“I fully put”: the CEO of Rudderless Southwest Airlines first-class fleet and long-haul flights
Southwest Airlines had a clear idea of who they were. They had a business theory. They did things differently from the rest of the industry to offer cheap and friendly service to the customer, mainly steering steps in cheap airports and using a single type of plane to reduce costs. They would pilot short flights that brought people out of the roads and in the sky.
All of this has changed. They now have basic economic rates, expiring flight credits and invoice for recorded bags. They will charge assignments of seats and sell additional legs for the legs. They will have boarding groups instead of aligning everyone. And they devalued their points.
The CEO of Southwest, Bob Jordan, however, spoken at The Bernstein strategic decisions’ conference and said what they did was at low risk precisely because everyone does it too.
(T) Here is a low risk because we put things that the industry has done forever. There is therefore a low -risk implementation, there is a low risk in reimbursement of financial advantages.
To be clear, there is little risk to besieged executives When they copy everyone. It is not their plan that is false, these are factors out of their control.
But there is a huge risk for the South West to eliminate their unique sales proposal, which was precisely that they were different, to copy financial sub-performants like American Airlines and JetBlue.
Jordan, however, says he’s not finished. He will continue what the customer wants, instead of advancing a customer theory and how to best meet their needs. And that could mean a real first class, it could mean flying in the long term. With Southwest Heart Dead, there is no more real north of the company.
(W) e does not stop here. So putting the things I described is not the end of the trip to the South West. We will continue to continue the consumer. And if the consumer wants other types of bonuses, he wants us to pilot other long destinations, which could lead to plane issues. I totally do it all. This is not a plan. But consumer demand in some cities for us for a living room is super high. My point is rather than saying that no Southwest airline does not do so. You must follow the consumer or if you are always vulnerable to others who can offer it to the consumer.
… Even there in Nashville and Austin as an example, people love us, but we cannot either – for many of our people who love the Southwest, we cannot do things that – we cannot provide products that you want like a first class, we cannot bring you to long international destinations. If a living room is important for you, we don’t have a living room. I do not predict any of these things. What I tell you is rather than being eternally vulnerable, we will follow the consumer and what the consumer needs.
The point to remember here should not be “Southwest Airlines is envisaged in first class, large -term aircraft and long -term flight”. Instead, it should be Southwest has no idea who they are, and no way to assess competing ideas.
The truth is that the old Southwest model has probably gone as far as possible. After having accumulated 47 consecutive years of profits, even until September 11 and the great recession with low costs, a simple operation and friendly policies, they are:
- Plus a low -cost carrier. They no longer have the hedges of Gary Kelly Fuel and have expensive contracts with pilots, on -board agents and other working groups. Headquarters grew up.
- Lacking long -term flight and partnerships. Southwest takes you to the biggest domestic markets, but cannot sell tickets in Europe or in other global destinations that customers want to fly. And they do not benefit from tickets that foreign airlines sell to their customers. An Asian passenger cannot land in Los Angeles and transfer to the same post to a southwest flight, or from Europe to New York. It’s a lot of lost business.
- Not serving small markets providing food to their larger plans. With nothing smaller than a Boeing 737, they cannot serve the markets that other airlines reach with regional jets. These passengers cannot then circulate in the rest of the Southwest road network.
- Missing premium products. Customers have wanted more and more space and other amenities, and the Southwest had nothing to offer to these passengers. This also includes less high -income customers than peers of inherited airlines (less desirable credit card). And they still don’t have that – they add additional legs for the legs but do not even plan to sell blocked central seats.
- Do not market flights to the customer. Southwest had largely sold tickets to their own channels only. They did not sell where so many customers were in online travel agencies. This meant that they sold most of their tickets to the inhabitants of the cities which had a strong notoriety in the southwest of the brand, and knew how to go to their website, but not as much on the smaller markets as they stole. Instead of an equal balance of passengers at the two ends of a route, the Southwest was missing from customers on these small markets.
This meant that customers do not directly compare prices, which was great, because the South West generally does not offer the lowest prices … But they have not sold restrictive basic tickets either and they have included free checkered bags at each price.
Once the Biden administration rule requires prices by comparing all costs with various costs has been struck in the courts, the only path in the southwest to be competitive by customers beyond their own channels was price like everyone else.
Southwest had an excellent model until it was no longer one. They could not continue to grow without changes and will never return to their historical costs. They had to abandon simplicity for growth, but this complexity also means higher costs.
This means that Southwest was never going to be the Southwest again, even with employees who do not largely hate their work. Accelerated changes cowardly on the market. The activist investor Elliott Management complained that the management of Southwest had been slow to adapt, which was true. But no one has solutions and we have therefore rushed to grasp the policies and practices of less successful airlines in the precipitation to protect jobs from false Baloney, while selling plane and delivery locations and, in some cases, rent them in order to finance sharing buyouts – which did not give the hoped -to -thickness.
