Southwest Airlines 'Freedom From Fees' Policy Helps Boost Its Share of Online Tickets Sold Directly by Major Airlines

comScore, Inc. (NASDAQ:SCOR) , a leader in measuring the digital world, today released the results of a study of online ticket sales at the U.S. sites of leading airlines as well as consumer attitudes toward airline fees.

The study found that Southwest sells nearly 2.5 times the dollar volume of online tickets at its site as its nearest competitor. From the second quarter of 2007 through the same period in 2008, Southwest Airlines has expanded its leading share of online ticket sales made directly at airline sites by 4.8 points, according to comScore's passively-observed online behavioral data.

While Southwest has long positioned itself as an economically priced airline, part of its growth in share coincides with the imposition of additional fees for services such as checking luggage and in-flight beverages charged by the majority of the competing suppliers. Meanwhile, Southwest Airlines has launched a marketing campaign promoting its “Freedom from Fees” policy.

  Dollar Share of Online Ticket Sales at Top Airline Sites*
  Q2 2007 vs. Q2 2008
  Total U.S. -- Home/Work/University Locations
  Source: comScore Marketing Solutions

  Supplier Sites              Q2 2007        Q2 2008        Point Change
  American Airlines            12.8%          10.7%            -2.1
  AirTran                       4.9%           4.9%             0.0
  Continental Airlines         11.5%          12.3%             0.8
  Delta Airlines               14.2%          13.3%            -0.9
  JetBlue                       5.9%           7.1%             1.2
  Northwest Airlines            6.8%           4.3%            -2.5
  Southwest Airlines           28.1%          32.8%             4.8
  United Airlines               7.5%           5.3%            -2.2
  US Airways                    8.3%           9.1%             0.9
  Total                       100.0%         100.0%             0.0

  *Does not include ticket sales made at online travel agency sites
   (e.g. Expedia or Orbitz)

“Charging additional fees for checked bags, meals, blankets and other services previously included in the cost of a ticket has received significant media attention and has been widely unpopular among consumers who, in today's economy, have become increasingly price sensitive,” said Kevin Levitt, comScore vice president. “Southwest Airlines appears to have successfully differentiated itself through its marketing position of 'no hidden fees,' effectively bolstering its online ticket sales and increasing its market share.”

American Airlines Flyers Most Receptive to 'A La Carte' Pricing

While most airlines have implemented additional fee policies for select services, some are also considering an 'a la carte' pricing structure, charging a low base fare with additional costs for all other services. American Airlines, for example, is reportedly planning to move to this pricing structure next year.

A recent comScore survey of more than 1,000 airline consumers found that consumer sentiment toward the 'a la carte' pricing structure is evenly divided, with 39 percent of respondents in favor of this structure, 37 percent opposed, and 14 percent unsure or undecided. Interestingly, respondents who said they prefer to fly American Airlines were the most receptive to 'a la carte' pricing, with 57 percent indicating they were in favor of the policy and only 32 percent indicating their opposition to it. Those who prefer to fly Continental Airlines and Delta Airlines were less receptive to the policy, with less than half of respondents indicating they were in favor of it.

  Question: Are you in favor of 'a la carte' pricing?

  Date: August 2008
  Source: comScore Marketing Solutions
                                    Respondents' Preferred* Airlines
                Total     American  Continental  Delta   Southwest  United
             Respondents  Airlines    Airlines  Airlines  Airlines  Airlines
  Response    (N=1082)    (N=134)      (N=93)   (N=126)    (N=198)   (N=92)
  Yes           38.5        56.5        48.6      48.6       50.1     53.8
  No            37.3        31.6        37.8      40.1       35.3     29.7
  Not sure/
   Undecided    14.2        11.9        13.5      11.3       14.6     16.4

  *Airline preference determined by response to the question: "Which one
   airline do you prefer to fly most frequently?"

As Prices Rise and Fees Mount So Does Consumer Dissatisfaction

Given the current state of the economy and the rising cost of fuel, many consumers understand the challenges faced by top airlines but disagree that the cost burden should fall on them. The comScore survey found that 80 percent of respondents believe the rising cost of fuel is the reason for increases in airfares, but less than 40 percent feel that current pricing is fair. An even greater percentage of consumers oppose the additional fees policies, with only 7 percent of respondents saying they deem fees imposed after purchasing a ticket to be acceptable.

Question: How much do you agree or disagree with the statement, “The additional fees imposed after purchasing an airline ticket are acceptable.”

  Date: August 2008
  Source: comScore Airline Travel Survey
                                         Percent of Total
  Response                             Respondents (N=1082)
  Strongly agree                                     2.6
  Agree                                              4.6
  Agree somewhat                                    14.6
  Disagree somewhat                                 23.7
  Disagree                                          25.4
  Strongly disagree                                 29.1

The survey also asked consumers about their willingness to pay additional fees for a range of services and amenities. Consumers indicated they were least likely to pay for a pillow or blanket (82 percent said they are somewhat unlikely or not at all likely to pay for the amenity), the ability to book by phone (80 percent), a window seat (79 percent) or an aisle seat (77 percent). They said they were most likely to pay for oversized bags (24 percent said they were somewhat or extremely likely to pay), Internet access (20 percent), or a second checked bag (18 percent).

Question: If airlines had additional fees for each of the following services, how likely would you be to pay the additional fee for each service?

  Date: August 2008
  Source: comScore Airline Travel Survey

                                         % of Total Respondents
                                                 (N=1082)
                               Extremely Likely or     Not At All Likely
  Services                       Somewhat Likely      or Somewhat Unlikely
  Oversized Bags                           24.2                    53.3
  Internet Access                          20.2                    65.1
  Second Checked Bag                       18.4                    60.6
  More Leg Room                            16.9                    65.6
  Changing Flights                         16.7                    63.8
  Curb Side Check-In                       14.7                    71.8
  First Checked Bag                        13.9                    73.1
  Non-alcoholic Drinks                     11.9                    75.4
  Window Seat                               8.9                    79.3
  Aisle Seat                                8.4                    77.3
  Booking by Phone                          8.3                    79.9
  Pillow or Blanket                         8.3                    81.5