was ready to pay a change fee and found there was none.

Now we are getting into dangerous territory for SWA in my opinion.  First, while there is no “fee” to change a ticket, it’s often misunderstood that a change in the ticket results in no extra cost.  That’s not true.  The user has to pay the difference in fares and that often can be considerable.

Second, change fees for such tickets will never be a big revenue driver but they can be a huge discriminator when it comes to adding customers.  It’s like the bag fee thing only better.  If I were Southwest, I would advertise the hell out of this and drive more traffic my way.

Third, Southwest perhaps should look at every time it has in place today but that doesn’t mean it should change every item in place either.  Should Wanna Get Away Fares be restricted?  Probably to some degree.  I would say that charging a $25 fee to change a ticket would be of no real impact to Southwest but at the same time add incremental revenue where it would be appropriate to add incremental revenue.

But I would also be very careful of letting analysts drive my focus in these areas.  Analysts are paid to find anomalies in data and point them out.  They are not paid to quantify intangibles.  Southwest’s success is based a great deal on the intangibles that the airline offers and I would be very careful not to corrupt that perception.  Furthermore, just because a very well paid people earning considerable 6 figure salaries are willing to pay change fees does not mean the consumer of Southwest’s services is willing to pay these.

Southwest’s advantage is in delivering a high value experience.  Every fee is potentially an item that diminishes that value.

Filed under: Airline Fees by ajax