Thursday, October 27, 2016

Southwest weighs extra fees, just not on bags

The bags are safe. Beyond that, however, Southwest Airlines might start charging fees for other things in the foreseeable future.

CEO Gary Kelly told analysts and reporters Wednesday he has “no thought whatsoever” to starting charging bag or change fees. Southwest markets its lack of those fees to help it stand out against its more fee-heavy rivals.

“We have a unique and beloved position in the industry with this approach,” Kelly said. “We would be foolish to squander it.”

But as Southwest seeks to meet revenue goals it missed in 2016, Kelly said ancillary fees for other items may be on the menu as a potentially significant source of revenue.
Tammy Romo, chief financial officer, said fees for EarlyBird Check-In and Business Select to skip boarding lines have been successful.

“The EarlyBird, as an example, we’re continuing to see year-over-year growth in ancillary products such as that,” she said.

Kelly doesn’t expect to introduce the fees immediately because he wants the airline to execute other priorities first. After a technology glitch in July canceled thousands of flights, the airline begins shifting to a new reservation system in December in a migration that's expected to be completed by May.

“I don’t want our company to chase too many things simultaneously,” Kelly said. “We need to execute well.”

Asked what the fees might cover, Kelly said he would play the choices close to the vest until they are ready for introduction, to avoid giving ideas to his competitors.

“It’s just not ready for prime time,” Kelly said. “Driving growth in ancillaries per passengers is absolutely an objective that we have. I don’t know if we’ll be doing a lot of that in 2017.”

(Bart Jansen - Today In The Sky / USA Today)

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