Southwest Airlines has a new cancellation policy called the no-show fee, even though they may boast about how they don’t charge extra for bags that aren’t too heavy.
The air carrier said that too many people were taking advantage of their cancellation policy, in where you could cancel or make changes to your flight without a fee unlike many other airlines. Officials at the airline said that it was leaving too many seats empty without ample time to resell them.
They will start imposing the fee sometime in 2013.
CEO Gary Kelly said the Southwest fee will bring the airline closer in line with policies at other airlines and won’t alienate customers. Kelly suggest’s that due to empty seats from customers who cancel at the last minute, causes ticket prices to go up and the new fee could help to keep prices lower as well as increase revenue.
“By our research, customers understand that we all could benefit, customers and the company, from the opportunity to resell a seat,” Kelly said. “Once the airplane takes off and (a seat) is empty, we can’t ever reclaim that.”
At the same time, Southwest announced that the charges for oversized bags and “early check-in” would be on the rise in the coming year.
The airline expects to raise $100 million next year from the new cancellation fee and increases in current fees, which is part of a plan to boost revenue by $1.3 billion in 2013 over 2012. Southwest is on pace for revenue this year of about $17.5 billion based on figures from 2011 and the first nine months of 2012. Executives discussed the plan at an investor conference Friday in New York.
“We’re looking for our revenue initiatives to take hold in 2013 in a way that would produce very strong earnings,” Kelly said, adding that such a goal assumed a growing economy and stable jet fuel prices.
As far as the current $50 overweight bag charge goes Southwest announced the charge will go up to $100 and the “early check-in” fee will go from $10 to $12.50. Official’s also announced that it would be trimming costs by eliminating 300 non essential jobs in the coming year.