SWA has spent a bundle advertising how they are different than the legacy majors and their “free bag” policy, so it would be surprising for them to change and charge. SWA has long NOT charged penalties, and that too has worked for them over the long run.

The consultants and pundits can say what they want about Southwest, but clearly the management talent and philosophy of SWA has out-performed their competition.

Southwest tells me that the “vast majority” of the $157.2 million in ancillary-fee revenue that the airline garnered in Q4 2009 was “from business partner revenues, which includes our frequent flyer partners.”

From the DOT numbers, we know that Southwest earned $6.8 million in bag fees in the fourth quarter, placing it 15th on the bag fee list in the fourth quarter as Southwest doesn’t charge for first and second checked bags.

Southwest says in Q3 and Q4 2009 combined, it took in $32 million in pet revenue (a very small percentage), EarlyBird Check-in, and unaccompanied minor charges. Southwest doesn’t charge to change reservations.

Southwest also points out that its #4 position on the ancillary revenue chart may have been driven by the fact “that we carry more passengers domestically than any other airline.”

That being said, I listened to an analysis May 5 of Southwest’s ancillary-services strategy by airline consultant Jay Sorensen, the president of IdeaWorks Company. For more about his talk, see this link. http://www.tnooz.com/2010/05/05/news/consultant-airlines-love-fees-hotels-will-be-infatuated-too/

Sorensen argues that 2009 represented somewhat of an about-face for Southwest as it abandoned its 2008 no-fee strategy and instituted
$50 fees for unaccompanied minors, $25 additional for overweight or third-checked bags, and a $10 fee for EarlyBird Check-In. The airline also implemented a $75 one-way pet fare.

Southwest prudently also is keeping its options open on first and second checked bags. Sorensen notes that the Elliott Blog reported in January that Southwest conducted consumer surveys to test reaction to potential $15 fees for first and second checked bags.

So, indeed if Southwest’s #4 position largely reflects frequent flyer transactions with business partners, then it was misleading of me — and possibly the Bureau of Transportation Statistics — to posit that Southwest is among the leaders in what we commonly refer to as ancillary fees.

That being said, Southwest indeed is embarked on a strategy to increase its fee revenue, despite the fact that it has gained market share from its Bags Fly Free policy.

As CEO Gary Kelly said last month, the airline will pursue a strategy of introducing new products along the lines of Business Select and EarlyBird Check-in.

So my views on how Southwest’s ancillary services strategy is evolving did get ahead of the facts. (And, the Bureau of Transportation Statistics could have done a better job by not lumping frequent flyer mile sales to business partners in the ancillary fee category.)

On another point, Sorensen argues that the DOT’s Bureau of Transportation Statistics numbers on ancillary fee revenue are flawed. He notes that the BTS does little to police the numbers, and that a carrier such as Delta may top the list because it more accurately compiles its numbers than do some other airlines.

Thanks for pointing out the flaws in my article.

Hey, that’s why we have a comment section and “community.”

So what’s that leave?

Now look at the notes in the source doc from BTS
Quote:
“* Ancillary fees include baggage fees, reservation change fees and miscellaneous operating revenue, including pet transportation, sale of frequent flyer award miles to airline business partners and standby passenger fees. Revenue from seating assignments and on-board sales of food, drink, pillows, blankets, entertainment, or any other ancillary items are reported as Transport Related Revenue and cannot be identified separately.”

My bet is that SWA made a major sale regarding the SWA Frequent Flyer program in 2009Q4 Either that or they sold a bunch of booze on their short hops!

Next time Dennis, don’t let the facts get in the way of your opinion.

Early Bird check-in is optional product. The revenue earned from the Early Bird product can not be included in your “fee comparison.” Also, Patrick is correct, for this to be a true comparison the number of passengers carried in Q4 for each Airline must be included. Next time try comparing the % of total revenue from fees instead of total $$ collected from “fees.”

You say that “Southwest has undertaken a deliberate strategy over the last year or so to increase its ancillary-revenue fees.” as though this is a bad thing. I look at the tables and think how refreshing it is to actually see airline revenues increasing at these levels. Fees aren’t new, so no-one should be suprised that airlines are incorporating them into their merchandising strategies.

Why don’t you go back and look at how many people flew on Southwest in the 4th quarter of 09 compared to United, Continental, AirTran, JetBlue and Alaska Airlines? Of course they took in more for fees because they carry more people. I see you really did some good research here as indicated by your mistakes in the original posting. It amazes me that people can post such crap. Go back and do some more research buddy!

However, apart from Bags Fly Free, Southwest has undertaken a deliberate strategy over the last year or so to increase its ancillary-revenue fees.

My only point is that Bags Fly Free is great, and I recently took advantage of the service. But, Southwest has increased fees for unaccompanied minors, introduced a pet fee, Early Bird Check-in and increased excess and overweight bag fees.

Look, Southwest is a great airline. And it obviously has a right to make money.

The latest Bureau of Transportation Statistics show that it is collecting more fees than several other major U.S. airlines — despite all the good will Southwest generates from Bags Fly Free.

In October, Southwest CFO Laura Kelly noted that the airline took in $10 million in revenue during the third quarter from a new pet fare, unaccompanied minor fee, and excess and overweight bag fees. (Just the excess and heavy bag fees account for about $40 million in revenue annually.)

And, the airline attracted $2 million in revenue in September for its EarlBird Check-in product.

Does Southwest get to fourth on the above list because it is larger than Continental and United?

If someone has those stats, feel free to chime in.