Thursday, August 13, 2009

Southwest Airlines CEO Fires First Shot

And so it begins. the Southwest Airlines CEO believes that the federal government shouldn't give it a competitive advantage.

After his speech, I asked Kelly whether his company would likely oppose high-speed passenger rail, given how precious every dollar has become to the airlines. Southwest's opposition years ago was a key reason a previous effort to build a high-speed line linking Dallas, Austin and Houston died. (Trains are seen by many as likely to compete with and in some cases perhaps eliminate short-haul flights.)

He said it's too early to oppose any particular plan, but said federal support for bullet trains shouldn't put airlines like his at a competitive disadvantage.

Perhaps if you can't beat them, you should join them. But airlines aren't looking that far ahead yet. Perhaps they'll start screaming when gas prices go back up again. I don't quite understand why they can't see the future in which higher oil prices make life for airlines hard. If last summer wasn't a wake up call, they'll be getting water splashed in their face soon.


kenf said...

As if the government never gave the airlines a competitive advantage. Right! Think air traffic control, air mail contracts, etc. Our government has been aiding and abetting the airlines since the Ford Trimotor days, maybe before.

John said...

Joining them is interesting. Maybe the government could contract out passenger rail operations and companies like SWA could bid on it. However, I'm not sure I want an airline experience on a train (I'm imagining much less leg room, mandatory seat belts, and no phone or computer use), so maybe that's not a good idea.

njh said...

PT: I don't understand your closing remark, if fuel is expensive then airlines will indeed have to pay more, but isn't that exactly when they don't want competition? When there is no alternative it is fine for them to say 'well I'm sorry but it really does cost $1k to fly from SF to oakland', but if someone could catch a train on that same route they have to justify the mark up. Hence their desire to resist real competition (inter-airline competition is probably a mirage, as they are most likely a cartel).

Pantograph Trolleypole said...

If fuel is expensive and they say it costs x amount people won't fly and the business will crash. Travel on airlines as the CEO said in the article are quite discretionary. I don't think it matters if they have competition or not, they are going to feel the crunch with prices sky high.

Alon Levy said...

Why, oh, why did the Dallas News article put a photo of the Acela, instead of of a real high-speed train?

The reason Southwest isn't opposing the project yet is that the project doesn't even have a route yet - probably because the consortium's airline backers would like for the train to make airport stops, whereas the cities would rather have city-center stops.

jfruh said...

Before SW started flying to Laguardia, I thought it would have been smart of them to have done a codeshare with Amtrak, which has a stop at their BWI east coast hub. SW could have sold it as a quick route to Midtown Manhattan, quicker than changing planes in Chicago then flying into Queens or NJ on some other airline then taking a cab or subway.

I think Amtrak should try to build alliances with anyone who flies into EWR or BWI or (once the new train station is open) Providence.

Jon said...

Does anyone know how individuals can get into the oil speculation market? Can this be done by small scale traders?

Theres potential to make a lot of money and also help usher in the kind of world I want to live in. Afterall we saw what the oil speculators did last summer... transit up, rail up, cities up, fuel efficient cars up, highways down, air travel down, suburbia down, suvs down, etc.

Alon Levy said...

Jon, the oil speculators you're talking about are middle-class Chinese citizens who could finally afford cars.

Jfruh, I thought Southwest flew point to point, so there'd be no need to change planes in Chicago.