US Airways president talks about Southwest fares

The Associated Press

The president of US Airways says Southwest Airlines Co. is changing how it thinks about prices. He says Southwest is targeting fare increases and sales, which can be "a little hard to understand" for most people but seems smart to airline insiders.

It's not idle chatter for an airline executive. Southwest carries more U.S. passengers than anyone and is the price-setter on many routes _ when Southwest raises fares, other airlines do the same; when Southwest balks at an increase, rivals roll back their prices.

This month, Southwest first refused to go along with a fare hike from United Airlines. Then, after everyone had rolled back prices, Southwest revived the higher fare increase. Veteran airfare watchers said they had never seen Southwest _ which still touts itself as a low-fare airline _ salvage a price increase that was about to fail.

Other airlines are taking notice.

On Wednesday, an analyst asked Scott Kirby, the president of US Airways Group Inc., what he thought.

QUESTION: The analyst asked if Kirby noticed "anything strange in how they have been behaving?"

ANSWER: "I think Southwest has changed over the last several years. We do see more tactical initiatives as opposed to just fare increases or just fare sales. That, from our perspective, seems rational and intelligent. Some of the things are a little hard to understand ... I certainly think they're more tactical both in terms of their pricing and in scheduling."