Southwest Airlines (LUV) has a brilliant unique value proposition: give travelers a way to fly at a comparable price to driving. Now, they will bring that proposition to the largest airport in the US (Hartsfield-Jackson in Atlanta) via today’s purchase of AirTran (AAI).
The move should scare the other airlines which make most of their money from baggage fees and fuel surcharges. Those extra costs were established during the oil crisis. Last time I checked, the storm passed (at least for now).
Also, other airlines such as Continental (CAL) and Delta (DAL) still don’t seem to understand that travelers do not care about all their supposed “special” features. Now that entertainment is as portable as my smartphone or iPad (AAPL), I can make a no-frills trip enjoyable. So, travelers are left asking, “Exactly why should I pay more?” Great question.
Southwest commercials offer prospective fliers an awesome comparable: the average flier spends $120 on baggage fees roundtrip, yet $0 for the same trip on Southwest. I don’t know about you, but that’s a deal I’m looking forward to taking.