Southwest keeps product simple despite new reservation system


Now that Southwest has opted to work with Amadeus for its long-awaited domestic reservation systems upgrade, questions are arising over how or if the airline will utilize the full suite of new capabilities available that includes options for managing ancillary revenues.

Earlier this year Southwest selected Amadeusʼ Altea reservation system for its domestic operations after choosing Amadeus for its international reservation capabilities. Southwest officially began operating international service under its on banner in June of this year.

Recently questions were put to Southwest about whether it could leverage the capabilities of Altea in managing new types of product offerings including something similar to other airlines’ extra legroom products. The airline also fielded queries about assigned seating, particularly for families wishing to sit together on international flights.

“We studied assigned seating quite a bit in the past because we had the same question,” explained Southwest CFO Tammy Romo. “And as we really met with our customers what we found is that what they really wanted was a different boarding process. So of course we now have boarding positions and so weʼve addressed that.”

The head of Hamlin Transportation Consulting, George Hamlin, concludes that Southwestʼs method of assigning boarding positions “works like a charm. With most legacy carriers after you get passed group one or group two it looks a lot like a rugby scrum.”

Still, as Southwest broadens its footprint on foreign routes and encounters hybrid airlines such as JetBlue Airways in some of its international markets, will its more simplified product be accepted? As Deutsche Bank analyst Michael Linenberg said to Romo: “As youʼve become bigger and more mature, it feels like youʼve become more mature as a company, but on the revenue side, your revenue product is not as mature as it its for other carriers.”

Hamlin believes even as Southwestʼs offerings have evolved with the introduction of products including Business Select that features access to favorable boarding positions, extra miles and a premium drink, the airline intends to keep its product proposition simple, and in the short-term few changes are in store. Adding product complexity “has cost implications”, Hamlin warns.

He highlights the slow and cautious merger integration process with AirTran as an example of Southwestʼs approach in evaluating new product offerings. However, he points out that unlike the United-Continental integration, Southwestʼs coupling with AirTran is concluding “without major hiccups”.

Even though Romo admits that “we will have a lot more capabilities with our new reservations system”, for now Southwest is sticking to its age-old message. “We have very loyal customers that fly Southwest over and over again, because they like our total offering,”