Southwest changes its business model

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Southwest Airlines continues to take the sort of steps that the classic low-cost carrier model says are at best unorthodox and at worst heretical.

The carrier's new offerings, from special boarding to special treatment for its highest-paying passengers, are a reversal of its "all flyers are equal" type of airborne democracy, but they are needed, says the airline's chief executive Gary Kelly.

Southwest is introducing priority security lanes for premium customers at selected airports, starting this autumn. It calls these lanes "Fly By", setting them aside for its Business Select and premium level Rapid Rewards "A Listers". The A List members will receive identification cards stating that they are entitled to the treatment. "Fly By" will be rolled out at Dallas Love Field, Baltimore/Washington, Denver, Los Angeles, Orange County, Phoenix and San Francisco.

Just a year ago, it rolled out Business Select, a product that gives priority boarding, extra frequent-flyer credits and free drinks for the highest-priced fares. Southwest senior vice-president of marketing and revenue ­management Dave Ridley says the carrier's share of flyers on its highest categories increased by 5% between 2006 and 2008, and it is tracking towards its goal of achieving $100 million in ­incremental revenues.

southwest airlines
 © Southwest

The airline, which long relied on jokes by its flight crews to keep passengers entertained, will have an Internet-equipped Boeing 737-700 in trial runs by the end of the year and will have the entire fleet outfitted by the end of 2010. Supplied by Row 44, the Internet will be free during the trial, but may move to a tiered pricing structure later, ­Ridley says.

The carrier is also moving towards its first international codeshares, adding a Mexican partner, probably by the end of the year, to its previously announced codeshare with ­Canada's WestJet.

The airline's executive vice-president for ­strategy and ­planning, Bob Jordan, says some 17 million passengers fly between Mexico and the USA annually. At least 75% of them move through an airport where Southwest already has a presence, therefore, "we don't have to modify our network much".

For more on how low-cost carriers have been tweaking their models, go to: flightglobal.com/lowcostcarriers