Southwest Airlines Present and Forecasted Expansions in 2020

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Photo by Stephanie Klepacki on Unsplash

Although hampered by the grounding of Boeing’s 737 Max aircraft in early 2019, Southwest Airlines continues to pursue aggressive expansion in the coming decade. While the 737 Max issue has grounded 10% of its fleet for a full year, the company showed tremendous resourcefulness in achieving record earnings for 2019.

Ranked 3rd in domestic market share, Southwest trailed only American and Delta by less than one percent in total revenue passenger miles from November 2018 through October 2018.

Southwest Takes Off

Beginning in 1971 as a Dallas Love Field-based regional airline serving only cities in Texas, Southwest Airlines has expanded its reach into almost every area of the United States including Hawaii and now flies to ten countries in the Caribbean, Mexico, and Latin America.

Known for affordable fares and excellent Rapid Rewards® program plus its unique style of ticketing, boarding, and operational efficiency, Southwest Airlines projects continuing expansion throughout the current decade.

Southwest’s Denver Hub Expansion

Projecting significant demand growth while experiencing expansion limitations at some locations, Southwest Airlines selected Denver International Airport to become their busiest hub. Centrally situated to link eastern markets with major western and Pacific destinations, the airport is adding 39 new gates, at least half of which will be assigned Southwest Airlines.

Southwest currently operates 200+ flights per day from the Denver airport with plans to add another hundred soon. With this expansion, Denver International will be Southwest’s busiest hub, easily surpassing Chicago Midway and Dallas Love Field.

Denver also happens to be the flagship airport for low-cost competitor Frontier Airlines and an important hub for United.

Adding New Routes in the U.S. and Caribbean

Southwest’s upcoming seasonal expansion includes:

  • Weekday routes from Houston’s Hobby Airport to Lubbock and Amarillo, Texas beginning in mid-April 2020
  • San Diego to Kahului, Maui in April 2020
  • San Diego to Honolulu in April 2020
  • Sacramento to Honolulu in November 2020
  • Sunday flights from Dallas Love Field to Cleveland in April 2020
  • Daily service from Dallas Love Field to Boston Logan Airport in April 2020
  • Daily flights from Atlanta to Charleston SC, Atlanta to Panama City FL, and Norfolk VA beginning June 7, 2020
  • Daily flights from Baltimore (BWI) to Tulsa OK and Pensacola FL beginning June 7, 2020
  • Saturday flights (only) from Nashville TN to Portland ME, Portland OR, and San Juan, Puerto Rico beginning June 13, 2020
  • Saturday flights (only) from Houston TX to Nassau, Bahamas beginning June 13, 2020
  • Saturday flights (only) from Atlanta to Charleston

Long-Term Outlook for Southwest Airlines

The reputable financial publication, Seeking Alpha, cites three critical attributes of Southwest Airlines that position the company for impressive expansion in the coming decade. These are:

  • Unique business model and low-cost strategy
  • Well-positioned financially compared to many competitors
  • Conservative management committed to keeping their Balance Sheet strong

Because the company has relied exclusively on the Boeing 737 since their beginning, the 737 MAX debacle of 2019 and 2020 could have severely affected their growth and expansion plans. With thirty-nine 737 MAX 8s grounded and more on order, the Southwest scaled back to accommodate the reduction in projected capacity. To their credit, Southwest’s management was able to adapt and make strategic choices that allowed them to continue to grow.

Will Southwest Ever Go to Europe?

While serving most of the United States and creating a flourishing business to Hawaii, Southwest’s management has not announced plans to go to Europe at this time. Their limitation is that their fleet consists only of limited range older versions of the narrow-bodied Boeing 737.

While the 737 MAX 8, when it returns, might be able to reach some western European destinations from eastern hubs like Baltimore’s BWI, for example, but the low passenger capacity, economy-only seating, and meal service issues could make any European venture somewhat questionable. Perhaps in the future, if Southwest branches out to other types of aircraft with at least a 4,000-mile range and ample passenger capacity, they will eventually consider this expansion.

In the meantime, Southwest Airlines sees plenty of growth opportunities in North America, Hawaii, and northern Latin America.

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