Southwest Adds Dots to Its Map
- Another new city for Southwest? No, three new cities. That’s right. In the first half of next year, the world’s largest LCC will bring its LUV to Colorado Springs, Savanah, and Mississippi’s capital, Jackson, the latter a market it served once before. As it explained during its Q3 earnings call, a big reason why Southwest didn’t add so many cities in the 2010s was the simple fact that it had a fleet deficit — not enough planes, in other words, to take advantage of all its opportunities.
That’s changed completely. It now has a fleet surplus, and it’s willing to try markets that might attract some leisure demand during an industry depression. Southwest remember, is also adding Miami, Palm Springs, and two ski destinations in Colorado (Montrose/Telluride and Steamboat Springs). Not stopping there, it’s getting into Chicago O’Hare, recognizing that when it does come time to grow again in the Windy City, Midway airport won’t have the capacity to accommodate. Besides, if there’s ever a time to grab scarce gates at O’Hare, now is it.
Finally, it’s re-entering Houston’s Bush Intercontinental airport, viewing it necessary to capture future growth in booming parts of the giant metro area. Hobby airport, located south of the city, is not where much of the high-potential demographic growth is happening. Southwest, it’s important to note, is also seeking more connecting traffic through key mid-continent hubs like Denver, Nashville, and St. Louis. Areas where it’s adding capacity right now, relative to last year, are Hawaii and Florida’s Gulf Coast, including Fort Myers, Pensacola, and Panama City. Don’t forget though, that it exited some markets like Newark and Havana.
Not to bury the lede, but a final thought here might be the most interesting thing Southwest said in its Q3 call: It is very much interested in codeshare relationships with international airlines to help attract more corporate customers.
- Beware of the Bari battle. Ryanair and Wizz Air, on the same day, announced new routes from the Italian coastal city, located on the Adriatic Sea across from Albania. Italy happens to be Ryanair’s largest country market, after years of exploiting the ineptitude of Alitalia. Clearly, it thinks there’s more exploiting to do. And Wizz clearly feels the same.
- Icelandair, which lives and dies on transatlantic travel, published its all-important summer schedule last week. Seat capacity will unsurprisingly be up from this summer but still 25% to 30% smaller than 2019 levels, or down even more pending the status of travel restrictions and the willingness of Americans and Europeans to travel internationally. As of now anyway, the schedule features 22 destinations in Europe, connecting with 10 destinations in North America, three of which are in Canada. Tenerife in Spain’s Canary Islands will be a new destination.
Even if demand does recover quickly, financial recovery will likely take longer. One reason for that: The relaxed revenue management and ticket rule policies carriers feel compelled to adopt. Icelandair, like most airlines, will allow ticketed customers to change their flight at any time before departure with no fees. Alternatively, they can get a voucher for future travel. This is of course costly because charging fees for ticket changes (on cheaper tickets) allows carriers to charge more for fares that don’t have these fees. Think of it as charging more for tickets with change flexibility — which you can’t do if all your tickets now have change flexibility.