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How assigned seats on Southwest Airlines could work: Wall Street analyst

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Southwest Airlines 737Jeramey Lende/Shutterstock

  • Southwest Airlines’ CEO Gary Kelly stoked the fires of speculation last month when he said that new sources of revenue were “under construction.”
  • The low-cost carrier has built a legacy on not charging for frills or assigned seats.
  • Still, JPMorgan analysts have theorized how Southwest could boost its profit by a ‘sort of assigned’ seating class — and it would look nothing like other airlines’ methods. 
  • By boarding last, business flyers could save time and still be guaranteed early exit after landing and overhead bin space. 

While other carriers pile on the for-sale frills, Southwest Airlines has stayed true to its roots.

But with demand for tickets set to pale in comparison to last year, JPMorgan is brainstorming ways that the discount carrier could get its cut of the billions of dollars that flyers pay every year for things like checked bags, changed reservations, and premium seats.

In a recent note to clients, analyst Jamie Baker began to “opine on the feasibility and potential profitability of seat monetization at Southwest.” However, the bank would like to “strenuously emphasize” that it’s aware of no such plans.

On Southwest’s fourth-quarter earnings call in January, CEO Gary Kelly said that new revenue sources were “under construction,” according to Bloomberg, which first reported on the JPMorgan note.

Bags will likely be off the table — “that’s not what we do,” Kelly said — but seat monetization could fill a lot of gaps, JPMorgan explains.

“Southwest could easily add $0.10 to $1.00 in annual EPS by monetizing up to four rows of each aircraft,” writes Baer. “Essentially, offering a paid opt-out to the need to queue in advance, thereby guaranteeing last on/first off status for travelers (along with dedicated bin space).”

That would check four boxes for the airline, which currently has a Business Select option for earlier boarding, but has maintained an all-coach cabin for decades: “ease of execution, ease of passenger understanding, profits, and the broader preservation of the existing Southwest experience,” says Baker.

‘Sort of assigned’ seating

Instead of boarding first, JPMorgan has an idea that basically reverses the common concept of priority seating.

Up to four rows of the aircraft would be reserved for premium tickets, potentially business travelers, guaranteeing access to perks like first-off exiting and overhead storage.

Read more: Southwest Airlines’ Companion Pass is the holy grail of travel rewards — I used mine for 3-for-1 flights with my wife and baby

“Simply put, this would negate the need to queue ahead of boarding time – a process that we believe initially wastes travelers’ time in exchange for reducing Southwest headcount,” writes Baker.

It likely wouldn’t cost Southwest much to implement, Baker estimates, and would save flight crews time if the new class included exit rows, as passengers who are prohibited by law from those seats likely wouldn’t be buying premium tickets.

But will this theory ever be put into practice?

“We have no idea,” says Baker. “While we can offer no unique insight as to what the company may be pondering, we do believe we understand what the new reservation system is capable of, as well as what passengers might potentially respond enthusiastically to – particularly business travelers.”

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More groups join in support of women in STEM program at Carleton

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OTTAWA — Major companies and government partners are lending their support to Carleton University’s newly established Women in Engineering and Information Technology Program.

The list of supporters includes Mississauga-based construction company EllisDon.

The latest to announce their support for the program also include BlackBerry QNX, CIRA (Canadian Internet Registration Authority), Ericsson, Nokia, Solace, Trend Micro, the Canadian Nuclear Safety Commission, CGI, Gastops, Leonardo DRS, Lockheed Martin Canada, Amdocs and Ross.

The program is officially set to launch this September.

It is being led by Carleton’s Faculty of Engineering and Design with the goal of establishing meaningful partnerships in support of women in STEM.  

The program will host events for women students to build relationships with industry and government partners, create mentorship opportunities, as well as establish a special fund to support allies at Carleton in meeting equity, diversity and inclusion goals.

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VR tech to revolutionize commercial driver training

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Serious Labs seems to have found a way from tragedy to triumph? The Edmonton-based firm designs and manufactures virtual reality simulators to standardize training programs for operators of heavy equipment such as aerial lifts, cranes, forklifts, and commercial trucks. These simulators enable operators to acquire and practice operational skills for the job safety and efficiency in a risk-free virtual environment so they can work more safely and efficiently.

The 2018 Humboldt bus catastrophe sent shock waves across the industry. The tragedy highlighted the need for standardized commercial driver training and testing. It also contributed to the acceleration of the federal government implementing a Mandatory Entry-Level Training (MELT) program for Class 1 & 2 drivers currently being adopted across Canada. MELT is a much more rigorous standard that promotes safety and in-depth practice for new drivers.

Enter Serious Labs. By proposing to harness the power of virtual reality (VR), Serious Labs has earned considerable funding to develop a VR commercial truck driving simulator.

The Government of Alberta has awarded $1 million, and Emissions Reduction Alberta (ERA) is contributing an additional $2 million for the simulator development. Commercial deployment is estimated to begin in 2024, with the simulator to be made available across Canada and the United States, and with the Alberta Motor Transport Association (AMTA) helping to provide simulator tests to certify that driver trainees have attained the appropriate standard. West Tech Report recently took the opportunity to chat with Serious Labs CEO, Jim Colvin, about the environmental and labour benefits of VR Driver Training, as well as the unique way that Colvin went from angel investor to CEO of the company.

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Next-Gen Tech Company Pops on New Cover Detection Test

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While the world comes out of the initial stages of the pandemic, COVID-19 will be continue to be a threat for some time to come. Companies, such as Zen Graphene, are working on ways to detect the virus and its variants and are on the forefronts of technology.

Nanotechnology firm ZEN Graphene Solutions Ltd. (TSX-Venture:ZEN) (OTCPK:ZENYF), is working to develop technology to help detect the COVID-19 virus and its variants. The firm signed an exclusive agreement with McMaster University to be the global commercializing partner for a newly developed aptamer-based, SARS-CoV-2 rapid detection technology.

This patent-pending technology uses clinical samples from patients and was funded by the Canadian Institutes of Health Research. The test is considered extremely accurate, scalable, saliva-based, affordable, and provides results in under 10 minutes.

Shares were trading up over 5% to $3.07 in early afternoon trade.

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