Southwest may need to change the perks that made customers loyal
Southwest may need to change the perks that made customers loyal
After facing some pressure earlier this week from an activist investment firm, Southwest Airlines has announced it’s making some major changes.
At its Investor Day on Thursday, the carrier emphasized its plans to shift some of its routes, add overnight flights, and do away with the main thing that had set it apart from its competitors: its open seating system.
Open seating and short domestic flights — Gary Leff at viewfromthewing.com says these hallmarks have kept Southwest Airlines’ ticket prices low and customers loyal until the last few years.
“Southwest has found that they reached the limit of their model to a large degree. And that was really accelerated by the pandemic,” Leff said.
The post-pandemic period saw an increased demand for travel abroad, but Southwest didn’t fly overnight or much internationally. Then came the great holiday meltdown of 2022 when nearly 17,000 flights were canceled after a network failure.
Industry analyst Robert Mann said people judge a carrier by their most recent trip. “Was it good, I’ll consider buying it again — or was it bad and I’ll go look for another airline,” he said.
Southwest’s changes could alienate their diehard customers, especially if the company becomes just another airline in the flock of airlines said Leff at viewfromthewing.com.
“The U.S. airline industry is largely homogenized, one that doesn’t have a lot of product differentiation today,” he said. Leff explained this is what happens when an industry consolidates — the players in it take on the same strategies.
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