Things in the Sky

Over the past couple of weeks, I’ve been thinking about Rapid Rewards 2.0. I can see why Southwest made the change – it makes total sense to make the program the most rewarding for those who spend more money, which Southwest’s current system doesn’t do all that well.

For example, if I want to fly from Providence to Baltimore the cheapest fare is $49. I’ll get one Rapid Rewards credit after that flight. But if I pay over three times that ($165) for Business Select, I will only receive an extra one quarter of a credit.

The same inequality exists for those on long-haul flights – a PVD-BWI and PVD-LAS flight will earn the same on most fares (though the Business Select bonus jumps from 0.25 to 1 credit).

That being said, the Rapid Rewards changes could leave some fliers feeling a little short-changed. In fact, I think the way Southwest set this up ends up punishing some. Southwest’s site only shows the lowest non-refundable fare by default, so even if I want to pay a higher fare for more points, my only option is a non-refundable fare, which can be prohibitively expensive.

Sure, the new Rapid Rewards lets you purchase points from Southwest, but not everyone will probably think of that. As a result, I think it might be a good idea for Southwest to look at a mileage multiplier product, akin to what American, United, and US Airawys are already offering.

Here’s an example – let’s say I fly between PVD and MDW 10 times. I picked a random day in March to get the fares. To calculate a multiplier fee, I decided to price the extra points at $0.03/point, a bit higher than what Southwest will charge for buying points in blocks of 1,000. (There would probably be some additional tax added there as well.)

Anyway, here’s what I’m thinking. For redemption I’m assuming a “Wanna Get Away” fare at $99 x 60 = 5,940 points.

Let’s say I need to do ten PVD-MDW one-ways. Now, if I fly ten times on a $99 PVD-MDW fare, I won’t earn any awards in the process, so my total base fare is $990. If I double my points, I will have earned one reward (if I’m redeeming for the $99 fare) after nine trips. Even if I redeem an award for the 10th trip my total spending on base fare is $1,051.38 – a 6.2% increase. If I pay for three times the miles, I will have earned two awards by the time I’ve completed eight flights. If I redeem free tickets for the last two flights, I still would’ve spent $1,077.12 on base fare – an 8.8% increase in total spending compared to buying the cheap fare alone.

Personally, I think this could be an interesting ancillary product from Southwest that could benefit both the airline and passengers. Even if only a few hundred passengers opt for such a service each day it could still mean a few million dollars in additional revenue.

Just my random thought for the day. Am I crazy? Let me know…

Last week, a friend sent me an interesting Chicago Sun-Times piece about Southwest’s December on-time performance, which, according to FlightStats, was a whopping 55% during the month. Of course, parts of the month were affected by weather, but some of Southwest’s peers had over 80% of their flights arrive on-time (within 15 minutes of scheduled arrival).

What’s very interesting thing is that there is a big difference between Southwest’s and FlightStats’ numbers. In October – the latest month for which government data is available – Southwest’s on-time percentage reported in the DOT’s Air Travel Consumer Report was 77.9%, while FlightStats reported it at 65.5%.

Minor differences between the two sources is not all to surprising, but such a wide spread is. For comparison’s sake, United’s performance as reported by the DOT was 89.9% for October, while FlightStats reported 89.1%. That’s interesting because according the DOT Air Travel Consumer Report, Southwest and United both use ACARS for their reporting.

According to the article, Southwest and FlightStats are now trying to figure out what’s going on. But even looking at government data – there is some reason to wonder about Southwest’s performance. The airline ranked ninth of the airlines that report their DOT numbers in October 2009, while Southwest came was 17th in the same month in 2010. Meanwhile, Southwest’s on-time performance for October decreased year-over-year while it improved for all airlines that report overall. Poor on-time performance is certainly is worrying for a few reasons:

1. Southwest’s recent focus on business travelers. The airline has focused more on business travelers lately, adding markets like LaGuardia and re-vamping its frequent flyer program to reward passengers who pay for higher fares. Southwest has a good sales pitch for business travel, but poor on-time performance hurts that.
2. The addition of the 737-800. Southwest’s announcement that it would add the larger 737-800 to its fleet was certainly exciting, but has operational and scheduling implications. Logic would dictate that a 737-800 would take more time to turn between flights, so that requires scheduling adjustments, and probably some additional ground handling procedures.
3. AirTran. Adding AirTran brings another fleet type, the 717, arguably adding more complexity to Southwest’s operation. Meanwhile, if something is off with Southwest at the moment, logic would dictate that only makes an acquisition more difficult.

Now, just for fun (really!), I decided to take a closer look at some of Southwest’s numbers. The DOT on-time database is quite comprehensive, and as a bonus its free! I decided to analyze Philadelphia as its one of those busier business markets that Southwest has entered over the past few years, and US Airways’ hub provides a nice basis for comparison. (Only US Airways mainline is included.) Plus, US Airways has been focusing on on-time performance over the past few years.

Before I get going – usual disclaimer on data-laden posts. My analysis, provided on an “as-is” basis, is based on DOT data. I am relying on the fact on that data being accurate (and who knows if that’s the case with this FlightStats situation). Also, there’s always the chance that I screwed up at some point. If anyone’s interested in how I calculated these results feel free to drop me a note. Anyway…

Photo Credit: Jay Bowie. Used with permission.

First off,  Southwest’s on-time performance in Philadelphia did slip a little bit from 2009 to 2010, from 74.8% to 72.2%. So there was a bit of a decrease, but nothing huge. Despite the lack of a major change (based on DOT data), there are still some interesting results to look at. It appears that Philadelphia – for lack of a better word – “amplifies” Southwest delays. As you can see below, departures are, on average, more off-schedule than arrivals. (Any diversions, which have departure delay times, are excluded.)

Those departure delays get pretty lengthy at some points during the day, so here’s a comparison to US Airways mainline:

Now, none of US Airways’ results here have regional flights, so I decided to focus on one route – Philadelphia to Boston (only in that direction) for a specific apples-to-apples comparison. US Airways has had a stranglehold on the market for awhile, and Southwest shook things up last year. There are some Republic flights mixed in so I focused on weekdays to minimize those. For on-time performance percentages, this chart excludes cancellations and diversions. (For the DOT’s monthly reports, cancellations end up hurting on-time performance. I decided to exclude them here to get what I think is a better sense of operational performance on this specific route.)

Yeah, not that pretty. It seems that the source of most delays for Southwest are on the ground. In fact, more of Southwest’s arrivals and departures to/from Philadelphia are shorter than scheduled (form gate to gate) than US Airways flights. Such a result would indicate that Southwest’s schedule, at least in terms of flight duration, could be a bit more padded than US Airways.

Meanwhile, US Airways’ better performance could indicate its turnaround times are more indicative of reality, and that the airline runs a good operation at Philadelphia (rewarding employees for on-time performance helps in that area). So let’s just go with my guess that something’s off on the ground.

Are Southwest’s legendary short turn times still realistic? The carrier appears to be carrying more connecting passengers than before (a subject of a whole other post) – and anecdotal evidence suggests Southwest is more willing to hold flights for connections. The airline’s load factors are also high – Southwest’s flights were 80.4% full in December – that’s 10.7 percentage points higher than December 2008. These situations create new challenges that the airline must address, whether it be schedule adjustments, new ground handling procedures, or perhaps extra manpower.

Anyway, here’s hoping you found this at least slightly interesting! I think this is certainly worth further examination, especially when the DOT releases the November numbers later this month. At that point I’ll probably examine a few more airports.

Earlier today, a very interesting job opening was posted on Southwest’s website, and the title speaks for itself:

You can see the whole job posting here.

Southwest possibly applying for ETOPS certification is not all that surprising, especially since Hawaii was mentioned a couple of time’s at the airline’s annual media event in October.

It’s also interesting to view this in the context that Southwest, while it has yet to formally announce an order, seems pretty much decided that it will add the 737-800 to its fleet, which according to the airline could be arriving in 2012.

Also worth noting is an interesting post on FlyerTalk, which speculates that all future 737 deliveries will be ETOPS-equipped, including three 737-700s that Southwest has acquired that were previously operated by Virgin Blue. The aircraft are registered N522WN, N523WN, and N524WN (previously VH-VBQ, VH-VBR, and VH-VBS).

If Southwest wants to obtain this certification, there are a whole bunch of steps such as aircraft equipment and maintenance procedures. If you’re interested you can read through the relevant  FAA AC here.

While this is all speculation…seeing this job posting makes it seem a bit more likely that we could see Southwest 737s flying to Honolulu in a few years.

Hat tip to curbcrusher on FlyerTalk for the find.

I’m playing a bit of catch-up today since a few exams last week forced me to focus a bit less on the airline stuff.

Anyway – Southwest made more progress on adding the Boeing 737-800 to its fleet last week, with its flight attendants, represented by the Transport Workers Union 556, ratified a tentative agreement that the union reached with the company earlier this year that adds the -800 to their collective bargaining agreement.

All of Southwest’s flights are currently staffed with three flight attendants, while the -800 would require a fourth due to its larger size.

The agreement was overwhelmingly approved – with 84.6% of those flight attendants cast ballots approving the agreement. Turnout seemed a little bit low, with only 38.7% of eligible voters casting a ballot, according to the TWU 556′s homepage.

But more needs to be done for Southwest to add the additional type to its fleet. First, Southwest says that it is still waiting for a vote on a TA with the company’s pilots, represented by SWAPA. The airline also says it has yet to complete evaluating the type.

Southwest hasn’t revealed much in terms of details about any potential -800 order, but in August Mike Van de Ven, Southwest’s COO, wrote in a blog post that the airline “would need to make a final decision by December 1 to begin accepting deliveries by early 2012.”