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Non-Tech : Southwest Airlines (LUV))
LUV 32.46+3.0%Nov 7 9:30 AM EST
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To: Bryan Arnold who wrote (87)12/29/1996 1:03:00 PM
From: Sam Citron   of 299
 
Bryan,

I don't know what has been causing these delays recently. Friends in California have also been mentioning this to me recently. You are in the Southeast if I am not mistaken? On what routes have you been noticing these delays and have they been getting worse? I would be interesting in finding out whether these delays have been plaguing the other carriers as well. Schedule slippage is not only annoying to customers but very expensive to the carrier. I don't know how LUV defines 'on-time'. But I doubt that they are being cute about it because it is just too important.

As far as discounting is concerned, this is something that affects all mature (read competitive) industries. Players have an incentive to lower prices as long as they have excess capacity and marginal revenue > marginal cost. Biggest advantage accrues to lowest cost provider (read LUV). Others must match to survive, although such survival may be temporary. Hence discounting has the long-term effect of flushing out weak high cost providers while actually being consistent with short-term profit maximization goals as well.

Discounting is also an important tool for signalling competitors as to the stakes involved in a particular market segment.
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