Three of the nation's four computer reservation systems-owned at least in part by rival airlines-said they were pulling the plug on Southwest for its refusal to pay booking fees. But Southwest, a master at playing to consumers, fired back with a print ad in the form of a letter from Chairman Herb Kelleher.
The ad was headlined "A letter to those who appreciate Southwest Airlines' low fares." The detailed letter, positioning Southwest as THE carrier interested in providing low fares, ran in The Wall Street Journal and USA Today with insertions in newspapers in Chicago, Houston, Los Angeles, San Francisco and Sacramento, Calif. Mr. Kelleher and Colleen Barrett, exec VP-customers, wrote the letter with input from ad agency Cramer-Krasselt, Chicago.
"We didn't want our customers to misinterpret sound bites or headlines that somehow they would be precluded from buying tickets or it would be more difficult in obtaining tickets," said Dave Ridley, Southwest director-marketing and sales. "We developed the ad to make people aware of Southwest's position of representing our customers' best interest-that is, our passion for controlling costs so that the lowest possible fare can be delivered."
The ad advised consumers to try another travel agent or call Southwest directly if their own travel agents refuse to book travel or issue tickets. The copy also pointed out that Southwest's new Ticket by Mail service will guarantee delivery of tickets for reservations made three days before the planned travel date.
"We decided more than 20 years ago that paying fees to all of the computer reservations systems owned by our competitors would undermine our commitment to low costs and low fares," Southwest said in the letter.
Additional ad plans were uncertain, but Southwest is sure to strike again if bookings slip or consumer perception sours. The reaction in the stock market was initially negative; Southwest's stock price fell nearly 10% from May 2 to May 5, when it closed at 281/2.
About 55% of Southwest's bookings are made through travel agents. About half its travel agent bookings are via Sabre, the largest system. Southwest pays a reduced fee to appear on Sabre, owned by American Airlines parent AMR Corp., and will remain on that system.
Further, Southwest is testing its own reservations and ticketing system at a limited number of agencies that use Apollo, owned primarily by United Airlines and USAir. The carrier is also testing a next-day ticket delivery system for certain travel agents as an interim solution.
But perhaps Southwest won't have to worry about tickets at all. Some speculate the airline may go ticketless and offer a confirmation number to passengers similar to the process used by hotels and car rental companies.
Still, some travel agents argue that in the end, Southwest will be hurt by refusing to cooperate with the industry's traditional computer reservation systems.
"If Southwest decides not to play the game and not pay the computer reservation systems vendors and they have flights removed [from the system], then Southwest has to bear whatever the business consequences," said an executive at a national travel agency network. "I think it will put a dent in Southwest revenues."