Southwest CEO Says Price War Is Coming
Southwest Airlines CEO Gary Kelly predicts an intense competition for passengers as the air travel industry starts coming back to life. At its low point back in April, travel was down an incredible 96%, but in recent weeks we have seen a 400% increase. The number of passengers passing through TSA checkpoints is still about 90% than last year, but there are encouraging signs.
So Kelly expects airlines to get into a price war in order to get business from those passengers who are willing to fly right now. Airlines are hurting for cash, and government bailout money will run out soon. He said he expects “a brutal low-fare environment” among carriers once coronavirus fears subside, Bloomberg reports.
With a potential price war putting more pressure on already struggling airlines, Southwest is preparing contingency plans the CEO said. “We’re well prepared for this catastrophe and we must strive to stay that way,” Kelly said.
Southwest is better positioned for a price war since they already have a low-cost philosophy. They also have a generous refund policy which gives passengers a piece of mind.
Airlines competing for passengers should mean lower prices. So passengers could see more travel deals once they are able to fly again. We have already seen such offers in the last few weeks, and with more generous than usual cancel policies, you can start dreaming of your next vacations already.
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Whenever I check prices, SWA is more expensive than Legacy carriers from DTW (Detroit) when I can be flexible with dates. It’s Benn many years since I’ve found low prices with SWA.
Data point: A late September NorCal to SoCal weekend peak fare (Fri to Sunday) dropped from $110 to $68 or a 40% reduction!