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Southwest was smart enough to hedge on fuel prices, which is why it can continue to be so competitive on ticket prices, lack of baggage fees, etc. The percentage of fuel hedged continues to drop each year, though, so it's only a matter of time before Southwest will have to deal with current fuel prices, too.
I agree that we're probably going to end up with fewer choices, and it will be more expensive to fly. We may see a return to the time when only rich people could afford to travel.
I remember reading that they obtained their fuel quite cheap a few years back..
Southwest was smart enough to hedge on fuel prices
It's not just a mater of smarts, although the media makes it sound like Southwest was the only one with the foresight, the other airlines would have loved to hedge as well, but this was back in the first downturn of 01/02 when the legacies were cash-strapped and going into chapter 11 left and right. Hedging takes a LOT of money, so the others simply couldn't afford it at the time.
Current Southwest Hedge rates:
2008 is 65% hedged at $49/barrel;
2009 is over 50% hedged at $51/barrel;
2010 is over 25% hedged at $63/barrel;
2010 is over is 15% hedged at $64/barrel;
2012 is 15% hedged at $63/barrel.
Well, I think it's good they charge for pillows and stuff. I mean, I'm not going to use a bankie that some other person sneezed all over. Yuk. I carry my own.
But I really think they should charge extra for carrying on luggage. It's ridiculous what people bring on now, and it will get worse if they charge you to check it. It they made everyone check their luggage, we'd get boarded a lot faster.
But this is probably why I'm not an airline executive.
OMG!!! Someone else who thinks like I do.
I actually call the airlines, tell them I bring no carry on so PLEASE seat me as far front as possible so I'm not sitting and waiting for DoDo ahead of me to retreive his kitchen sink from the over heads
Surely you didn't expect rates to saty the same with fuel cost skyrocketing. You have to ask yourself should a traveler with only a carry on pay the same as one with two heavy bags besides. Seems a sensibe way of charging for service with higher fuel cost.There has alos been some talk about charging by total weight person and luggage.
Unfortunately, the airlines are bleeding out quite badly right now. Except for SouthWest, as has been pointed out, thanks to their fuel hedging. The airlines are in a tough spot - the public is accustomed to high frequency, low-fare air travel. But with oil as high as it is, the airlines must raise revenue, a lot, just to have a hope of survival. The days of cheap air travel are going to become a thing of the past. There will be huge capacity cutbacks and bankruptcies in the airlines. Prices will go up. This will lead to fewer being able to afford to fly. The airline business model is so faulty and frail in good times, with very thin profit margins to begin with. Just a hiccup in oil prices hits them hard. Nearly every domestic flight that occurs is at a loss right now.
I wish airlines would enforce the rules regarding can be carried onto the plane. I've seen the metal frames by the boarding gates with the sign that reads something like if the luggage doesn't fit inside the frame, it has to be checked. Unfortunately, I have yet to see anyone actually use them. I have also seen people get onto the plane, find the first available overhead space, put their luggage in and then proceed to the rear of the plane to their seat. The overhead compartments need to be made either larger to accomodate what is in reality being carried on board or made smaller so that anything larger than a camera case can not be carried on.
For long distance trips, I dont care what they charge, Im still flying. Though now I try to consolidate what is only necessary into a carry on backpack and plan on doing laundry wherever Im going if the trip is more than 2-3 days.
Unfortunately, the airlines are bleeding out quite badly right now. Except for SouthWest, as has been pointed out, thanks to their fuel hedging. The airlines are in a tough spot - the public is accustomed to high frequency, low-fare air travel. But with oil as high as it is, the airlines must raise revenue, a lot, just to have a hope of survival. The days of cheap air travel are going to become a thing of the past. There will be huge capacity cutbacks and bankruptcies in the airlines. Prices will go up. This will lead to fewer being able to afford to fly. The airline business model is so faulty and frail in good times, with very thin profit margins to begin with. Just a hiccup in oil prices hits them hard. Nearly every domestic flight that occurs is at a loss right now.
i think that it would help if the gov't would decrease or remove many of those annoying fees and taxes that are slapped onto our airfares. they do take out a big chunk of our wallet. if they did that, that might negate any increases that the airlines would charge.
Southwest charges but only for the 3rd piece on up.
I just sent my boys to their father's on SW with one small checked bag between the 2 of them, and one small carry on (between the two of them)... so it won't affect us. Their Dad has a washing machine after all.
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