The airline is placing its focus on restoration of prior destinations after experiencing challenges stemming from its expansion of the past couple of years.
DALLAS — The video at the top of this page originally aired on May 12, 2022. The article below originally appeared in the Dallas Business Journal, a WFAA news content partner.
It seems as if everyone wants to know where Southwest Airlines Co. will fly next.
After COVID-19 shut down the airline industry in 2020, Dallas-based Southwest returned with a vengeance when flying resumed. During late 2020 and throughout 2021, Southwest entered 18 new markets. According to data from Cirium, the carrier is scheduled to fly into 20 airports during the fourth quarter that it did not serve in the same period in 2019.
Many of those markets were new destinations for Southwest (NYSE: LUV) entirely, such as Palm Springs, California, and Myrtle Beach, South Carolina. Others were expansions in cities that Southwest already served, such as Chicago and Houston. For example, Southwest already served Chicago Midway International Airport and then added O’Hare International Airport as well.
As Southwest heads into the holiday travel season and prepares for 2023, though, the carrier’s executives remain focused on network restoration and ensuring operational reliability instead of new market expansion.
“While we expect a healthy amount of capacity growth next year, it is nearly all going back into key Southwest markets,” CEO Bob Jordan said during a conference call with analysts on Thursday. “These are markets that we borrowed from to fund new airport expansion during the pandemic, and as business demand improves we have opportunities to build those back up.”
Southwest expects its route network to be approximately 90% restored by summer 2023 compared with 2019 flight levels in pre-pandemic markets, and fully restored by the end of the year. Jordan said restoring existing markets to full capacity represents “lower-risk growth” since they are places where Southwest already ranks at the top for market share and has established customer bases.
“We see that as very different than putting all the service into new markets that then have to be developed,” Jordan said.
The focus on restoration and prior destinations comes after Southwest experienced challenges during the expansion of the past couple of years.
Southwest started flying new routes at a time when airlines had just begun restoring capacity from the pandemic shutdown. However, the airline industry overall has seen demand roar back and Southwest has been no exception. Amid a staffing shortage in 2021 due to retirements and buyouts, events such as thunderstorms resulted in Southwest canceling and delaying thousands of flights. The carrier also re-published its summer schedule in April, resulting in a cut of more than 8,000 flights.
Demand remains strong so far this year. Southwest reported record revenue of $6.2 billion in the second quarter, up 10.6% from the same period in 2019. The third quarter also marked the second consecutive period when Southwest reported a profit and record quarterly revenue. Executives said leisure demand has stayed high all year and business travel demand has been on an upswing ever since Labor Day.
However, challenges persist. The company continues to be constrained by a pilot shortage, despite planning to hire 1,200 this year. Overall, Southwest remains on track to grow its workforce by approximately 10,000 employees this year.
Southwest also faces continued delays in deliveries of 737 MAX aircraft by Boeing. Even if Boeing delivered the planes on time, though, Southwest still wouldn’t have pilots to fly all of them because of a training backlog. Southwest expects to end the year with 768 aircraft in its fleet.
“We’re really pilot-constrained,” Chief Commercial Officer Andrew Watterson. “A lot of what we’re doing for the bulk of next year is really paced by our pilot training capacity and not by Boeing deliveries.”
Jordan said Southwest wants to avoid re-publishing schedules and maintain high completion factors with high on-time performance.
So what are some of those markets where Southwest will look to restore flights? According to Cirium, among Southwest’s 15 biggest airports in the fourth quarter of 2019 there are still 11 where it remains scheduled to serve fewer flights. The four airports that are planned to grow compared to the 2019 period are Denver, Las Vegas, Phoenix and Nashville.
The airports where room for recovery still exists include:
Of course, there are many more airports where Southwest will likely add flights beyond this list, including Tampa and Fort Lauderdale. But this list represents a start.
When Southwest does get back into expansion mode, speculation has already begun that Southwest will look to Canada and or various destinations in South America. But until Southwest has the pilots and fleet it needs to reach new markets, executives remain focused on tapping into the demand they already know exists.
“We need to continue to restore our operational reliability and we need to get staffed so we can fly our whole fleet,” Jordan said.