Southwest Airlines fee: No-shows will have to pay up
Southwest Airlines fee takes effect sometime in 2013. No-show passengers with the cheapest tickets will pay Southwest Airlines new fee unless they cancel in advance.
Charles Rex Arbogast/AP/File
Southwest¬†Airlines Co. will start charging a no-show¬†fee¬†for passengers who fail to cancel tickets before their flights.
The company also said Friday that¬†fees¬†on early check-in and oversized bags are going up. And it repeated a longtime goal for boosting profits that could only be met next year if it doubles earnings.
Southwest¬†brags that it doesn't charge ticket-change¬†fees, and it lets customers apply the price of an unused ticket to a later trip.
But customers who take advantage of those policies are leaving too many seats empty, the airline says.
So beginning sometime next year,¬†Southwest¬†will charge a no-show¬†fee¬†on its cheapest fares, known as "Wanna Get Away" tickets. Neither the date nor the amount of the¬†fee has been set.
CEO Gary Kelly said the Southwest fee will bring the airline closer in line with policies at other airlines and won't alienate customers.
"By our research, customers understand that we all could benefit ‚ÄĒ customers and the company ‚ÄĒ from the opportunity to resell a seat," Kelly said. "Once the airplane takes off and (a seat) is empty, we can't ever reclaim that."
The airline expects to raise $100 million next year from the new¬†fee¬†and increases in current¬†fees, part of a plan to boost revenue by $1.3 billion in 2013 over 2012.Southwest¬†is on pace for revenue this year of about $17.5 billion based on figures from 2011 and the first nine months of 2012. Executives discussed the plan at an investor conference Friday in New York.
Southwest¬†has long had a goal of boosting return on investment by 15 percent per year but hasn't been able to do it. An analyst at the conference told Kelly that hitting the target next year would be heroic.
Kelly acknowledged that it would require at least doubling the company's earnings, but he didn't back away.
"We're looking for our revenue initiatives to take hold in 2013 in a way that would produce very strong earnings," he said, adding that such a goal assumed a growing economy and stable jet fuel prices.
Southwest¬†officials said holiday bookings were strong and that they plan cost-cutting steps including eliminating 300 jobs through attrition.
In recent years,¬†Southwest¬†has bombarded TV viewers with "bags fly free" commercials to highlight that it doesn't charge customers for their first two checked bags or for changing a reservation ‚ÄĒ both¬†fees¬†are standard on most other major U.S. airlines.Southwest¬†executives said they're not thinking about imposing those¬†fees, but would announce other changes Saturday.
Executives said the¬†fee¬†for overweight bags will rise to $100 from $50, and early check-in, which helps move passengers toward the front of the boarding line and assure space for their bag in the overhead bins, will go to $12.50 from $10.
Southwest's¬†AirTran Airways subsidiary will raise its¬†fees¬†for checking bags to $25 for the first bag, up from $20, and to $35 for the second, up from $25, said AirTran president Robert Jordan.¬†Southwest¬†has promised to end AirTran's bag¬†fees¬†when it folds AirTran into the¬†Southwest¬†fleet over the next few years.
The company also said October's Superstorm Sandy, which caused canceled flights in the Northeast, will reduce fourth-quarter operating profit by between $15 million and $20 million.
Shares of¬†Southwest¬†rose 11 cents to $10.25 in afternoon trading.