SOUTHWEST'S GAMBLE

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Southwest Airlines has shown in dramatic ways that niche marketing can be profitable in the airline industry. With careful control of costs and astute selection of short-haul routes, Southwest has become an industry anomaly: It makes money.

Now Southwest, producing about one-seventh the revenue of United Airlines, is vowing to take on United in the long-haul market. It appears the decision stems from pique on the part of Southwest Chairman-CEO Herb Kelleher, who is responding to United's plan to start a short-haul service, United Shuttle, to compete against Southwest. "To the degree that [United Shuttle] tries to take passengers from our short-haul, then we will certainly share with them some of their long-haul passengers," declared Southwest's PR manager. "That's not a threat; that's a promise."

That sounds like the kind of thinking that got the airline industry into its continuing troubles-fighting fire with fire; fare cuts with fare cuts; double frequent-flier miles with double frequent-flier miles.

What can Southwest bring to the long-haul party?

It will offer an inexpensive, no-frills service, presumably, the same sort of service as on its short hops. But United and the other major lines never met a rate they wouldn't match, and with a leaner United now on the way, it's not likely to let Southwest have a low-fare advantage.

How will Southwest match the movies and meals service of the long-haul competitors? By the advertising it's now running, it looks like it will hammer home its policy of low fares for all seats on all flights, as opposed to the many restrictions surrounding most airline bargain fares.

Will that be enough? Who knows?

Southwest's many admirers hope the airline isn't getting embroiled in an unnecessary dog fight that could eventually spoil its run of successes. In the vital air transportation industry, it's nice to have at least one example of a niche marketer that makes money.

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