Southwest Air: The Low Cost Carrier That Isn’t

By Douglas A. McIntyre Published Feb 12, 4:00PM EST

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Today Southwest Air (LUV-NYSE) has raised its prices by up to $10.00 each way. Sure the other airlines either have (or will have) followed the fare hike, but this further goes to show that Southwest is no longer the cheapest of the carriers out there. This probably isn’t a huge shock since the company has less fuel hedging than it did in the past, but when the lead ‘discounter’ hikes fares it sure signals a change.

After years of being a traveler and someone who flies many times per year it has been surprising that Southwest Air (LUV-NYSE) has been referred to as the ‘low-cost carrier.’ The company isn’t exactly the most expensive or anywhere close to it but for years now it is almost always possible to get cheaper flights. This is particularly true of the shorter-time flights instead of the 21, 14, and 7 day advanced purchasing. I have compared these directly for a long time and Southwest as THE low-cost flyer just doesn’t hold. It seemed to change back in 2001 to 2002 where Southwest was no longer the lowest fare.

As a frequent traveler you don’t get the perks. There is no private lounge for travelers and there is not the normal seat assignment. Out of Houston you can easily use Continental or other carriers for cheaper flights. Out of Chicago there are also many more alternatives with cheaper fares, quite often from legacy carriers as well. Obviously this is subjective and will be grossly different for consumers in one city over others. I still personally use Southwest sometimes when I fly, but it is certainly much less on a comparable basis than before. This has been the case in and out of Chicago, San Diego, L.A., San Francisco, Chicago, New York, and Houston.

Maybe Southwest isn’t trying to be the cheapest carrier any longer. That wouldn’t be a shock to me at all. This is not to point toward them being bad, but this should be a re-labelling of the carrier. If they are comparable and often more expensive than legacy carriers, then is the term discounter still applicable?

Jon C. Ogg
February 12, 2007

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.