Southwest Airlines announces strategy: Unprofitable Hawaii flights protect access to the main gate
Brian Sumers from The Airline Observer features some really interesting comments from Southwest Airlines Chief Operating Officer Andrew Watterson about the airline’s Hawaii operations. Much of it is not about their West Coast to Hawaii flights, but rather their extensive flight operations between the islands. The performance of these routes is absolutely brutal, but Watterson says they still make sense.
- Southwest’s load factor on these routes ranges between 32% (Maui – Lihue) and 57% (Honolulu – Hilto).
- Average fares are about $40 each way, often about 15 to 30 percent lower than what Hawaiian charges on the same routes.
Southwest Airlines in Honolulu
Watterson says one of the problems they face is that tourists just don’t do the island hopping like they used to, as Sumers notes:
(T)he number of visitors visiting more than one island has fallen by 15 percent compared to 2019, which equates to about 700 fewer people per day.
The positive thing, however, is:
- They are already sending these planes to Hawaii, and many would otherwise remain on the ground waiting for the flight times requested by customers.
- In some cases, they may use crew members with additional statutory duty hours instead of newly hired crew members.
- Inter-island flights give Southwest more reach into the islands and better connectivity, which helps fill planes between Hawaii and the mainland. Some of their revenue from flights between the mainland and Hawaii may therefore be attributable to these short-haul flights.
At the same time, their Hawaii operation needed its own base and its own sales support. They even provided a backup aircraft. So it’s not just about peripheral flights. And those flights are more expensive than expected – they had planned to fly a Boeing 737 MAX 7, which is smaller and should cost less to operate than a MAX 8.
What caught my eye, however, is the argument that intra-island flights help make Southwest the most sought-after airline. just for their mainland flight schedule. In other words, they use air traffic within the island to occupy gates.
- You must plan at least six flights per gate to ensure priority use of the gates.
- If they were to limit flight capacity, they would have to give up gates and use each gate more frequently – but that would mean spreading out their flights. They could offer fewer flights at the most popular times.
“The time channels are pretty sensitive,” he said. “When people leave the West Coast, they prefer not to leave too early in the morning – say around 8 a.m., give or take an hour – and arrive on the islands at noon to go to the hotel and spend time on the beach. Then they fly back during the day and arrive in the evening. And that means you definitely want to have access to the gates in Honolulu.”
I understand why they do this. They want gates and the best flight times. But at the same time they are taking up space that others cannot use.
At the same time, the government believes it is important to give airlines the certainty that gates will be available to them once they start operating. At the same time, it is important to require that the reserved gate spaces are used, otherwise they will have to be given to others.
At the same time, granting preferential gates based on a minimum capacity creates an incentive for unnecessary and unprofitable (and environmentally unfriendly!) flights just to eliminate the competition.
Once Southwest begins overnight flights to Hawaii (allowing them to reach destinations further east), they will no longer need as many intra-island flights to maintain six flights per gate. We could see fewer intra-island flights as a result if overnight flights are offered in addition to the current flights to mainland Hawaii.
However, surprisingly, Hawaii is not the main focus of the airline’s planned new night flights.
Although Southwest’s Hawaii business remains focused on the West Coast, “there will be some in Hawaii,” Watterson said. “The majority will probably be elsewhere.”
While Aruba is Southwest’s largest Rapid Rewards redemption destination, that’s largely because flights to Hawaii are currently only affordable for West Coast travelers. Hawaii is undoubtedly important to Southwest’s redemption program and, by extension, its profitable credit card program.
