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Give them an inch and they take $773 million
- petercooper 13y agoIf they came up with a way to run at 90% capacity instead of 80%, I wonder how many seats they could remove and how many inches of leg room could be gained.
- wangthony 13y agonot all Southwest airplanes are 737's
- tptacek 13y agoSouthwest is famous for maintaining an all-737 fleet (I don't know what they're doing with Airtran's 717 fleet, but Airtran hasn't been integrated with SWA yet.)
- verroq 13y ago>implying the flights stayed 80% full after new seats were added >implying decreased customer satisfaction didn't hurt their revenue >implying their systems didn't need to scale because of increased customers >implying their R&D on smaller legroom didn't cost anything >implying upgrading planes didn't cost anything >implying more customers on planes didn't have an impact on maintenance costs >implying revenue means anything when you don't know the profit margins
- patio11 13y agoThe prevailing theory among air carriers is that demand for flights is totally exogenous to the industry and allocation of flights between carriers in the industry is, for most customers (e.g. not frequent business travelers, who are price insensitive and care about mileage), dependent pretty much solely on price. Accordingly, minor decreases in comfort which add capacity are pretty much an auto-win. Many people dislike this conclusion and dispute it's factual accuracy because they don't want to believe that they'll predictably increase their own agony to shave $5 off a ticket. But, well, non-experts opinion of their own behavior often does not have 1 to 1 correspondence with reality which is tractable to measurement with numbers.
- glurgh 13y agoBut that's not, strictly speaking, SWA's theory in entirety. SWA's policies and customer service are typically better than those of many of their larger competitors. You might be inclined to take the budget flight you were promised in exchange for not being nickel-and-dimed or treated like a sack of potatoes. Price is a major driving factor but I don't think Southwest continues to be competitive simply on the basis of price - Shuttle by United was aggressively price competitive (http://en.wikipedia.org/wiki/Shuttle_by_United http://en.wikipedia.org/wiki/Shuttle_by_United) and still ended up failing, for instance.
- tiredofcareer 13y agoFor most customers, maybe, but I suspect there's a pretty sizable portion of the population (myself included) that will happily pay more for an airline that treats me extraordinarily well, considers my comfort while on board, and gives me reasons to shout their name down the street. For example, Virgin America is one of those airlines for me, and I will happily pay a premium to fly one of their tragically few routes (they're one of the few airlines I fly first on, as well). I blacklist Southwest entirely because of the complete disregard for my experience shown on the three miserable flights I've had with them. I don't think I fit in your business bucket, but that's a data point, at least. In another industry where profit is the focus, domain registration, I'm absolutely dying for a $100-$200/year registrar that knows what they're doing and isn't awful to deal with. I will happily pay that premium since my hosting bill far outweighs my domain registration, and handling support tickets expediently and providing features I want are far more important than the bottom line to me. If an extra $10/year from all customers means I get IPv6 glue or a ticket answered inside of 72 hours, please, do it! (This is less relevant now, but was a concern for me in the past.) I'm willing to part cash to be treated better in almost all cases.
- rdl 13y agoFor domain registration at the $100-200/yr range, just become a Tucows/OpenSRS reseller yourself. You get a lot of power to do things, minimal hassle, etc. I own maybe 200 domains (because I tend to get all variations of the ones I use) and it's totally worth it (and still only $7-8/domain/yr)
- deleted 13y ago[deleted]
- patio11 13y agoFuel costs are essentially linear with regards to weight, and accordingly dominated by putting several hundred tons of metal in the air. After you've made that decision, adding a marginal passenger is much, much, MUCH cheaper than the price of a ticket. The margins approach that of the last customer added to a SaaS company. (!) Airlines occasionally obscure this with regards to their public pricing rationales for extra luggage, but that is almost solely an ops/revenue-maximization problem for the airline rather than being sincerely a proportional response to the additional marginal cost of putting another bag in the air.
- peter_l_downs 13y agoMakes sense. Thanks for the correction.
- AJ007 13y agoAh, faulty assumptions (and in this case a mathematical equation leaving out a critical piece) leading to surprising numbers. Why stop at 1" and not take all 31? Unlimited money.
- lancedouglas 13y agoAwesome... lol
- quackerhacker 13y agoNice! When you account simple changes like this, it's amazing just due to the massive improvement. I could just imagine the saving for Walmart if they followed Ikea's model with doing away with plastic bags.
- johnpowell 13y agoThe Wal*Mart here doesn't have plastic bags but that is due to a city ordinance in Eugene. They charge five cents per paper bag but most people just bring in their own bags.
- dangrossman 13y agoI've been underestimating the size of the airline industry. I have a hard time reconciling the fact that the airlines always seem to be on the verge of bankruptcy with numbers this big -- $90+ billion a year in just passenger revenue.
- kevingadd 13y agoThe issue here is probably their margins, not their volume, though? It doesn't matter how much passenger revenue they bring in if the expenses (safety, security, regulation conformance, equipment maintenance, fuel, staff pay...) outweigh it.
- kamkazemoose 13y agoIt reminds me of the old quip "We lose money on every sale, but we make up for it in volume."
- megablast 13y agoThere are plenty of years where some airlines make around $100-$200 profit per flight. Not per customer, but PER FLIGHT. Think about all the costs involved, and that is your reward. http://si.wsj.net/public/resources/images/PJ-BH720A_MIDSE_G_20120606215401.jpg http://si.wsj.net/public/resources/images/PJ-BH720A_MIDSE_G_...
- conjecTech 13y agoRunning an airline is an enormously fixed cost business. At 75% occupancy, you are barely covering the costs of renting airplanes and terminals, paying personnel, etc. Once you are clearing enough to pay all of that, your marginal profit margin jumps tremendously because all those costs don't increase with the number of passengers you have, so the only thing you have to pay for that extra person is gas, which is about 20% of the ticket price. That necessarily leads to a boom-bust type industry. Southwest has been consistently profitable to the extent that they have tried to actively undo that. They do so by flying out of airports with cheaper terminal rents, reducing the size of their maintenance crews by only flying 1 or 2 models of aircraft, etc. A professor at NYU posts lectures from his corporate finance classes online and actually goes through a thorough analysis of the industry in one of the lectures. Link: http://pages.stern.nyu.edu/~adamodar/ http://pages.stern.nyu.edu/~adamodar/
- Construct 13y agoNot quite. The extra seats only provide additional revenue when the flights would have otherwise been full. From the article, the average flight is only 80% full, which means those six extra seats aren't providing any additional revenue. To determine the actual revenue increase from those six extra seats, we would have to know how frequently flights have less than 6 empty seats.
- smoyer 13y agoPeople don't like booking the last seat on a jam-packed flight. If given the preference, they'll find a flight with some room (this applies in other cases where people decide whether or not to be in a crowd). So I wouldn't be surprised at all to hear that Southwest's 80% capacity remained constant before and after the six additional seats were added. EDIT: Here's a related article where church seating on pews versus individual chairs is discussed - and airplane seats are even mentioned: http://www.alban.org/conversation.aspx?id=2380 http://www.alban.org/conversation.aspx?id=2380
- deleted 13y ago[deleted]
- rgbrenner 13y ago" (4.8 * $141.72 * 93,350 = $63,689,399) in additional revenue." x 12, since the number of flights is a monthly number.. which gives you (roughly) the same number in the article.
- peter_l_downs 13y agoAh, I'm dumb.
- rgbrenner 13y agoMissing a detail doesn't make you dumb... I do it all the time. Too many examples to list here
- 13y ago
- DrStalker 13y agoIf flights are at 80% capacity adding 6 extra seats just means an extra 6 empty seats on every flight. The $733 million number is meaningless - what is actually needed is to know how many post-reconfiguration flights had 5 or fewer free seats, since that is the only situation in which the extra capacity is being used.
- josefresco 13y agoNot if they maintained the same occupancy rates but with a higher total capacity. 80% of 100 is 80 80% of 106 is 84ish
- StavrosK 13y agoWhy would the average number of passengers suddenly change just because they installed six more free seats?
- Dylan16807 13y agoLook at the post right next to the one you're replying to. More seats makes it easier to get more people on board without risking filling up.
- StavrosK 13y agoBut if they could get more people on board, they wouldn't be 80% full. Or are you referring to the times they're completely full, which would go up by 6 seats? Then 6 doesn't get added to the entire average.
- Dylan16807 13y agoIt's probabilistic. You can't just sell 100% of tickets ahead of time and be done. Some people don't show up. Some people buy tickets at the last second. The more tickets you sell the more you risk running out of space and having angry customers that need to be compensated. Even if you assume every flight has the same demand, having more seats lets you sell more tickets which lets you get more people on board, without needing flights to be full. On top of that, you have uneven demand causing completely full flights, and while it doesn't add 6 to the entire average it adds a notable fraction of 6. Note that nobody actually claimed they added a full 6 more passengers.
- poink 13y agoBeing 6'5, my knees hate these numbers.
- daeken 13y agoAgreed. I'm almost exclusively flying Jet Blue and Virgin and upgrading to their extended legroom seats at this point. I'm 6'2" and overweight -- not a good mix for the horrid seats in most coach sections.
- sharkweek 13y agoat 6'4" I'm sort of just below that range of "get this man an exit row, stat!" my buddy who is 6'8" has it given to him virtually every flight
- lostlogin 13y agoI'm a bit under 6'5" and bit over 6'4". I know this situation well and have only rarely managed to get an exit seat, and yet have often seem people who are almost half my height in them. The only time we managed to get an exit seat was when my pregnant wife was literally crying from her legs being so sore that they gave them to us.
- deleted 13y ago[deleted]
- film42 13y agoMy girlfriends father is a pilot for southwest. For my birthday we flew home with my pregnant sister, we of course flew standby. On the way back, my sister and I were separated in Phoenix, where she ended up getting stuck for the night because every flight after 11am was booked. What I'm saying is that although they were able to add more seats, they still can't give everyone a seat, and to southwest that's money lost, and to me, that's one frightened sister. Although I enjoy my legroom, it was hell trying to get my sister home.
- ricardobeat 13y agoI love dark chocolate.
- chaz 13y agoIn 2006, JetBlue removed an entire row of seats: JetBlue estimates a net savings of $30 million over five years by removing six seats from the A320 fleet, as a result of reducing the inflight crewmember team to three, and by reducing the weight of the aircraft by approximately 904 pounds, which will lower the fuel burn. That figure includes lost revenue opportunities as a result of selling six fewer seats per A320 flight. The figure does not include any revenue improvement that may result from the enhanced JetBlue Experience. http://investor.jetblue.com/phoenix.zhtml?c=131045&p=irol-newsArticle&ID=942110&highlight= http://investor.jetblue.com/phoenix.zhtml?c=131045&p=iro...
- shabble 13y agocoming next, Responsive Seating! per-flight configurable seat modules, for exactly the number of people on board, and can be quickly loaded/unloaded to minimise excess weight. Installed seats adjust their clearance automatically based on available space and user's ticket price/options.
- bazzargh 13y ago... that double as waiting rooms, and you board before the plane is even on the ground. http://s3images.coroflot.com/user_files/individual_files/79414_c_a8KATUOg4h2F9HCHh_AJ5d8.jpg http://s3images.coroflot.com/user_files/individual_files/794...
- yardie 13y agoI can already see the logistics and engineering nightmare of a flight devoid of seats having to bump an entire group of passengers because the next leg doesn't have enough inventory. Seats are fixed because bolts are easy. Once you get into the whole latches and levers business you compound your points of failure. Ever look under the last row of foldable seats in an SUV? A lot of engineering goes into securing 100kg bags of meat to an object hurtling along the ground at 80km/h. Now imagine having to do the same for a plane traveling 2-3x that.
- freehunter 13y ago
- mistercow 13y agoI feel like saying "a single inch" like it's a pittance when we're talking about airplane legroom is a bit silly. Sure, it seems small compared to the other 31 inches, but that's not a fair comparison, because most of those 31 inches are non negotiable. Realistically, we're talking about at least a 5% reduction in leg room, and that's nothing to sneeze at.
- zackzackzack 13y agoYou obviously are not above average in terms of height. I'm 6'5" and planes are a nightmare of cramps and bruised knees. A single inch can mean the difference between being able to sleep comfortably on a long flight and staying awake while stiffening up for eight hours.
- lostlogin 13y agoDitto. I tried the near OD strategy for an Auckland-Rome series of flights. It turns out that you reach the point where they dont work anymore - at least not easily. At 4x the recommended dose I couldn't sleep that last 6 hours. I seem to max out at about 20ish hours of sleep. I almost got a DVT - swollen leg and very painful. I just avoid flights now. Edit: premature post.
- sjmulder 13y agoIt’s bad enough on buses and trains already (although newer Dutch Railways trains are great), but with flying I now have to make sure beforehand that I will physically fit. It’s not a matter of comfort for me, and it’s not like one can go to the gym and lose some height.
- mistercow 13y agoI did say "at least".
- kayoone 13y agoUKs Ryan Air was even proposing ideas of having people stand during flights (yep, its really that ridicolous) and letting people pay to use the lavatories... Not that they would get through with that but still, they are searching for every inch to make more money.
- ohazi 13y agoHonestly, after sitting at my desk all day/week... I actually wouldn't mind standing on my usual 50 minute Southwest flight. Not that the FAA would ever allow it.
- kayoone 13y agoYeah but id bet some elderly/pregnant/ill people would ;)
- yardie 13y agoThe CEO said it in jest because even bad headlines is good advertisement. I don't think anyone of his engineers would have seriously considered implementing it. And that's not even counting the insurance underwriters and CAA who would have shut it down.
- switch007 13y agoThose crackpot schemes are just designed to get their brand in the Daily Mail and in turn, for people to talk about Ryanair. (their headquarters are in Ireland, not the UK)
- lostlogin 13y agoIs it Ryan air that gets all its air hostesses to paint their faces with orangeish makeup? I have a recollection of a collection of air hostesses in skin-colour-inappropriate makeup from a trip a few years back.
- philk10 13y agoIf it's orange then it's likely to be EasyJet as everything they do is that colour
- mrshoe 13y agoIn addition to the sketchy mathematical foundation, there's another reason to not draw too many conclusions from this observation: your company, product, and customers are probably quite unlike Southwest Airlines. For starters, airline customers care almost exclusively about price. Joel Spolsky was wise to warn against doing what this article suggests (http://www.joelonsoftware.com/items/2007/09/11.html http://www.joelonsoftware.com/items/2007/09/11.html): In one of Gerald Weinberg's books, probably The Secrets of Consulting, there's the apocryphal story of the giant multinational hamburger chain where some bright MBA figured out that eliminating just three sesame seeds from a sesame-seed bun would be completely unnoticeable by anyone yet would save the company $126,000 per year. So they do it, and time passes, and another bushy-tailed MBA comes along, and does another study, and concludes that removing another five sesame seeds wouldn't hurt either, and would save even more money, and so on and so forth, every year or two, the new management trainee looking for ways to save money proposes removing a sesame seed or two, until eventually, they're shipping hamburger buns with exactly three sesame seeds artfully arranged in a triangle, and nobody buys their hamburgers any more.
- Nursie 13y ago>> For starters, airline customers care almost exclusively about price. I wish that wasn't the case. I'd gladly pay an extra £20 on an international flight for decent food, and I regularly do pay an extra £50 or so for more room or an exit row seat. I know there's a market of people like me, for whom business class is way to expensive just to make a few hours a bit more pleasant, but who aren't just counting every penny. The airlines seem to have started to cater for us with things like Delta's "Comfort Economy", but it needs to go further.
- jessriedel 13y agoPresumably it will go exactly as far as the market will bear. (I'll keep my $100, please...)
- mseebach 13y agoYou're the "almost" in "almost exclusively". I am too. When I was younger, I had more time than money, I travelled many a long hour in "cattle class", but I have some pretty awesome experiences to show for it. These days, I've got less time, but much more money, so I'll spend it for more comfort - but I'd be a damn hypocrite if I wanted airlines to do any less than their best to make sure young people of today can get the same experiences.
- mbesto 13y ago> That means, every year that single inch earns them $773,074,040 of additional revenue. I guess every little bit really does count. This does not. There are so many intangibles here, that the conclusion drawn is very ill-conceived. Here's a list of things that can affect this number: 1. The amount of customers lost due to restrictive seats 2. The negative PR which will result from the change 3. The impact on flight price that the company may change after said PR 4. Is the data from all of those references accurate? The list goes on and on... It's a nice thought, but there's much smarter people with access to more precise information that draw these conclusions within the company. Enterprise businesses aren't as dumb as we all may think they are.
- xefer 13y agoI don't know the economics of airlines, nor travel that much, but I can't believe there isn't a niche for an airline that features a reasonable amount of legroom at a reasonably higher cost. Something above the "cattle pen with wings" that people seem to have to put up with.