LUV is the answer

If you thought Wall Street types had learned anything over the last year, put that right out of your mind.

During a conference call to discuss Southwest Airlines’ first-quarter financial performance, the Street’s airline analysts badgered CEO Gary Kelly with the same question phrased in different ways: Why isn’t Southwest charging fees to check bags?

I could almost hear the ghost of Gordon Gekko whispering, “Greed is good.”

I suppose the analysts can be forgiven for second-guessing what is arguably the least stupid airline in America. After all, Southwest just reported a first-quarter net loss of $91 million, the bulk of which was due to charges related to fuel hedging. (American, meanwhile, reported a first-quarter net loss of $375 million.)

The money is there for the taking, the analysts argued.

“I would argue that our revenue results demonstrate that we are doing something better,” Kelly said. “Our load factor and revenue production is better in comparison to the legacy carriers.”

It’s low-hanging fruit, the Wall Street boys argued.

“We are virtually alone in not charging a bag fee,” Kelly said. “Based on all our research, there is a meaningful impact” in taking that approach. Besides, he said, in times like these, an airline is more dependent than ever on price-sensitive travelers. If you lose just one customer, you need 10 or 12 bag fees to make up for it.

Another analyst asked, what’s the matter, don’t you have the technology to do it?

Not at the moment, Kelly said. “We have the ability to charge fees at the airport, but think about the number of customers who would have to dig out their credit cards. I don’t know if that would be the right customer experience.” Down the road, Southwest will have the ability to collect fees online, but the bag fee is “not on our technology agenda.”

The analysts persisted: But everybody’s doing it!

Patiently, Kelly explained that Southwest loves having customers who love the airline. “You can’t find customers who like the fees,” he said. If Southwest charges bag fees, “We become just another airline.”

Maybe that’s what the Wall Street guys want: an airline that doesn’t fuss too much over whether its passengers are happy. An airline they can understand.