30 December 2008

Psst Want A Free Steak Dinner On Southwest?

In the category of sure win bets - WN CEO Gary Kelly is offering a steak dinner to anyone who can prove that Southwest Airlines does not carry more domestic business travelers than any U.S. carrier.

Southwest Airlines' CEO thinks this is a sure fire win and that he'll never have to pay up. So since the Professor's readers are an ornery lot - I throw down the gauntlet and I will supplement it with a bottle of wine - if anyone does!

Actually its going to be pretty hard because there are few ways to prove him wrong because most airlines don't know the real purposes of many customers' trips. However I think its still possible. With WN the largest domestic airline at well over 100 million trips, Kelly maintains that internal research shows the airline is already No. 1 in US domestic business travel. He is banking on Southwest to capture even more of the business-travel market in 2009. To accomplish that, he's doing some heavy tinkering with a business model that has kept the airline profitable for an unprecedented 35 consecutive years.

However - the end of the egalitarian model that we predicted in 2008 and a move to hybridization does stand the risk of alienating some of the existing customer base. But this will have little impact on WN's growth as the other airlines keep cutting their US domestic ops.

In my opinion this is leading to a large hole in the US market for a next gen LCC to capture trunk and regional business in primary and secondary markets. Actually the opportunity is growing so fast that there is a chance for more than one. The reduction of capacity over the last 12 months is big enough to allow a new airline to build a single hub based operation the size of Alaska Airlines.

Think about it.

Oh yes... and call me when you are having that Steak Dinner - I want to be there just to watch and buy the wine for the two of you...


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