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I have flown a decent amount this year. Usually [SFO -> LAX, SFO -> LAS, SFO -> SAT]. Almost all my flights have been Southwest, because honestly it is the chea

I have flown a decent amount this year. Usually [SFO -> LAX, SFO -> LAS, SFO -> SAT]. Almost all my flights have been Southwest, because honestly it is the cheapest. The problem is that nearly every flight leaving or heading into SFO on Southwest is massively delayed. My last experience from LAX to SFO, the flight was delayed four hours. There obviously was a mob of grumpy Southwest customers. On the other hand I have taken Virgin America a handful of times, and the experience is the opposite. It is a complete dream and pleasure. I love the lighting (feels so sheek). So what is the problem? Their product is top notch, but they are losing money hand over fist. Normally, a company would just adjust their prices, but in the brutally competitive landscape that is air-travel, prices are everything (see my top paragraph). So, what is Virgin America to do? I still to this day don't know how Southwest is able to offer flights significantly cheaper than everybody, and stay afloat, while the rest of the air-line industry can't. What is their secret sauce? Cheaper plans? Lower wages? Not sure, but Virgin America should figure it out and adopt it. I am sure it ins't their interior lighting and amazing customer service though.

rdl 14y ago
Southwest's secret sauce is rapid turnaround of planes, flying from cheaper airports, and fleet commonality around one type so they can minimize maintenance, pilot training, etc. expenses. Plus, generally serving second-tier markets with less competition with direct service, vs. hub and spoke, which is only possible through volume. Plus, great labor relations vs. the other carriers. The other thing they did which helped them a lot was Goldman-level hedging of fuel contracts, although that could have hurt them if prices had gone down (although when they took on all the hedges, prices for fuel were quite low, and everyone expected them to go up.)
TimGebhardt 14y ago
For a while it was because they had pre-purchased all of their fuel at 2000ish oil prices using long-term futures contracts. The bet turned out to be extremely lucrative for them. However, most of their contracts are either expired or set to expire soon so I expect their prices to revert to the mean. They do a couple of other clever things, like only fly a single type of plane to take advantage of economies of scale, and only fly out of airports that have cheaper gate licensing fees. But the futures contracts really helped them through the industry's rough patch so that they could expand and aggressively grow while their competitors were declaring bankruptcy. http://www.time.com/time/magazine/article/0,9171,1074147,00.html http://www.time.com/time/magazine/article/0,9171,1074147,00....
nirvana 14y ago
Southwest is THE low cost airline. That's their secret sauce. Virgin is being "the best way to fly" or whatever. Southwest cares about nothing else. They don't do assigned seating because they found that without assigned seats they were able to fill the planes faster, meaning less time at the gate meaning more time in the air, meaning more legs in a day, which makes them more financially efficient. Back in the day they didn't pay travel agents the %15, and sold direct instead, etc. Southwest treats their employees very well, and while there is occasionaly a union squabble of some sort or another, they have much less of a problem than other airlines. Why? Becuase its' cheaper to treat your employees well. Seriously. This also means that customers are happier because employees are happier. The attitude of a southwest steward compared to the big three (Delta, United, Continental) is radically different. The big three employees often give me attitude and seem to think that dealing with me is some sort of an imposition-- and so I am loathe to fly on them (it only takes a couple incidents.) Awhile back southwest merged with a regional carrier (frontier? no, something else) but that carrier was known for a gimick where the employees would sing on landing or do the safety lecture in rhyme and the pilots would tell jokes. Southwest didn't change this practice, and it became optional and now it's not unusual to fly on SWA and have a landing limmerick. Their ticker symbol is LUV. Southwest flies into Midland instead of DFW. They fly into the older city airports, not the big fancy new airports. Why? Gate fees are a huge operating cost (basically a license for the local government to extort as much as they can from the airlines for the "priviledge" of providing air travel that boosts the cities tax revenues anyway) ... but soutwest doesn't pay to be in the glamorous locations. You may walk further to your gate and your airport may not be as nice, but it saves them, and -- here's the important thing-- they pass that savings along. Southwest doesn't serve hot meals. They give you a bag of peanuts labeled "Frills". They are one of those unique companies like Apple and Zappos and Crutchfield that really put the customer first, and were willing to go against convention to do it. Nothing against Virgin- I think they're trying to do the same thing and taking the high end of the market, and I'd love to fly Virgin if they had ever had an option on a route I was going (they haven't yet, so I haven't flown Virgin yet.) But Southwest filters everything they do thru their mantra. They are THE low cost airline. Does whatever help that? No? Then don't do it. Southwest is a result of focus, and that is a useful lesson for every startup. I hear the book written by Herb Kehler (sp?) is well worth reading (I think it's called "Nuts" or something like that.)
NoPiece 14y ago
Flying in and out of SFO is rough. According to flightstats.com, Virgis is on time 71% of the time, United and Southwest 63%, and American 58%. In comparison, flying from LAX to San Jose: American Eagle 93%, Horizon 89%, Southwest 82%, and flying into Oakland, Southwest is 85%, Skywest is 82%.

rdl 14y ago

Southwest's secret sauce is rapid turnaround of planes, flying from cheaper airports, and fleet commonality around one type so they can minimize maintenance, pilot training, etc. expenses. Plus, generally serving second-tier markets with less competition with direct service, vs. hub and spoke, which is only possible through volume. Plus, great labor relations vs. the other carriers. The other thing they did which helped them a lot was Goldman-level hedging of fuel contracts, although that could have hurt them if prices had gone down (although when they took on all the hedges, prices for fuel were quite low, and everyone expected them to go up.)

TimGebhardt 14y ago

For a while it was because they had pre-purchased all of their fuel at 2000ish oil prices using long-term futures contracts. The bet turned out to be extremely lucrative for them. However, most of their contracts are either expired or set to expire soon so I expect their prices to revert to the mean. They do a couple of other clever things, like only fly a single type of plane to take advantage of economies of scale, and only fly out of airports that have cheaper gate licensing fees. But the futures contracts really helped them through the industry's rough patch so that they could expand and aggressively grow while their competitors were declaring bankruptcy. http://www.time.com/time/magazine/article/0,9171,1074147,00.html http://www.time.com/time/magazine/article/0,9171,1074147,00....

nirvana 14y ago

Southwest is THE low cost airline. That's their secret sauce. Virgin is being "the best way to fly" or whatever. Southwest cares about nothing else. They don't do assigned seating because they found that without assigned seats they were able to fill the planes faster, meaning less time at the gate meaning more time in the air, meaning more legs in a day, which makes them more financially efficient. Back in the day they didn't pay travel agents the %15, and sold direct instead, etc. Southwest treats their employees very well, and while there is occasionaly a union squabble of some sort or another, they have much less of a problem than other airlines. Why? Becuase its' cheaper to treat your employees well. Seriously. This also means that customers are happier because employees are happier. The attitude of a southwest steward compared to the big three (Delta, United, Continental) is radically different. The big three employees often give me attitude and seem to think that dealing with me is some sort of an imposition-- and so I am loathe to fly on them (it only takes a couple incidents.) Awhile back southwest merged with a regional carrier (frontier? no, something else) but that carrier was known for a gimick where the employees would sing on landing or do the safety lecture in rhyme and the pilots would tell jokes. Southwest didn't change this practice, and it became optional and now it's not unusual to fly on SWA and have a landing limmerick. Their ticker symbol is LUV. Southwest flies into Midland instead of DFW. They fly into the older city airports, not the big fancy new airports. Why? Gate fees are a huge operating cost (basically a license for the local government to extort as much as they can from the airlines for the "priviledge" of providing air travel that boosts the cities tax revenues anyway) ... but soutwest doesn't pay to be in the glamorous locations. You may walk further to your gate and your airport may not be as nice, but it saves them, and -- here's the important thing-- they pass that savings along. Southwest doesn't serve hot meals. They give you a bag of peanuts labeled "Frills". They are one of those unique companies like Apple and Zappos and Crutchfield that really put the customer first, and were willing to go against convention to do it. Nothing against Virgin- I think they're trying to do the same thing and taking the high end of the market, and I'd love to fly Virgin if they had ever had an option on a route I was going (they haven't yet, so I haven't flown Virgin yet.) But Southwest filters everything they do thru their mantra. They are THE low cost airline. Does whatever help that? No? Then don't do it. Southwest is a result of focus, and that is a useful lesson for every startup. I hear the book written by Herb Kehler (sp?) is well worth reading (I think it's called "Nuts" or something like that.)

NoPiece 14y ago

Flying in and out of SFO is rough. According to flightstats.com, Virgis is on time 71% of the time, United and Southwest 63%, and American 58%. In comparison, flying from LAX to San Jose: American Eagle 93%, Horizon 89%, Southwest 82%, and flying into Oakland, Southwest is 85%, Skywest is 82%.