Starting today, Customers now have the ability to book flights to Mexico on Volaris via a link to Volaris’ booking portal on southwest.com. I asked Senior Vice President Marketing and Revenue Management Dave Ridley to answer a few questions about what this news means for Southwest Airlines Customers and Employees.
Q: Customers will now have the ability to book flights to Mexico on Volaris via a link to Volaris’ booking portal on southwest.com. Why just the link today, and what does that mean for Southwest?
A: We announced our intentions to codeshare with Volaris in November 2008. While our official codeshare with Volaris has not yet begun, offering our Customers the option to book Volaris flights via the link on southwest.com is an important first step forward in that relationship. It introduces our Customers to the Volaris’ brand and breadth of service and at the same time provides additional revenue to Southwest Airlines.
Q: Additional revenue sounds good. How does that work, and how much additional revenue are you anticipating?
It’s too early to tell how many bookings or revenue that this new link will generate, but we will receive a commission with each Volaris flight booked via the link on southwest.com.
Q: In a separate announcement, Volaris said that they will begin service to two U.S. cities on July 1 – Los Angeles (LAX) and Oakland (OAK). Are those two of the cities where Southwest will be codesharing with Volaris?
A: Again, our official codeshare with Volaris has not yet begun, and we are not yet ready to announce which cities will support our codeshare service. But, stay tuned. We expect to make that announcement sometime in the first half of 2010.
Q: Why Volaris?
A: A company’s dedication to Culture and Customer Service are very high on our priority list when considering a relationship of any kind. And, we are confident that we’ve found a perfect fit with Volaris.
- Volaris was founded in 2006 and currently serves 39 routes in 23 cities throughout Mexico.
- They have a reputation for being a highly efficient airline with a dedication to Customer Service.
- They are known for competitive pricing and an end-to-end operations model that has earned them the reputation for being Mexico’s most ontime carrier, with a 92 percent ontime record.
- They operate a modern fleet of 18 AirbusA319 and an A320 aircraft with an average age of 2.17 years, guaranteeing lower Carbon Dioxide emissions, as well as a much lower sound pollution footprint than their competitors.
- Their single class, all leather seat cabin configuration is very similar to ours.
- And, like Southwest, they have earned exceptionally high marks for their Customer Service through a commonly used net promoter score.
All of these factors make Volaris a good fit for Southwest.
Q: In addition to codeshares with Volaris and Canadian carrier WestJet, we have also announced plans to broaden our international codeshare service even further. Why aren’t we flying our own aircraft on these routes, and what impact will these plans have on our future growth?
Our CEO Gary Kelly has been very candid about our plans to codeshare to near international markets, along with Hawaii. That was our plan with ATA Airlines, and we are now simply replacing the now defunct ATA with other carriers.
The truth is we are not operationally ready to serve foreign destinations right now. In addition to added operational costs and risks, we have no meaningful marketing presence in foreign countries. Expansion opportunities in the U.S. are a much higher priority for Southwest than any foreign destination, and we have recently taken advantage of several of these opportunities in Minneapolis - St. Paul, New York LaGuardia, and Boston Logan. We see more fruitful domestic opportunities ahead of us, and now is simply not the time to contemplate our own expansion to risky foreign markets.
The other point to remember about our codesharing plans is that we’re contemplating only a marginal number of Customers per flight. At the margin, this helps us sustain our own flights, especially in this environment of declining traffic. The point is that codesharing is a necessary initiative to sustain or grow our own flying, not take away.
Q: Do these plans prevent Southwest from flying our own aircraft internationally in the future?
No. Our codeshare agreements do not, cannot, and will not restrict us from flying internationally. But, again, it will likely be years before we are prepared to consider our own international flying because it’s currently not viable—the expense and risks involved, coupled with the domestic expansion opportunities available to us, make it a low priority for us at this point. That said, when we are presented with opportunities to make money on international routes we’re not yet prepared to fly, the responsible thing to do is to take advantage of those opportunities. They allow us to grow our profits, and growing our profits is imperative to achieving our objective of continuing to grow the Southwest Airlines fleet and route map.
Q: How would you address concerns that we are growing other airlines at the expense our own?
That’s just simply not the case. We have a number of revenue growth initiatives underway here at Southwest Airlines, with codeshare being just one vital component of our future growth strategy. Simply put, the profits from our codeshare agreements will help finance the growth of Southwest Airlines. The sale of WestJet and Volaris service on southwest.com is one important piece of that puzzle. And, again, with regard to codesharing, Southwest is only interested in markets that would otherwise not be economically viable for us at this point to serve.
Q: In light of the current economic environment, we know some Employees may be nervous about the future and want to ensure that we are making the right decisions for Southwest and our Employees. What can you say to those folks out there to assure them that their jobs are not being “outsourced”?
We have been very open and honest with our Employees regarding our plans for near international codeshare opportunities. And, recognizing our Pilots' sensitivity to codeshare, in particular, we have contractually agreed that Southwest codesharing will not be a substitute for continuing to grow our airline. Rather, codeshare will be an adjunct of that growth. In fact, we have even agreed that trans-border segment available seat miles (ASMs) of near international codeshare flights (e.g. Canada and Mexico) will not exceed a certain percentage of our total ASMs. If our ASMs increase, then trans-border segment codeshare ASMs can also increase. And, SWAPA, our pilots union, has agreed that if Southwest meets certain fleet growth targets, the limitation on trans-border segment codeshare ASMs goes away. So again, codeshare will not be a substitute for our own growth. We understand the concerns of our Pilots and all of our Employees, and we have agreed to work collaboratively with SWAPA on future domestic and far international codeshare opportunities.
Q: Final thoughts?
We are excited about our partnerships with both Volaris and WestJet. We see this as a win-win for everyone involved – our Customers, our Employees, our Company, and our new partners. We are pleased to be adding value for our Customers, not taking it away, and we think our Customers are going to be very pleased with these new services and more to come.
Thanks, Dave. Tickets on Volaris and WestJet are now available for sale on southwest.com, so book today. And, check out this thread on FlyerTalk for a trip report from a FlyerTalker who recently flew Volaris to Puerto Vallarta.