Airlines are adopting basic economy fares left and right as a way to make more money. Charging separately for bags and seats – or encouraging passengers to pay for an upgrade – has proven a winning business strategy, even if customers suffer.
Every major U.S. airline will sell basic economy fares in 2019 – jetBlue will join the fold sometime this year. But Southwest CEO Gary Kelly drew a hard line on Thursday, promising it won't sell the bag-less fares that have spread.
“You’re not going to see Basic Economy from Southwest. That’s not what we do,” Kelly said during a quarterly earnings call. “We’re not going to charge for bag fees.”
He added a shot at Southwest's competitors: “They unbundle, and we don't,”
Our Analysis
It may not be a surprise, but it's still refreshing to hear.
Southwest knows what kind of airline it is, and that's not changing. This is not an airline that caters to business travelers, but instead to vacationers. Southwest beloved among travelers because it includes two free checked bags and allows cancellations on paid and award tickets, no matter what.
Southwest simply does things differently, and it works. While other airlines have suffered, collapsed, and followed budget carriers' lead, Southwest has turned a profit for 46 years straight.
And that's precisely because Southwest resists these maneuvers. It guards its reputation as a flyer-friendly airline carefully. That's the vision and principle that its former CEO and founder, the late Herb Kelleher, set in stone. Kelleher passed away earlier this month.
That those came through in Kelly's declaration against basic economy loud and clear.
Bottom Line
Airlines and their shareholders love to make more money, and many haven't been able resist the extra cash that basic economy brings in. Southwest knows it can't afford to follow them.
Southwest is the best. I’m in Las Vegas and with that I can avoid United almost 100%