Southwest hoping to woo more business travelers

0 Comments | Deseret News (Salt Lake City), Nov 28, 2007 | by Melanie Trottman The Wall Street Journal

Hoping to wean itself from its reliance on budget travelers, Southwest Airlines is dispatching a beefed-up sales force across the country to woo corporate road warriors.

It's a radical -- and risky -- change of course for Dallas-based Southwest. The airline built its empire on a foundation of low operating costs and cheap, no-frills flights, and the new strategy could alienate regular customers.

But Southwest's discount dominance has diminished in recent years as new bargain airlines have cropped up and older carriers have cut costs and lowered prices. Meanwhile, other airlines have gained ground by catering to business travelers, who often pay higher prices for last-minute tickets, and they are providing such amenities as assigned seating, first-class cabins and private airport lounges.

Southwest has drawn its share of bargain-hunting business travelers over the years -- it estimates such customers account for 40 percent to 50 percent of its passengers -- but it would like to have more customers who are willing to pay higher fares.

Winning such high-end business travelers would give Southwest the leeway to raise ticket prices at a time when its profits are being pinched by rising costs. But winning the hearts of these notoriously finicky fliers will force Southwest to offer more perks. "That is admittedly the customer that is harder to win," says Southwest Chief Executive Gary Kelly.

Southwest's new business-friendly policies could also drive away the leisure travelers who have been loyal to the airline because of its low-fare, egalitarian reputation. "It is integrity, really, that's at stake," says Jim Kane, a partner in Brookeside Group of Acton, Mass., which advises companies on customer loyalty. In the past, Southwest's low-fare brand has been so powerful that many travelers booked on the airline without even checking competitors' fares, Kane notes. By changing its democratic system, "opinions and perceptions will change," he says.

But Kelly says the recent changes are about passenger choice and "trying to take care of each individual customer's needs." The airline isn't abandoning its model but updating it, he adds, understanding that Southwest will never be all things to all people.

Already, Southwest has announced a new category of "Business Select" fares that cost $10-$30 more one way and provide preferential boarding, bonus frequent-flier credits and a free cocktail. In a tour of a dozen major cities, Southwest's 15-member sales team is meeting with companies to promote the new fare category, along with new nonstop routes and more frequent flights that work better with business travelers' schedules.