If you thought I was done with the Boyd Conference, you’re wrong. I’m just slow. While I was there, I had the chance to sit with Southwest EVP and Chief Revenue Officer Andrew Watterson. We talked about a variety of topics, but there were two that stood one. One, the so-called “short-haul renaissance” is a topic of a future post. Today, let’s talk about Hawai’i.
Over time, Southwest has expertly dribbled out bit and pieces of information regarding its upcoming Hawai’i service. The slow drip has given Southwest a silly amount of free press coverage… and now I’ll be doing the same. There’s nothing earth-shattering here. File this under “we’re still on track.”
Ticket Sales Still Expected By Year-End
If you recall Southwest said it would start selling tickets to Hawai’i by the end of 2018, but that didn’t mean it would actually fly this year. We’re in September, and so far, no tickets have been sold. So will this still be happening as planned?
Andrew chose his words carefully when he said, “we have said we plan to be for sale by the end of this year.” He’s sticking by that saying the plan hasn’t changed, but he added, “and if we’re fortunate to fly by the end of this year….”
Say what? It’s already September, and Southwest still thinks it can fly by the end of the year? Apparently it will if it can. The airline is going through the ETOPS certification process so it can fly twin engine aircraft over the long stretch of water between California and Hawai’i. This is a government process, and when approval comes is far from certain. If the government gives Southwest the go-ahead, it will do a mid-schedule load and start flying quickly. How quickly remains to be seen, but this won’t be a typical Southwest move of extending the schedule and then tacking Hawai’i on at the end. It will happen fast.
As Andrew correctly notes, “nobody will remember the day we started, but they’ll remember we started poorly.” In other words, if they publish a schedule and then ETOPS certification doesn’t come through in time, there will be a lot of angry people. Southwest would rather just wait and then start flying quickly even though it won’t have a long booking window to prop up those early flights.
(As a side note, my suggestion to acquire DC-10s if ETOPS certification doesn’t come through was shot down. Andrew prefers the L-1011. Sadly, neither option seems feasible.)
A New Terminal Area in Honolulu
There has been a lot of discussion about Honolulu’s airport not having enough capacity during peak hours of the day, from about 11am to 2pm. With Southwest not flying redeyes, it is going to need airport space during those peak hours, so what will the airline do?
Fortunately for Southwest, Island Air went under. Island Air was building a ground-level concourse extension to the Diamond Head Concourse which wasn’t finished. Southwest has decided to take that over and create its own gate area.
Andrew says “It’ll be the nicest part of the airport… new, ample bathrooms, a Starbucks, a Kona Brewing Company, nice seating. And it’ll have a walkway out to the airplanes with Diamond Head in the background.” Passengers will board via ramps up to the aircraft.
No News on Interisland Flying
Since I know this question is going to come up in the comments, I figured I’d address it. Southwest still has no news to report on its decision to also fly interisland services. I’m expecting a handful of frequencies in key markets, so nothing like the half-hourly shuttles that you find on Hawaiian. But of course, I could be totally wrong. We’ll just have to wait and see.
Is Hawai’i Worth It?
I asked Andrew if he thought Hawai’i flying was still worth it looking back on what the airline has gone through. After all, there are a lot of places where Southwest could have put those airplanes and other resources (including tech). While there was zero chance he’d say “nah, we blew it,” I knew he’d give me some color on why he thought it was still worthwhile:
These are very big markets, and they’re very important to our California customers. Those are two good reasons to do it. It’s also quite high-priced. We fly from San Diego to Baltimore today, and that’s about the same distance as San Diego to Honolulu. The market fares are about a hundred bucks higher to Honolulu. That looks to us like a juicy fare. Oakland to Baltimore we fly; Oakland to Maui is about the same distance. That one is only $75 higher than the Baltimore fare but these are big markets, prices are high so it makes complete sense to add this to our California franchise.
The market dynamics are very different in these markets, of course. Hawai’i has fewer cheap sale fares and fewer full fare business travelers. It just sells a lot more in the middle than you’ll find in most markets. But that didn’t seem to faze Andrew. The average fare is still higher than other markets, and Southwest sees an opportunity. But don’t overlook that first sentence about it being important to California customers. Southwest is fighting off Alaska in California, and today, it can’t compete with Alaska’s Hawaiian network. This will open up a new front in the war, for better or worse.