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Southwest Airlines strategy adds child, pet and third-bag fees in tough times

For three decades, Southwest Airlines stubbornly stuck to its original keep-it-simple game plan. No in-flight meals. First-come, first-served seating. Avoid congested big city airports.

The tiny Texas startup grew into the most feared competitor in the skies with years of consistent profitability. Why mess with success?

But traditions started changing in 2004 when Gary Kelly took over as chief executive, then assumed the chairman's seat last year from founder Herb Kelleher. On Friday, the nation's largest discount airline and Tampa International's biggest passenger carrier again showed its pragmatic streak.

Southwest will start allowing dogs and cats in the cabin for $75 each way starting June 17. Pets must remain in a leak-proof container that fits under the passenger's seat the entire trip.

Southwest also took the opportunity to slap a new fee — $25 one-way, $50 round trip — for children ages 5 to 11 flying without an adult. Charges for a third checked bag or overweight luggage will jump from $25 to $50 each way, the airline said.

Like the industry, Southwest is being pummeled by weak ticket sales as companies and vacation travelers tighten belts. Southwest lost $91 million in the first three months of 2009 as revenue fell nearly 7 percent from a year earlier, in the airline's third quarterly loss in a row.

On a company blog, Kelly wrote that economic conditions this year could be the worst in a century of commercial aviation. The fees are expected to produce tens of millions of dollars in revenue. They represent "just the starting point" for initiatives this year, he wrote.

But Kelly insisted Southwest was committed to its low-fare bargain brand, reminding customers they still can check two pieces of luggage free. Most competitors last year started charging $15 each way for the first checked bag and $25 for the second.

"These are charges for extra service, not a surprise," said spokeswoman Marilee McInnis.

Still, the changes leave a lot of ambiguity for an airline that gleefully lampooned competitors with slogans like "No Hidden Fees" and "Fees Don't Fly With Us."

Judging by responses on the airline's "Nuts About Southwest" blog, customers weren't upset about the new fees. Only about 1 percent of fliers check three bags, the airline said. Other carriers charge more for kids flying alone and for pets on board.

But Kelly's blog post did attract a lot of angry comments about customers with pet allergies.

"Their odor and dander will linger on the plane, affecting other flights and passengers," wrote one reader. "Though your company is looking to make an extra buck … I don't think this program will bring that much revenue by the time you lose flying passengers. BRING back HERB!''

Southwest has allowed service and "emotional assistance" animals on board for years and will separate people with allergies from dogs and cats in the cabin, the airline says.

As for bringing back the Southwest legend, don't hold your breath. Wall Street and airline experts say Southwest can't afford to leave fee revenue on the table.

"It's reasonable and won't hurt (Southwest)," said Darryl Jenkins, a longtime airline consultant. "When you're losing money, you have to think differently."

Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

Southwest Airlines strategy adds child, pet and third-bag fees in tough times 06/02/09 [Last modified: Tuesday, June 2, 2009 10:04pm]
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