Of Course, Passengers Would Pay Extra For Extras

If the idea of assigned seating onboard Southwest Airlines flights threw you for a loop when the airline first pitched the notion last year, you will likely have an equally difficult time contemplating the idea of onboard meals. Not peanuts -- real food.

Those are but two of the possibilities the Dallas, TX-based low cost carrier is mulling over to increase profits, reports The Houston Chronicle, in the face of high fuel prices and relatively flat bookings.

"It is pretty basic," Southwest spokeswoman Paula Berg said. "Costs are rising, and we are a low-fare airline, so how do we reconcile those two things?"

One possible answer: added amenities, something the airline has resisted since its beginnings in the 1970s. But passengers would have to pay for such perks.

"Some customers might like to have those options and might pay a small charge for those additional services," Berg said.

Raymond James airline analyst Jim Parker says Southwest may soon become the latest in a string of airlines to diversify revenue streams by charging passengers for conveniences and amenities.

Parker added the first fee Southwest would likely charge passengers would be for priority boarding or assigned seating -- which would be appealing to passengers who dislike the airline's current "cattle call" procedure.

While no final decisions have been made, Berg said Southwest may unveil new options as soon as the end of this year. The airline is adamant it won't take current free offerings -- such as pillows, blankets, and the everpresent peanuts -- away.

The timing of Southwest's potential move comes as the airline is set to lose a big financial advantage: its fuel hedging program is set to be dramatically scaled back by 2010.

Currently, 85 percent of the airline's fuel charges are locked in at less than $50 per barrel -- some $15 less than current market prices. But that advantage shrivels to 17 percent at $63 within the next three years.

FMI: www.southwest.com