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Southwest Airlines – Going Green to Panama City

October 21, 2009 | Posted in: Airline News,Southwest

I spent the better part of the day out at Hangar 5 and Freedom Hall at Southwest Airlines corporate headquarters just off the fence line of Dallas Love Field.

It is a stretch to call what we do "mainstream media" but the good folks at Southwest Airlnes have invited me twice now to their annual "Media Day" and for that I count them as in the "get it" category when it comes to "new media".

They wouldn't have one of these shindigs if they weren't going to announce something -- and of course speculation was running rampant, from possible new cities like Honolulu, San Juan to changes in their Rapid Reward Progam. I had even suggested in jest on Twitter they might switch to Airbus (of course I should know better than to joke on Twitter as a few commenters questioned my judgment -- as Southwest only has 500+ Boeing 737's).

It was clear when I arrived this morning that we were going to take a tour of the cabin of a 737 since it was sitting front and center, with a person doing some last minute touch up paint (I presume for the photo op).

Keeping reading for a rundown on what's new and what's "green"...

The announcement came pretty quickly that Southwest was going full force "green" with a variety of initiatives that revolved around recycled products in the cabin as well as fuel saving measures to get more carbon friendly. A new logo was unveiled with the recycling symbol around Southwest's normal heart/wings design and Southwest team and a variety of vendors highlighted initiatives included the following:

  • Adding satellite based navigation (testing recently done in Colorado, a multi-million dollar investment)
  • New green synthetic leather seat covers, backs, cushions (projected to save 5lbs per seat or 20k per plane, per year, in fuel -- $10 million)
  • New green carpet
  • Recent move from styrofoam coffee cups to "green" cups and Southwest's new coffee blend dubbed "Lift"
  • Engine washing program to keep engines working more efficiently and extend life time
  • But no, they are not removing olives from the salads (they don't serve them)

Unfortunately, I had to drive back to the office in a humming rainstorm for a meeting and didn't get back to Southwest's offices until after the post-luncheon announcement of new service to the panhandle of Florida, Panama City (PFN). Last year the big news was Minneapolis (a Northwest Airlines, now Delta stronghold) -- so after speculation about Hawaii and Puerto Rico, it was a bit of a let down, but not without intrigue.

And that's because a subsidy is part of the deal from a development company in the area (which as evidently been hit pretty hard by the recession), and Southwest will be the first airline in the new international airport to open next May. The only details were 8 daily non-stops to four as yet un-named destinations which will be announced in December. I have seen subsidy deals before with chambers of commerce in seasonal towns (like ski resorts) but I don't recall one with a developer, so this will be interesting to follow in the coming months.

As the day came to a close the most interesting discussion revolved around Southwest bag fees, or rather, their lack of bag fees.

Evidently during the Southwest earnings call last week there was some hammering by investors about why they are not charging these fees (and picking up the revenue like their competitors). Southwest presented some interesting slides showing they were gaining market share because of fees and that they believe not charging fees may be a net positive, as a portion of people defect to them.

It was noted that Southwest had been concerned that passengers had not differentiated them with other airlines who had fees and that their persistent marketing campaigns have made inroads over time as people who fly infrequently and are most prone to getting caught unaware by bag fees, see their "no bag fee" message and respond.

There has been a pretty good debate the past few weeks about whether the revenue generated from fees is worth it. Airline analysts have been trying to put a number on the incremental revenue of fees vs. new revenue from gaining market share by not having these fees.

As the saying goes, "only time will tell" on this particular debate.

2 Responses to “Southwest Airlines – Going Green to Panama City”

  1. Christi says:

    Hey Rick!

    It was great seeing you at Media Day! Thanks for stopping by, and for this lil’ recap! See ya in the Twittersphere!

    -Christi

  2. Denise says:

    I am extremely disappointed and cannot understand why Southwest Airlines would choose Panama City over Pensacola, Florida for its new service. The Pensacola area generates a ton more passengers than little Panama City, and the vast majority of panhandle customers plus many customers from south Alabama will now be lost revenue for them.

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