Southwest Airlines plans to complete the integration of AirTran by the end of this year, positioning the carrier to resume expansion into new markets, says CEO Gary Kelly.
In an interview last week at WN’s Dallas headquarters, Kelly said the last of AirTran’s Boeing 717s will exit service by year end, leaving Southwest with a fleet of 690 Boeing 737-300s, -700s and -800s. There were 56 737-700s, 52 -800s, 30 -7 MAX and 170 -8 MAX on order at December 31 with more than 220 options for all types.
The airline carries more passengers in US domestic service than any other. For the balance of this year, new routes are coming from within the system as Southwest shifts airplanes from one market to another rather than adding aircraft. A major milestone comes in October when the so-called Wright Amendment goes away. This Amendment, a left-over from pre-deregulation days in the US, restricted flights from Dallas Love Field, first to nearby states and then one-stop service beyond these states. Once lifted, Southwest can fly non-stop anywhere in the US—and it has announced service to 15 cities that previously were restricted, including the slot-controlled airports in New York and Washington (DC).
Kelly told us that even though Love Field today is but a fraction of WN’s system compared with its impact even a decade ago, the opportunity to open new non-stop markets will be important. In addition to DCA and LGA, Chicago Midway and Las Vegas are key, high-demand markets. Based on one-stop demand, Kelly believes that “profits will be virtually instant.”
But the real growth potential for Southwest goes well beyond Love Field. Once the carrier is finished with AirTran, Kelly sees a potential for 50 new cities in North, Central and the northern part of South America. International destinations—WN serves just seven now, all from AirTran—will be part of the expansion.
Southwest abandoned many city pairs as fuel prices increased over the years, and Kelly acknowledges that introduction of a second aircraft type—such as the Bombardier CSeries or Embraer E-Jet—would open many new markets to the airline. But growth focus in the foreseeable future will be on those 50 cities using the 737 fleet types.
“Before we launch [new service with a new aircraft type], I’d have to be comfortable to opportunity would be worth it,” Kelly says, ticking off the costs of introducing a new aircraft type: crew, maintenance, integration, fleet types and more.