Southwest has no regrets about free-bags stance

An edgy Southwest Airlines advertising video shows 11 burly "rampers" hollering as they rush en masse onto a tarmac and line up side-by-side alongside a competitor's airliner.

The baggage handlers rip open their blue work shirts to expose their chests, each painted with single capital red letter outlined in orange.

Then the camera swings to a well-dressed woman who looks down from her seat on the competitor's airliner to see the message "BAGSFLYFREE," spelled out on the men's chests, with a Southwest Boeing 737 in the background.

The TV ad and subsequent postings on YouTube that have gained more than a quarter-million viewings should be good for a long time, a Southwest marketing executive reiterated Friday.

Since Southwest executives made the decision in May 2009 to launch the "Bags Fly Free" marketing campaign, they've not looked back once, said Dana Williams, a senior marketing director for the Dallas-based airline.

During the past two years, U.S. airlines reaped $7.9 billion in revenue from baggage fees and reservation change and cancellation costs, the Government Accountability Office reported this week.

Southwest, which charges neither for changing reservations nor a passenger's first two bags, collected zero dollars of those billions.

"Gary Kelly (chairman and chief executive) has made very clear his position on this," Williams told a luncheon gathering Friday of the Tampa Bay Chapter of the American Marketing Association.

Some Wall Street analysts contend Southwest should charge for checked bags, but the airline believes it would lose customers. It also says it gains stature from its no-fees stance.

The airline posted an $11 million profit for the first quarter and analysts predict profits will rise to 26 cents a share (from 8 cents a year ago) when second quarter results are released July 29.

Other major carriers expect strong second quarter reports, after losing $4.4 billion in 2008 and 2009. The most recent Department of Transportation report shows the nation's 10 largest airlines collected about $770 million from baggage fees the first three months of 2010, a 33 percent increase from last year.

To market the concept, Southwest has embraced "Evangelistic marketing," in which customers spread the word about a company's brand and image.

Direct advertising no longer carries the day, Williams said. Instead Southwest relies on people sharing the word on social media that can draw newcomers to the airline.

Southwest has 800,000 Facebook followers and more than 1 million who follow the airline on Twitter.

The free bags video and its variants have gained more than 250,000 viewers on YouTube. One shows the "rampers" at a May shareholders meeting, when Kelly declined to strip his jacket, shirt and tie, but another Southwest executive quickly stepped in to maintain the spirit.

Williams' focus on Southwest's two free bags struck a timely chord as industry officials this week spoke on Capitol Hill about the pros and cons of charging for incidentals beyond airfare.

The GAO released a report this week that stated that checked baggage fees have led to an increase in carry-on baggage and flight crew concerns regarding crew and passenger safety from stressful boarding situations, including worries about injuries to airline staff and passengers to lift heavy bags onto overhead bins.