Might first-class, long-haul flights and airport lounges be subsequent at Southwest Airways? After all of the modifications to the airline’s long-standing enterprise mannequin in current months, together with bag charges, assigned seats and large loyalty program shake-ups, the corporate’s high executives seemingly aren’t ruling something out.
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“We aren’t stopping right here,” Southwest CEO Bob Jordan acknowledged, talking Thursday at an trade convention in New York.
By subsequent yr, Jordan mentioned, Southwest plans to unveil its subsequent spherical of long-term plans — the subsequent chapter, if you’ll, within the evolution that to this point has ushered in assigned seats, $35 bags and, for the primary time on the airline, primary economic system.
What else might be on the horizon?
“There is no reveal in the present day,” Jordan cautioned. However he additionally posed some “hypothetical” examples of what the airline may take into account.
“For a lot of of our of us that love Southwest, we won’t do issues — we won’t present merchandise — that you really want. Like a first-class. We will not get you to long-haul worldwide locations. If a lounge is vital to you, we do not have a lounge,” Jordan mentioned whereas talking on the Bernstein Strategic Selections Convention.
“I am not predicting any of these issues,” he reiterated whereas making clear that “we are going to proceed to pursue the buyer.”
And client demand for a lounge in some key Southwest cities, Jordan famous, is “tremendous excessive.”
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He additionally acknowledged that rethinking Southwest’s worldwide technique (and pushing past its short-haul flights to locations like Mexico and the Caribbean), “may require that you consider a special plane.” The provider at the moment has a fleet of solely narrow-body Boeing 737s.
“What I am promising you,” Jordan mentioned, “…is that we are going to by no means lack a ‘the place we head 5 years from now’ technique.”
Evolving, however more and more much less totally different
Once more, none of that is formally “on the desk,” so to talk.
However from bidding farewell to its hallmark Wanna Get Away fares (bear in mind these commercials?) to upending its one-of-a-kind boarding process and launching red-eye flights earlier this yr, current months have proven a Southwest, which minimize its tooth on being totally different, as an airline that is more and more unafraid of change.
Monetary pressures have rather a lot to do with it.
Within the wake of the coronavirus pandemic, it is carriers like Delta Air Strains and United Airways which have soared to the U.S. airline trade’s highest earnings, propelled by their strong worldwide networks, premium seats and profitable bank card portfolios.
Southwest, in the meantime, hasn’t maintained its traditionally excessive margins — a driving pressure behind the shift the airline has gone by in current months.
“The previous mannequin wasn’t working and so now we have pivoted,” Southwest Chief Working Officer Andrew Watterson acknowledged on the corporate’s earnings name final month.
Competing with premium airways
But there is a stark actuality in Southwest’s pivot: Sure, it’ll quickly have extra premium choices in its extra-legroom rows. Sure, it’s going to provide “upgrades” to A-Listing elite members and sure Rapid Rewards credit card holders.
However at the same time as Southwest matches Delta, United, American Airways and Alaska Airways in charging clients add-on charges for baggage (and ultimately seats, on some fares), it nonetheless will not have the first-class seats and lounges these carriers provide. Even Frontier Airways is adding bona fide premium seats, and JetBlue has introduced lounges and a domestic first-class product to enhance its long-haul Mint suites.
That distinction, as Brian Sumers of The Airline Observer wrote in March, arguably places Southwest at a drawback because it begins to look extra like its opponents in different areas.
And it is a distinction I posed to Tony Roach, govt vice chairman of buyer and model, throughout a current interview only a few weeks in the past.
“There’s nothing to announce on lounges or top notch,” Roach cautioned then, with an identical tone to what Jordan provided throughout his remarks this week.
“However you’ll be able to nearly assume that, if it is a product providing that our clients finally are going to need and demand from Southwest Airways, we have demonstrated that we have got to proceed to evolve, serve extra of these wants,” he added. “We proceed to look towards long run, the way forward for Southwest, which we, once more, proceed to supply extra issues that is going to offer individuals extra motive to decide on Southwest.”
Planning for the long run
Whether or not clients would proceed to decide on a vastly different-looking Southwest was the subject of plenty of speculation this spring.
To this point, so good, executives claimed final month, noting the provider had not, as of but, shed passengers to opponents.
“After saying these modifications, we noticed no proof of bookaway,” Jordan informed analysts in April.
However sustaining that momentum, he urged this week, may require Southwest to proceed evolving.
It is conceivable that quest may lead the airline to extra of the options — and flights — that its opponents (and their clients) have flocked to lately.
“As a result of we won’t provide sure merchandise and get you to sure locations, even clients that love Southwest, we pressure you to fly on anyone else. And we then pressure you to hold anyone else’s cobrand [credit] card,” Jordan mentioned Thursday, committing to “research” that hole over the approaching months.
“I might take into consideration that,” he added, “… as a 2026 query.”
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