Airfare

Southwest to alter boarding policy

Mary Schlangenstein | Bloomberg News
September 19, 2007

Southwest Airlines Co., the only major U.S. carrier that doesn't assign seats, will stop letting people with young children board first,
reducing the time it takes to load its planes.

The change, which occurs Oct. 2, is among several options Southwest tested to reduce boarding time, spokeswoman Beth Harbin said Tuesday. The Dallas-based airline also may announce other changes at a news conference today.

The policy is "not that different" from the practices of traditional
full-fare airlines, said Jim Corridore, a Standard & Poor's analyst in
New York. "They usually allow first-class customers to board before
customers who need accommodation."

Faster boarding would help Chief Executive Officer Gary Kelly pare
operating costs as fuel and labor spending rise. He also seeks to add $1 billion in annual revenue at the largest discount carrier by 2010. Sales were $9.1 billion in 2006.

"Having families within the general boarding groups allows them to still sit together, yet it does speed up the overall boarding process a little bit," Harbin said. She said she didn't know how much time the change would save.

Southwest, the No. 1 passenger carrier at Orlando International Airport, now splits fliers into three groups, based on when they check in, and lets them pick their seats once aboard the plane. Families with children now board before the first, or A, group.

Starting Oct. 2, passengers holding A boarding passes will board first, followed by families with children 4 and younger. Then the B and C groups will board. If a family has A-group passes, they can board with the A group, Harbin said.

The change already has been implemented in flights from San Antonio.

The change may initially hurt Southwest's reputation with families
unless the carrier makes it clear that people flying with young children still will board before the B and C groups, said Corridore, who rates the stock as a "buy."

The carrier also is considering ways to generate revenue from sources other than tickets, including marketing more items through its Web site, carrying more cargo and changing its frequent-flier program to attract more business travelers.

Harbin would not comment on additional changes Southwest may announce. The airline also is taking steps to win more corporate travel accounts.

Southwest Air Decides Against Shift to Assigned Seats

By Mary Schlangenstein
Sept. 19 (Bloomberg News)

Southwest Airlines Co., reaching out to business fliers, will change boarding procedures to reduce the time passengers wait in lines while keeping its policy of not assigning seats.

An end to so-called open seating would slow planes' loading and wasn't preferred by travelers, Southwest said today. The airline, the only major U.S. carrier that doesn't link fliers to seats, will begin boarding by numerical order in November.

Cutting the time passengers spend in line is part of a push to lure more business travelers, who generally buy tickets just before travel and pay higher fares as a result. Dallas-based Southwest is struggling to blunt rising fuel and labor costs.

The boarding changes still may not be enough to win corporate fliers, said consultant Robert Mann of R.W. Mann & Co. in Port Washington, New York. ``Business travelers want to arrive late and get the seat they want,'' he said. ``The only way you can do that is to allow them to select in advance.''

Under Southwest's new system, travelers will continue to be assigned to one of three boarding groups based on their check-in time, and they'll also get a number within their groups so they board in numerical order and then choose seats.

`Customers Told Us'
``Customers told us what they wanted,'' Chief Executive Officer Gary Kelly said of the airline's decision to keep letting passengers choose their seats. ``It was pretty easy in the end to decide what to do.''

Southwest missed a chance to boost revenue by charging clients more to get in a preferential boarding group, said analyst Douglas Runte of RBS Greenwich Capital Markets in Greenwich, Connecticut.

``We can understand the need to protect the egalitarian Southwest spirit, but the company by its own statements, and more challenging financials, needs to raise more revenue,'' Runte said.

Passengers' time in line before boarding should drop to six to seven minutes, from 45 minutes to an hour now, the airline said. Southwest, the largest discount carrier, said the shift would appeal to business travelers, who can use time at the gate to work on computers instead of waiting in lines.

Southwest will switch to the new system in early November, Kelly said, without providing a specific date.

Southwest rose 6 cents to $15.13 at 4:03 p.m. in New York Stock Exchange composite trading.

Two Years of Tests
The airline spent about $2 million over the past two years testing different ways to assign seats and board passengers, and on computer upgrades to accommodate new boarding passes. Renovating airport gates to accommodate the new system will cost $18 million to $20 million, Southwest said.

Kelly said he changed his mind several times on whether to retain the no-assigned-seats policy. He was prepared to make the switch, he said, until the airline saw customer feedback. Tests of assigned seating also added one to four minutes to boarding.

For Southwest, the new board-by-numbers policy will shave current boarding times by one to two minutes, the airline said.

Southwest also said yesterday it would change its boarding policy Oct. 2 to stop letting people with small children board planes first. The switch also will reduce the time needed to load the aircraft, Southwest said.

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