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Southwest: Not the Low-Fare Leader You Thought

For several years, it has been my suspicion that the so-called low-cost carriers (LCCs)—in particular Southwest, JetBlue, and Virgin America—could no longer be counted on to reliably fulfill their traditional roles: provide consistently cheaper fares in exchange for lower levels of service and fewer perks.

With the reorganizations of the full-service carriers, the LCCs' cost advantage has largely evaporated. And as the mainline airlines were scaling back on amenities, the LCCs were bulking up on full-service perks to better appeal to the most profitable segment of the travel market, business flyers.

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Virgin America has industry-leading inflight entertainment systems and its own airport lounge. JetBlue's Even More Space seats trump the mainline carriers' Economy Plus offerings. And Southwest is trying to recast itself as a viable option for business travelers with pricey unrestricted fares and frequent-flyer benefits that disproportionately reward road warriors.

Ah yes, Southwest. The airline that once proclaimed, "You are now free to move about the country." The real message: We're not fancy. But we fly most places you need to go. And by golly, we're cheap.

Notably, Southwest doesn't sell its tickets through the likes of Travelocity, Expedia, and Orbitz. That means consumers must research both Southwest's site and one or more of the online travel agencies to get a full picture of comparative prices. But many don't bother looking beyond the Southwest website, because of the entrenched perception that Southwest's fares are lower than the competition's.

But are they really?

A study by Topaz International, a company that conducts airfare studies on behalf of corporate travel departments, shines some much-needed light on the question.

In a study based on 100 city pairs, Topaz found that Southwest's fares were the lowest only 40 percent of the time for flyers who carried on their bags. "Most business travelers that Topaz International has spoken to and interacted with during our 35 years of travel consulting are more likely to carry on their luggage in an effort to speed up their trip and get both to their destination and home when completed. In this case, while Southwest Airlines can be the lowest cost alternative, 60 percent of the time they are not."

Directly addressing the widespread assumption that Southwest remains the low-fare leader, Topaz's warning to its corporate travel manager clients was clear:

It is imperative for corporate travel managers to better understand their programs and constantly monitor airfares to ensure their tools and suppliers are providing the best value to the corporation and to the travelers. This is a clear example of why perception does not equal reality when it comes to airfares and the best alternatives for business travelers.

To the extent that it's based on its heavily promoted Bags Fly Free policy, what there is of Southwest's pricing leadership is likely to erode further. The company recently signaled its willingness to abandon its fee-free approach in the interest of increasing profitability.

For travel consumers, the message is that there is no one-stop solution when it comes to getting the best ticket price. A visit to Southwest.com should still be part of the research process. But better prices may well be found elsewhere.

Compare. Compare. Compare.

Reader Reality Check

Do you still assume that Southwest's fares are the lowest?

This article originally appeared on FrequentFlier.com.

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