Southwest Airlines 1999-2003

The hub-and-spoke model used by the nation’s largest airlines was designed to extract high fares from customers while moving them seamlessly to points around the globe. The model worked well during boom times when leisure travelers and especially business travelers willingly paid the higher fares. But it is an expensive model for several reasons:

· Flight schedules are constructed to attract high volumes of low-yield connecting passengers. This causes airport congestion, slow aircraft turnaround on the ground, and inefficient use of equipment and people.

· The majors using this system fly a variety of long, short, low-traffic, and high-traffic routes. This demands that they use a variety of aircraft. Varying aircraft types means more expensive maintenance, large and expensive parts inventories, and redundant crew training facilities.

· The varying routes demand costly accommodations for last-minute seat assignment changes, upgrades, and itinerary changes.

By the end of 2000, the cracks in the hub-and-spoke model became evident. The economy was slipping as the dotcom bust was in fu

But JetBlue differs from Southwest Airlines in several ways. Like Southwest’s Boeing 737s, the JetBlue’s A-320s have 3-and-3 seating. The planes are brand new. The seats are 18.5 inches wide, only one-half inch narrower than first class seating. This is possible because of the A-320’s body is slightly wider than the 737s. Those seats are covered with leather, and they each have a TV screen in their backs with 24-channel Direc TV connections. Flight attendants wear tailor-made, dark blue uniforms that show real class.

2. Cutting taxes and fees is also up to the federal government. When a passenger buys an airline ticket, she or he pays four charges: a 7.5 percent federal excise tax; a $3-per-segment tax; as much as $4.50 in facilities charges for each leg of the flight to airports; and a $2.50 charge per leg to the Transportation Security Administration (TSA) to police airports. Those who oppose these taxes can argue that flying is not a luxury for the rich, which the excise tax implies, and that passengers should not have to fund the TSA.

ll swing and a general economic downturn had begun. Both business and leisure travelers began seeking cheaper airfares. Increased fuel costs, fewer travelers, and the high labor costs they had granted to keep peace with the unions trapped the major airlines.

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