Southwest Airlines said that it will expand in Houston and Chicago by starting flights to those cities’ largest airports. However, it is coping up side by side against bigger airlines.
Whereas, the airline is already serving smaller airports in both cities, Hobby in Houston and Midway in Chicago. The airline said it expects to return to Houston George Bush Intercontinental, where United is majorly operating. Moreover, it plans to launch service at Chicago’s O’Hare International Airport, where both United and American Airlines have major operations. However, the airline plans to start these operations in the first half of next year.
The airline decided to expand its operations as there is a massive decline in air travel demand and airlines are struggling to survive during the coronavirus pandemic.
Southwest entered the downturn in stronger financial health than United or American, and its lesser reliance on moribund business travel could give it a further advantage. Chief Commercial Officer Andrew Watterson said Southwest also has idle planes that it can use for the new service.
However, this Dallas-based airline is the nation’s fourth-largest airline by revenue. And it says that it will soon announce schedules and prices for the new service.
For much of its 50-year history, Southwest was never operating in congested major airports as it was preferring to stand out at secondary airports such as Love Field in Dallas. And it mostly stuck to one airport in a metro area.
But as Southwest has expanded, it has started operating into more crowded airports including Los Angeles, San Francisco, and New York’s LaGuardia. Moreover, it has been serving frequently in more than one airport in a region.
Southwest flew to Bush Intercontinental from the 1970s, when it was known simply as Houston Intercontinental Airport, until 2005. It recently added the ability to operate international flights from Hobby Airport, an older field that is closer to downtown.
Cost Cutting Plans
However, airlines are struggling and cutting costs after the federal aid stimulus ran out last week. Congress provided $50 billion in relief to airlines during the pandemic as there was a drop in passenger numbers. Kelly said Southwest’s revenue remains 70% below what it normally would be.
However, the House of Representatives passed a new $2.2 trillion relief measure favored by Democrats last week. But the GOP-led Senate was not taking it up. House Speaker Nancy Pelosi, D-Calif., has been in talks with Treasury Secretary Steven Mnuchin and it is still uncertain whether a separate bill to aid the airlines, a strategy that the White House is in favor of, can be hammered out.
Kelly said Southwest must plan for cost reductions. As there are no signs of further federal help comes through. He invoked the airline’s maverick history and noted that labor is the highest area of cost.
“We have a clear way to do all of this without layoffs or furloughs. At least through the end of next year,” he said in a video message to the workforce. “As usual, we’re different from the other airlines.”
However, he also mentioned that he will work without his base salary through the end of next year. Moreover, managers and the board of directors will also take pay cuts.