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Do Southwest Airlines’ Nice-Guy Tactics Cost It Millions of Dollars in Profit?

Southwest doesn't jerk around its customers—yet.
Southwest doesn’t jerk around its customers—yet.

The blog of the unique travel planning service Flightfox has a post comparing Dallas-based Southwest Airlines, the “low-budget darling” of the airline industry in the United States to Ryanair, Europe’s low-low-cost carrier.

Ryanair is famous for its extremely cheap fares accompanied by exorbitant fees, like charging $115 to print your boarding pass for you. The airline even once proposed charging passengers to use the onboard toilet. By contrast, Southwest has resisted even the industry trend to charge bag fees. Ryanair’s profits last year were 40% higher than Southwest’s. Says Flightfox:

In the league that Ryanair plays in, Southwest is simply too nice. Southwest maintains wholesome traditional values that when added together, end up costing them millions.

Southwest mainly defies the low-cost model logic with its acceptance of two free checked bags. The checking of any bags should be avoided as they slow down loading the plane, inflate the turnover time, and end up costing the airlines more than they are worth.

In addition, although the airline’s customer-service approach is charming, an automated system like Ryanair’s is far more cost-effective. Instead of employing thousands to answer phones and book flights, Ryanair is saving the energy on plotting the next money-making scheme.

Southwest’s customer service, freebies, unionized labour, frequent flyer rewards and a mismatched aircraft fleet are all consistent with a more traditional airline model.

Although Southwest was once considered a pioneer amongst low-cost carriers, it has remained just that; a dated, bonnet-wearing airline. If Southwest ever hopes to offer its customers lower rates or increase their profit margin, they are going to have to ditch the sweet tea and start drinking some of Ryanair’s killer Kool-Aid.

I’m not so sure that adopting the miserly approach of Ryanair is a path to higher profits for Southwest.

The comparison that Flightfox makes breaks down because, by the writer’s own admission, Southwest isn’t really a budget carrier anymore. Ryanair’s counterpart in the U.S. is really Spirit Airlines, which also charges low fares but ridiculous additional fees and is ruthless about canceling your ticket without a refund if you’re, for example, late for your flight.  (A lesson a co-working FrontBurnervian’s mother-in-law recently learned.)

Spirit has become, by some measures, the most profitable airline in the U.S. for its size. Last year, Spirit made $103.8 million in net income, a fourth straight year of profitability.

Last year, Southwest Airlines made $421 million net income, its 40th straight year of profitability. Southwest is doing just fine without jerking us around.