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Southwest Increases Prices – Here’s Why That Could Affect ALL US Airlines

  • Joseph Hostetler

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    Southwest is one of our absolute favorite airlines.  It’s got an extremely customer friendly culture, with policies like:

    Another thing we all love about Southwest is its cheap prices.  Many of us at Million Mile Secrets fly Southwest often because of the stellar deals.  So if we hear that Southwest is raising prices on all fares, that’s a little disheartening.  Both for future flights on Southwest and on other US airlines!  Here’s why.

    Southwest’s Low Fares Help Keep the Competition Low, Too!

    Southwest Makes Small Increase to Airfare – What Does It Mean?

    Southwest is increasing the prices of its airfare only slightly, between $2 and $5 each way.  That’s not going to cause anyone to cancel their trip, but it is telling.

    Southwest plays an important role in the ecosystem of domestic flights.  Southwest isn’t always the cheapest option, but they’re always very competitive.  In fact, their prices could be a big reason we’ve seen such amazing deals from competing airlines!  Whichever areas Southwest serves, prices seem to drop from everyone.

    Adam at The Motley Fool points out that when Southwest expanded into Dallas in 2014:

    [F]ares for the Dallas-Fort Worth market as a whole went from being 2.3% higher than the national average in the third quarter of 2014 to 8.5% lower than the national average a year later.

    We see fare war after fare war every year between US airlines with impossibly low sales to destinations all over the country.  Southwest has provoked many of them in the past.  They sell low fares pretty much all the time, and it keeps the other airlines honest.  If an airline tries to gouge customers, they’ll just buy a dependably priced Southwest ticket.

    Southwest CEO Gary Kelly wants to increase the airline’s unit revenue by 3%+ in 2019.  To that end comes the incremental price increase of ~$5 each way, as well as probably extremely limited participation in fare wars.

    In other words, we might not see the amount of outlandish deals we’ve seen in the past on Southwest’s routes.  And Southwest might just start playing the role of moral compass for domestic airfare prices instead of pricing their tickets aggressively low.  They’re likely focusing more of their energy on Hawaii (which should be available within a few months!), where they’re sure to make an absolute killing.

    Even if Southwest doesn’t have the cheapest flights, they could still be well worth paying a little extra just for those customer friendly benefits I mentioned at the top (free changes and cancellations, 2 free checked bags, etc.).  Yeah it’ll be a shame if Southwest sales aren’t as frequent or as exciting, but Southwest will likely still be the first choice for lots of travelers.  Especially those with the holy grail of travel, the Southwest Companion Pass!  You can read about it here to learn how easy it is to earn, and how much money it can save you.  And now is a great time to earn it because all 4 of the Southwest credit cards have increased bonuses which count toward earning a Companion Pass.

    What are your thoughts on Southwest’s direction?

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    Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)