Southwest’s New Cities Fit Neatly Into a Hub Strategy

Southwest

For an airline that hasn’t rolled out many new cities in some time, Southwest sure is active these days. While I was traveling last week, Southwest announced Savannah, Jackson (MS), and Colorado Springs. Then just yesterday, it published schedules for Colorado Springs and Chicago/O’Hare. With every announcement, Southwest begins to look more and more like a hub-and-spoke carrier. Oh sure, it’s not in a traditional way, but it sure is the basis for how Southwest is bringing new dots on to its route map.

While many of Southwest’s new cities — including Savannah — fall into a standard pattern (heavy leisure, primary airports, etc), three of these are worth a closer look. So, let’s dive into Jackson, Chicago/O’Hare, and Colorado Springs.

Jackson, Mississippi

We don’t know the schedule for Jackson just yet, but it does hold the dubious distinction of being one of the only cities Southwest has ever left. For that reason, we can see how Southwest used to serve the market.

In the last few years while it was there, Southwest flew once or twice a day to Baltimore, twice or thrice daily to Houston, once daily to Orlando, and once or twice daily to Chicago. That thin schedule was a pure leisure play for Orlando with limited connecting opportunities through the other cities. It never quite worked out commercially. Of course, that probably wasn’t the plan anyway.

You see, Trent Lott (MS-R) was a long-time US Senator and former majority leader who stepped back after a scandal. Lott was an influential member who at one time chaired the aviation subcommittee in the Senate. The general belief is that Southwest went into Jackson to curry favor with the Senator. He resigned from the Senate in 2007, and Southwest — not one to want to leave a city nor show any tinge of impropriety — hung on until 2014 before it left due to the weak demand that was always there.

Does that mean that Southwest is now returning because the commercial situation has changed? Well, the cynical me says it’s again about politics. Sen. Roger Wicker (MS-R) succeeded Trent Lott in 2007, and in the current Congress, he ascended to the throne as chair of the Senate Committee on Commerce, Science, and Transportation. Wicker has been pushing for more airline aid, sponsoring the last bill to extend CARES for the airlines. So, well… that.

Just because it’s politically expedient, however, doesn’t mean it can’t make sense commercially too. I turned to my old friend Cirium….

Jackson (MS) Domestic Traffic and Fare by Year

DB1 data via Cirium

Traffic has declined while fare has gone up. So, well, I don’t think there’s much here for Southwest to get excited about. That being said, Southwest is a different airline now, so there could be a slight commercial opportunity.

With more connections, Southwest is highly unlikely to resume the Orlando flight. I’d look for Dallas (which couldn’t offer connections before thanks to the Wright Amendment) and/or Houston, Nashville, Atlanta, and possibly further afield to another hub. With more flights feeding those hubs from other places, there is more of an opportunity for Southwest to carry a higher percent of Jackson’s traffic than before. It’s just going to have a lot more connections onboard, and that’s ok.

Maybe it really is a political move, but the increasing hub utility means cities like this can potentially work in this environment, even if there is no real growth in the market.

Chicago/O’Hare

It was only a couple weeks ago that Southwest announced it would go into O’Hare, and now we have the full schedule. Service begins on Valentine’s Day as follows, and again, it’s a hub-and-spoke play.

Maps generated by the Great Circle Mapper – copyright © Karl L. Swartz.

With twenty flights a day, this is a pretty heavy schedule, and it shows that Southwest isn’t stupid. If you’re going to go into a market with competition, you need to go in pretty big on frequency. Southwest is certainly doing that here. And Southwest is strong enough that it doesn’t have to worry about retaliation from the others.

Based on the current schedule, Southwest does not have a schedule advantage versus United or American in any of these markets except against American to Denver. But a schedule advantage probably isn’t necessary, as long as there are enough flights. This is a robust schedule. Since we’re thinking about this from a hub perspective, it’s not only the number of flights in each city that matters but also the number of connecting options to get elsewhere.

  • If you’re heading west, you have 8 flights to connect you beyond Denver and Phoenix. Want to go to Reno? Southwest sells 6 connecting options.
  • If you’re heading to the Southwest, you have 6 flights beyond Phoenix and Dallas. Southwest offers 10 options from Chicago to Albuquerque that way.
  • Between Texas and the Southeast, you have 8 flights between Dallas and Nashville plus some utility on those 4 Baltimore flights. That means 8 options a day to Jacksonville alone.
  • The weakest coverage is in the Northeast where the 4 flights through Baltimore are probably your best option. That still leaves 3 options a day to Buffalo and 2 to Manchester.

I was quick to notice that not one of these flights goes to Florida which shows just how different this is compared to the past. This is not a nonstop leisure play as I would have expected it needed to be before. This is again a connectivity play (both business and leisure) that Southwest hopes will draw enough people to regularly fill 20 airplanes a day.

Colorado Springs

If you still doubt that Southwest has hubs, this schedule should put it to rest completely. Beginning March 11, Southwest will have 13 departures a day in Colorado Springs, and four of them go just a few miles up the road to Denver. In case you’re wondering, there are about 3 people a day according to Cirium data that fly that route without a beyond connection, but even that number seems highly suspect. This is as pure of a connecting market as you’ll find anywhere, and Southwest is flying it.

Here’s the full schedule:

Maps generated by the Great Circle Mapper – copyright © Karl L. Swartz.

This market is more about regional connectivity to get to the rest of the network. For those heading anywhere, they’ll be able to connect on those 4 flights a day through Denver.

  • If you go west, you have 4 more between Vegas and Phoenix. That gives you 10 options to Orange County and even 6 to Long Beach.
  • If you go southeast, you have 3 more with Dallas. Take one of 10 daily options to Orlando if you like the Mouse.
  • If you go east, you have 2 more via Chicago. That means there are 6 connecting options if you want to head to Pittsburgh, believe it or not.

There is no need for greater frequency here. Competition is very limited, and Southwest adds huge utility by just connecting into its hubs.

It sounds weird to say it, but it’s long overdue. Southwest has one of the best domestic hub networks possible, and each new city makes the hubs more and more powerful.

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61 comments on “Southwest’s New Cities Fit Neatly Into a Hub Strategy

  1. If anyone needs confirmation that WN has become a hub and spoke carrier, 4x on DEN-COS should be it. It’s quite interesting that WN continues to poke at so many of UA’s hubs. In ORD, AA could be in some trouble there long term if WN can build enough of a schedule at ORD to pull more ff and corporate client away from them.

  2. CF, I’m surprised that LGA and PHL were not included in the list of new flights from ORD? Any reason why that is?

    1. Angry Bob – Well, LGA is slot-controlled so there’s no reason why they’d bump other flights just for this new airport. And PHL is not much of a focus. Neither of those surprise me. Southwest is connecting into its biggest cities, and LGA and PHL are not part of that.

  3. There is no other way to describe WN’s schedules from ORD as going for AA and UA’s jugular. WN’s hub/focus cities happen to line up quite well with AA and UA’s major hubs and WN is adding a number of those from ORD. WN will serve several key AA/UA hub metros from both MDW and ORD, making it very likely that they will become the largest carrier to those metros from Chicago. WN is already the largest carrier in the local market for some of the metro areas like CHI (both airports) to BNA just with service from MDW.

    Yes, COS-DEN shows that they are focused on becoming a hub and spoke carrier, esp. at DEN where they are already the largest carrier in the local market and are likely well on the way to overtaking UA in total volume at the airport. Using even 140 seat 737-700s compared to 50 seat RJs makes it much easier to overtake UA; serving markets like ORD-DEN on top of MDW-DEN is an enormous blow to UA.

    Between B6′ buildup at EWR and WN’s new service from ORD and IAH (we haven’t seen those schedules yet) and its buildup of DEN, UA will be fighting for its life domestically which will greatly impact its ability to rebuild its international network. WN’s new service from MIA is relatively peaceful in comparison but between adding several key routes from DAL including to ORD as well as significant new service to PHX makes AA’s job of just staying afloat much more difficult esp. in Chicago where AA’s value to corporate travelers has been reduced because it has gutted its own international schedule.

    No other carrier could get by with the huge competitive assault on AA and UA that WN is doing but WN has established itself as an airline that brings value to America. WN has now positioned itself as poised to move into major AA and UA markets and could actually hasten their demise.

    1. AA could be in a lot of trouble in ORD. It’s international network was already non-existent outside of summer season. It has 13 fewer gates than UA. On a lot of routes, it’s simply running noncompetitive aircraft from the customer’s point of view. Much focus has been looking at their declines in NYC and LAX. The reality is that ORD, PHX and PHl are also facing major downsizing.

      DL, AS and B6 are sitting there smiling at how much less WN’s aggressive actions are affecting them.

      1. “There is no other way to describe WN’s schedules from ORD as going for AA and UA’s jugular. WN’s hub/focus cities happen to line up quite well with AA and UA’s major hubs and WN is adding a number of those from ORD.”

        Are we looking at the potential for two of our national carriers remaining more or less wounded post pandemic? B6, AS & WN have been making moves as of late that would indicate they all smell jet fuel in the water.

      2. Chicago has been in a unique position as the only two legacy carrier hub metro area in the interior US since Delta made the decision to close its hub at DFW and redeploy assets to NYC. AA and UA have battled each other to split the ORD market, with UA having won the CHI longhaul local market.
        AA and UA’s strategy Chicago has been to not serve the secondary airport, a strategy largely (but not entirely) copied in Dallas and Houston. Delta has long pursued a strategy of serving every route that a competitor serves from DL’s hubs – and DOT data shows that WN is the larger of the two carriers to only a few WN hub/focus cities from DL hubs but in total, DL is the largest carrier to every one of the metro areas from its hubs and in total to any of the AA/UA/WN focus cities/hubs. And, Tory, WN has about one-fourth of the local ATL domestic market that DL has. In comparison, they have about two-thirds of the local Chicago market compared to AA and UA just with their service from MDW.
        It is precisely because Southwest is now doing exactly what DL has done for years in serving top markets from both airports that it is almost certain to become the dominant carrier in every market it serves from ORD – because it will also serve the same market from MDW.
        The reason WN’s moves are a true existential threat to AA and UA’s ORD hubs is because a 20 flight initial schedule to multiple AA/UA hubs will result in more service which will add at least a 3rd player not just from ORD but give WN the position of being the dominant carrier from Chicago to each of the cities it chooses to serve from ORD. When another carrier starts picking off the top markets for each carrier from its own hubs, it is not hard to see the fall in profitability.
        When you compound what is happening in Chicago with what WN is doing in other AA/UA hubs plus what B6 is doing at EWR, this is a major strategic assault on AA and UA’s largest domestic markets. At a time when international traffic is minuscule and domestic travel is greatly reduced, WN’s abililty to win over large portions of traffic in AA and UA’s hub markets is amplified along with a disproportionate financial impact to AA and UA including their ability to support the rebuilding of their international networks.
        It is simply not an exaggeration to say that WN has gone for AA and UA’s jugular.
        Given that AS, B6, DL and NK and ULCCs are on the sidelines, they all stand to gain as AA and UA fight for their very lives; by nature of its size and the amount of network overlap it has with both AA and UA, DL stands to gain the most esp. since AA and DL are neck in neck in many medium sized cities that AA simply cannot deploy resources to defend; in international markets, it is DL and UA.
        WN’s strategy has the potential to result in the most significant restructuring of the US airline industry and some of the largest domestic markets that we have ever seen.

        1. No one is safe, not even Delta. Southwest is just dealing with Delta in a different way. Yes, Delta will feed on the scraps that sink to the bottom, but sharks feed on the surface and they feed at will.

          1. DL’s four interior hubs are all in single airport cities which WN has served for years. WN’s share in DL’s core four hubs has fallen consistently even before covid.
            DL’s strategy of serving every airport in multi-airport metro areas if another carrier serves that city from a DL hub is why this is about AA and UA and not about DL.

            1. While Delta is laying in the fetal position with its fists clenched, waiting to defend its turf, Southwest is dancing all around them. After Southwest finishes taking what it wants from AA/UA, Delta will be further trapped in its hubs. If this goes the way I’m thinking it will, Delta will need to GROW its way out of trouble, not simply defend its turf. To that end, Delta needs to be planning which AA or UA assets may come into play either due to Chapter or as a result of abandonment. Given Delta’s long history of M&A as its primary means of growth, it’s doubtful that true organic growth will take hold. Against that background, Delta needs to RIGHT NOW be planning on flipping MIA, returning in force to DFW, thinking about CLT and PHX, and keeping its fingers crossed that slots are NOT lifted at LGA and/or JFK. Otherwise, it may find a different playing field when the Covid dust finally settles in a few years.

            2. Actual data is quite different than what you portray
              DL has overtaken AA as the largest airline at LAX and is now the largest network/global carrier at AUS, SJC and BNA, DL’s most recently announced new focus cities. The same thing is playing out in dozens of medium sized cities across the US. DL is consolidating its position as the largest network carrier.
              DL was the largest carrier at NYC and still is.
              DL now has half of the seats from DCA that AA has even though AA has a hub there.

              no, Delta is simply pursuing its same strategies and it will result in significant fare and revenue share.

              Low cost carriers are not invading Delta’s markets.

              This article is about AA and UA because they adopted strategies that provided an opportunity for low cost carriers to grow. WN did it.
              There is no rationalizing away what WN is doing in AA and UA hubs by what you think – unsupported by data – that WN might do in DL hub and strength markets.

            3. Tim – Oh fun, data that can be verified…

              > DL has overtaken AA as the largest airline at LAX

              This is true by a lot. Delta has 455,536 seats scheduled this November while number two United has 269,194. American is next with 260,878. The problem is… Delta is only selling 2/3 of its seats while the others sell all of theirs. So Delta is just flying more flights to get that advantage… which may not be an advantage at all, but I’ll talk about that later.

              > and is now the largest network/global carrier at AUS, SJC and BNA, DL’s most recently announced new focus cities.

              If you’re going to torture this into looking only at global network carrier, then you’re almost right. I’m looking at seats for November which again isn’t accurate since DL is only selling about 2/3 of its seats while the other networks carriers are selling them all. Here’s how it breaks down.

              AUS – 14.3% of total seats vs 12.4% last November WN 165,252 AA 65,116 DL 59,966

              SJC – 7.9% of total seats vs 10.4% last November WN 186,787 AS 54,998 DL 24,903

              BNA – 11.7% of total seats vs 14.0% last November WN 424,694 DL 79,013 AA 65,807

              T100 data only goes to July now, so we could look there, but that was a different world. Besides, you wouldn’t like that since in July, Delta wasn’t first in any of these markets, and by a long shot.

              But none of that really matters. Delta is playing the same game it has always played. Everyone else is branching out to see what works. To me, it means absolutely nothing if Delta has an advantage in seats in some market. Slot rules are still suspended, so in those airports, it will change when they must be used again. And in other airports, it’s not like Delta is taking over real estate that other airlines can’t regain. This isn’t like they’ve planted a flag and somehow won the game. Delta is just playing the old game, and others are busy trying other things while they have the chance.

            4. no idea what fantasy report you look at. PANYNJ annual report (free and public) has shown UA consistently carrying more passengers than DL over last few years combining all 3 airports. (technically it’s those + SWF, not that SWF was enough to put DL ahead either).

              So unless you’re willing to put down ACTUAL numbers, your claims ring hollow. i have reports 2013-2019 right here on my desktop. As close as those figures are, they don’t show DL higher.

              2019 full-year

              Rank Airline ………… Passengers ……… Passengers ………….Passengers… Cumulative %
              1 United ………………..24,359,741 ………….8,574,734 …………. 32,934,475 …………. 23.44%
              2 Delta ………………. 26,758,450 ………….6,095,321 …………. 32,853,771 ………….46.82%
              3 JetBlue Airways … 13,644,823 ……… 4,384,059 …………. 18,028,882 …………. 59.66%
              4 American …………..14,291,350 …………2,386,574 …………..16,677,924 ……………71.53%
              5 Southwest Airlines 3,926,236 …………. ……………………… – 3,926,236 ………….74.32%

            5. Keep in mind that DL is blocking seats. Once it starts to unblock all the seats, it will have to reduce the number of flights on many of the trunk routes. Also, I’m not really sure why you keeps on holding on to the fantasy of BNA/SJC/AUS. The game has changed. DL temporarily having a couple of more flights really don’t change things that much. WN will continue to dominate more in these markets. And for people looking for network carriers, they will go for the carrier that has the largest hub nearby. For SJC, that’s UA. For AUS, that could be AA or UA. DL has a lot of challenges on its hand. It’s not a good idea to focus on too many things. LAX is a huge opportunity for them. They should focus on that. AS is now in an even stronger position in SEA given their recently entry into OneWorld. DL is going to have to blow a lot of money to stay relevant there. And even in NYC, it’s going to face a much strong challenge from JetBlue than it ever did from AA.

            6. Henry,
              boardings are not local market share. Local market share is passengers that begin or end their trip in NYC. It doesn’t not include connections. The DOT reports O&D analysis as do some other sources but not any local airport.

              Delta has had the most flights and seats from NYC’s 3 airports even before covid and still does. DL also is the largest carrier based on O&D NYC traffic for 2019. UA had more O&D (local market) revenue because of UA’s larger international network.

              FC,
              Rarely is market share disconnected from capacity. The load factor of the big 4 was within a few percentage point of an average of the 4. DL and WN’s load factor was well below its load factor cap. DL and WN actually filled a higher percentage of the seats they had for sale with their caps than AA or UA did with no caps.

              Based on Nov schedules, DL has the most capacity of any legacy in the cities noted.

              There is no reason to believe that Delta will reduce flights if load factors climb and it reduces its caps. Given the increases in covid cases, people will perceive, rightly or wrongly, that block seats offer a little extra safety.

              DL has been handling multiple initiatives at one time. There is no reason to think that will be any more difficult for them now in proportion to any other carrier.

              WN is doing what it is doing in AA and UA hub markets because it has the financial resources to do so and WN saw an opportunity; DL has nearly the same amount of cash burn to cash available as WN. Both have $10 billion in unencumbered assets.

              DL is not adding a bunch of new leisure routes or new cities; they are operating essentially the same network – plus or minus routes or there – they had before covid. DL’s strategy pre-covid was designed to grow DL’s network while maintaining its presence in its highest markets. and competitors are not adding a bunch of new flights into DL hub markets.

            7. CF,
              glad you verified the data.
              See note about load factor caps. I said before any carrier reported 3rd quarter statistics that DL and WN’s load factor would be below its caps and that has been the case.

              The significance of looking at global/legacy carriers is because WN has maintained a decent share in many legacy/global carrier markets and vice versa.
              AUS, BNA, SJC and others are cities where DL will likely displace the current #1 legacy/global carrier based on traffic statistics that reflect seats that are being sold, and more importantly revenue. No one said that WN won’t remain the largest carrier. But when ranks 2-4 get rearranged, it has significance, esp. if repeated over and over in other cities.

              AA and UA simply don’t have the financial bandwidth to defend dozens of medium and small cities while also defending their hubs. They will prioritize defending their hubs.

              I am happy to wait for the O&D data to start coming in next year for each of those markets based on schedules that are in place right now. Will you follow up with analysis of schedules vs. O&D share shifts in these and other markets?

            8. FC: “And for people looking for network carriers, they will go for the carrier that has the largest hub nearby. For SJC, that’s UA. For AUS, that could be AA or UA. DL has a lot of challenges on its hand. It’s not a good idea to focus on too many things. LAX is a huge opportunity for them. They should focus on that. AS is now in an even stronger position in SEA given their recently entry into OneWorld. DL is going to have to blow a lot of money to stay relevant there. And even in NYC, it’s going to face a much strong challenge from JetBlue than it ever did from AA.”

              Complete agreement on everything except for the LAX opportunity, which violates your largest nearby hub rule. A loyal AA flier can get up and down the coast on AS or route thru PHX or DFW (+OW). A loyal UA flier can route thru SFO, DEN, or IAH (+strong Star Alliance options). If Delta doesn’t have an LAX nonstop the options are… SLC (unless you think they’ll route thru SEA?!). They literally have nothing in the southern US until ATL, and routing thru SLC to go anywhere in that territory is quite out of the way. Delta thinks they can pull off at LAX what they did at JFK+LGA, but what they’re missing is that their NYC routes were backed up with strong hubs at DTW and ATL to provide broader coverage, and they have nothing similar for the west coast. Sophisticated high-value loyalty travelers in LA are not going to fall for it – their options with AA and UA are just too strong. Delta will try to buy share there while pouring money into a bottomless pit only to attract low-value fliers.

            9. We’ll leave the DL hubs to Spirit and Frontier!

              Let’s not forget that WN carries more domestic pax than DL….

            10. DL has said that it adds flights as soon as it gets to close to the seat cap on a route. Which means if the seat cap was higher, those additional flights are not needed. Those are from Delta themselves. So taking just a snapshot of middle of pandemic doesn’t make a lot of sense. We wll get a better sense of some of these markets next summer when things are a little more back to normal. I haven’t seen Delta any moves other than adding more routes to LAX. It has a chance to succeed in LAX, but it’s still constrained by the # of gates available in T2/3. As far as NYC goes, it’s stuck at 20% of pre-COVID booking. That is terrible. It’s doing about 40 flights a day out of LGA. The slot waiver is not going to last forever. All the LCCs are looking to add slots. When April comes around and leisure traffic rebounds, it will need to raise that to 220 flights a day. In an environment where those short haul business routes aren’t likely to return anywhere close to pre-COVID levels for a few years, DL’s LGA advantage is completely nullified. There is at least a medium shift in NYC traffic where a lot of people have moved to suburbs to take advantage of WFH policies and decentralized office approach that many companies are moving to. That means both EWR and JFK will gain long term vs LGA. There will also be PATH extension to EWR in the next few years. That’s another factor that will shift some traffic long term. Based on AA’s decline in NYC, I think DL should anticipate JetBlue peaking at about 220 flights at JFK, 60 flights at LGA and 100 at EWR in a couple of years. I also anticipate WN to get larger at LGA through some slot deals. All of these things will give DL greater pressure at NYC than AA managed. For the smaller non-hub airports, that will really depends on how AA/B6 partnership works out. Let’s say BNA gets flights to JFK/LGA/EWR/BOS/DCA/ORD/PHL/MIA/CLT/DFW/LHR/LAX from AA and it’s codeshare with JetBlue and BA, that’s something Delta simply cannot match with it’s network. And we can replace BNA with any number of second tier airports in East coast. It would be the same problem facing Delta.

            11. FC et al

              If it is not appropriate to quote statistics in the middle of the crisis to draw conclusions, then yours (and other’s) attempts to make predictions about how things will shake out is also premature including about what will happen in NYC and SFO, markets that are being dramatically reshaped as people leave those high cost cities in record numbers.

              AS will not have a revenue sharing agreement with AA; AA will SIMPLY buy seats on AS flights. The same principle applies with B6. AA is shrinking its presence in major markets and trying to put its code on B6 flights, and in some cases transfer assets to B6. The government is still reviewing what AA/B6 are asking to do. Domestic codeshares between two carriers have NEVER resulted in larger share. AA cannot recover all, let alone most of the share it loses because it chooses to fly with its own metal. AA is a smaller airline and domestic codeshares will at best slow but certainly not stop the shrinkage that AA is experiencing across its network because it is ending flying that it said even before the pandemic was unprofitable.

              SJC is a market of its own. It has its pool of passengers and revenue just as EWR does. If being large at one airport was enough to win over all of the customers in a metro area were enough, then UA wouldn’t be trying to get back into JFK. Airports ALL have individual passenger characteristics but they are also part of a metro.

              By the same logic, arguing that DL can’t do anything in the southwest means that UA will have no chance of growing in the SE or AA won’t succeed in the mountain region. We ALL can logically see that is not the case.

              The key principle is that many of AA and UA’s largest metro areas and hubs are seeing competitive growth because competitors saw the opportunity to grow there in part because 1. United chose not to add seats back while other carriers believe they can grow now. and 2. because American is in by far in the weakest position among US airlines, with many analysts noting that, reserving assets to pledge for DIP financing in a potential bankruptcy, AA may not have enough cash to make it to summer, esp. if covid rages around the world through the winter and beyond.

              AA and UA both made strategic network decisions which have made it much easier for WN to add service in their largest hubs. ORD already had very interesting dynamics because of being a two airline hub. WN will succeed just as it has in growing in DEN not because all of the capacity that UA or AA uses to connect passengers but because WN can win over one spoke after another, making the viability of the hub much lower. With their ORD schedules, WN chose routes that are some of the largest AA and UA markets, including major hub to hub routes like ORD-DEN and ORD to Dallas.

              Unlike NYC, WN ALREADY has more than 20% of the domestic local market share in Chicago, Dallas and Houston and
              is the largest carrier at Denver by local O&D share. At Newark, they were a tiny fish in the largest local market revenue hub in the US. Even consolidating their presence to LGA, WN still has a very low share of the NYC market. They are far from the same position in expanding into the primary airports of Houston and Chicago that they were in Newark or still are in NYC.

              AA and UA simply do not have the resources to defend other parts of their network while defending their key hubs. Every other carrier will benefit from the competitive battle that will take place between AA and UA on the one side and WN on the other. As the largest carrier based on current seats and also the only legacy carrier that is not seeing its network being attacked by low cost carriers, Delta is by far in a better position than any other carrier to pick up share not just in cities like Boston and Seattle where it already has gained at the expense of AA and UA but in scores of medium-sized cities like AUS and BNA and many more where AA, DL and UA have split the market in various forms.

              Finally, Jon Ostrower retreated this letter from DL’s CEO which was sent to employees. Whether you agree with it or not, there are compelling data points that anyone that watches the industry should know. Ed Bastian doesn’t mention that DL still has $1.3 billion in CARES Act money that it will use to significantly reduce its 4th quarter costs. Delta and ALPA reached an agreement yesterday to retain all of its pilots; if it passes approval, which is expected, DL will be the only legacy/global carrier that will not furlough and many of the huge training issues which legacy carriers face in downsizing situations will be avoided or reduced. The legacy/global carrier industry is divided between AA and UA on one side and DL on the other; DL is much more similar to WN in its financial and competitive position and now that similarity to WN appears to include workforce and labor relations.
              https://twitter.com/David_Slotnick/status/1321885007871311873/photo/1

              Of course we are all still in the midst of this pandemic. But it is clear that long-term strategies that will determine long-term winners and losers in the industry are being put in place. Financial and competitive strength is now defined by decisions made years ago. Life won’t look the same for any of us post-pandemic and the airline industry, including the assumptions and structure many hold to, are most certainly going to be revised.

        1. In terms of current schedule. I agree with you. That’s more a function of demand out of Phoenix. But I believe in terms of FA reductions, PHX had the biggest drop.

          1. FC – Yes, they cut a lot of crews, but that was primarily because they were going to fund it from the other bases. It has no bearing on how well Phoenix is doing.

            Looking at domestic seats on offer this Nov versus last Nov, here’s how things look:

            DFW – 30.8% CLT -32.6% MIA -37.2% PHX -42.1% PHL -47.3% BOS -55.2% ORD -62.4% LAX -66.5% JFK -68.0% DCA -69.3% LGA -73.9%

            This November, PHX has more seats than any other hub (domestically) behind DFW and Charlotte. Even including international, PHX just slips behind MIA but is still ahead of everything else.

            1. I believe this is also partly attributed to AA’s drawdown at LAX. Domestic connecting traffic that used to go through LAX & PHX pre-covid is probably all going through PHX now, creating a healthier (financially speaking) hub network in the west.

        2. It sucks that AA is only operating two banks East and two West. It’s sad that they lost the O & D and can only survive with connections. Shouldn’t a strong profitable hub have a good balance of both to survive long term?

          1. Jack – In Phoenix? I’m not sure what you mean. American has done nothing but improve local traffic at the expense of connections.

            2012 28.7% 2013 29.8% 2014 30.2% 2015 31.5% 2016 35.9% 2017 38.2% 2018 40.8% 2019 39.4%

            Most of the adds that are being made now are for local traffic as well, so that should boost higher going forward.

    2. You make good points, but I’d say it’s AA that’s at more risk. For example, in Cranky’s write up of WN’s connecting options from ORD, I’ve already flown from ORD to these very destinations (e.g. RNO, ABQ, JAX) non-stop on UA. And for ABQ, I’ve actually flown non-stop from MDW. Would people rather have a connection than a non-stop? I’m not so sure. Personally, I’d say if you’re based in Chicago you are used to having non-stop options to most places and booking a connection versus a non-stop would seem to be a non-starter.

      On the other hand, the cities that WN has chosen to serve from ORD are solid in their own right. PHX, BNA, DEN, DAL, BWI – all serve destinations that are popular with Chicago area travelers. Will some also use them to connect? Perhaps. But either way, I think these flights will do pretty well.

    3. If DL can handle SWA offering 100+ flights a day from ATL, I’m pretty sure UA can handle 20 flights from ORD or IAH just fine (same as DL does with SWA from MSP, SLC, and DTW). SWA no longer has a pricing advantage or change-fee advantage, and UA has the basic economy fare bucket to undercut them all day long without losing revenue from their loyal fliers. In fact, I wouldn’t be surprised to see UA switch some of their international widebodies over to temporary domestic service to flood routes like DEN-ORD with cheap capacity (same with EWR-LAX/SFO vs. JetBlue).

    4. “. WN will serve several key AA/UA hub metros from both MDW and ORD, making it very likely that they will become the largest carrier to those metros from Chicago.”

      oh dear exactly how drowsy is that covid medication ? Pre-pandemic UA was like 580 daily departures out of ORD, AA maybe 490-510 ish. I recall WN MDW was what ? 220 ? 230 ?

      It’s QUITE a long way for them to even start getting close to either. Yeah we’re also waiting for the day when WN/HOU and WN/DEN is gonna eat UA’s lunch, prophesied by many, and never getting anywhere close that. zzzzzzzzzzzzzzzzzzz

      and who surrendered EWR ? so yeah before all those fantasy dreams of UA utterly slaughtered by the Texas challenger regarding ORD and IAH, maybe have some perspectives regarding WN’s track record first.

      ps : just read Q3 earnings of Big 3. you know DL loyalists’ favorite metric to tout how they’re super low in debt versus the rivals ?

      As of Q3 earnings, Long-term debt is $22bn for UA , $28bn for DL, and $30bn for AA.

      1. Henry,
        Obviously the aviation world will be watching what happens. Few people legitimately believes that WN will come up empty handed in its expansion into AA and UA hubs.

        WN offered 12 million seats from Chicago last year, AA 17 million and UA, 22 million. Obviously gauge matters.

        WN is not starting ORD service with RJs but with 20 737s that will cumulatively seat at least 5% of UA’s entire 2019 ORD capacity.

      2. Regional jets rule AA and UA at ORD. Count Mainline flights only- SWA rules the local Chicago market. (And the idiots at UA and AA allowed it to happen.)

  4. Which gates will WN use at ORD? It never felt like there was a lot of extra space at ORD and I don’t recall any other airline recently abandoning ORD (even with a draw down of flights). For 20 flights a day, WN would need 3 or 4 gates.

    1. Terminal 3 I would guess as Dl is shifting to concourse L & that has opened some additional space there for B6 as well.

      1. No – T-5.
        With the ongoing redevelopment of T-5 it will be interesting to see how this will work. While the absence of far-eastern widebodies has helped alleviate the massive congestion there, it still has major challenges with it’s baggage systems, TSA baggage screening, and the influx of carriers from T-2 which will eventually be demolished to make way for a replacement and much upgraded terminal.
        Lots of moving parts here!

      2. Terminal 5 (Concourse M) is being expanded on the Eastern-Side for Delta, then Delta will move from Terminal 2 (Concourse E).

    2. Terminal 5 (Concourse M) is being expanded on the Eastern-Side for Delta, then Delta will move from Terminal 2 (Concourse E).

      Terminal 5 (Concourse M) are all “Common Use” Gates and this is where Southwest will be located.

  5. Now we just need WN to come to TYS from a few hubs as well. It’s one of the largest markets now without WN service, is much more of a tourist draw with the Smokies being the #1 visited national park, more annual boardings than COS or JAN, and more income per capita than SAV or JAN. BWI would provide connections to the NE and be the market with the least competition, MDW or DAL could probably handle everything else, or hey if they’re doing COS-DEN, why not TYS-BNA?

    1. You mean the 2-3 flights a week on Allegiant to beaches and a few big cities aren’t good enough for y’all in Knoxville? ;-)

      I kid, mostly because I’m not a big Allegiant fan.

      1. Heh, I’m fine with Allegiant in principle, and I have taken them a couple of times (to Florida and Vegas) but IRROPS scare me somewhat when you can get stuck for days. Typically I stick to DL but I’d welcome a little fare pressure at least and the opportunity to fly something different every once in a while.

    2. Complete agreement TYS is a good opportunity for WN. It would probably help if they took their cue from the “Bozeman Yellowstone Airport” and the “Fresno Yosemite Airport” for a rebranding to the “Great Smoky Mountains International Airport”. Too bad the GSM airport code is already taken.

  6. I would be very surprised to see the level of frequency they have announced fly in reality. All airlines have made announcements of new markets by announcing competitive schedules, but then they cancel and collapse those schedules and reaccom the pax onto fewer frequencies. Is there really value in offering a 6x business pattern between ORD and DEN while there’s no business traffic?

  7. Isnt WN technically “returning” to COS as well since they bought Morris Air and it was flying from COS post-purchase. ;)

  8. How are they getting gates at ORD? Even with the plunge in traffic are airlines really giving up gates to save money or did WN muscle their way in? Anyone know what concourse they will be in?
    Surprisingly absent so far in their new city announcements is service to their hubs in ATL, STL and LAS.
    As for COS-DEN, what’s next TUS-PHX or MKE-MDW? I would venture to say yes.
    Finally if AA couldn’t make COS-PHX work even with more connecting cities going west, why does WN think they can?

    1. Jack – As has been mentioned here by another person, Southwest will be at T5. Those are all common-use gates that are primarily used by international carriers. With international travel down, there is an opportunity for Southwest. Looking at the schedules, this should be mostly run off 2 gates with maybe a couple times a day that need a third. So it’s pretty light on needs.

      As for COS-PHX, American only brought that back in December, and it pulled it after the pandemic began. So it didn’t get much of a chance to work.
      But American was mostly running one flight a day with a couple more in March. It just didn’t create many connecting options anyway.

  9. If the shift to a more hub-and-spoke model becomes permanent, WN’s recently expressed interest in the A220 takes on a whole new meaning, especially if they somehow managed to entice Airbus to develop the A225 with the promise of a big enough order. That would not only let them replace their entire fleet with planes of an equivalent size but much more efficient, it would also open up the possibility of introducing the A221 in order to both enter smaller markets and increase frequencies in their existing ones.

    1. With the 221 they could wind up reentering markets they dropped when they decided running AirTran 717s wasn’t worth the trouble.

      I still rather doubt Southwest will switch aircraft vendors, but I’d love it if they went for the 220.

      1. I have yet to fly the A220, but I’ve heard tons of good things about it from a passenger comfort side, and I’m a big fan of the 3-2 seating configuration (miss flying the Mad Dogs, which are now mostly, if not totally, retired from US service). I’m really looking forward to flying on the A220 and while I’m not going to go crazy trying to fly on it, I have been looking for it when booking flights on DL, with an eye towards potentially making a small compromise on price or schedule for the opportunity to try the A220 and scratch an avgeek itch.

  10. Cranky,

    With Southwest flying between DEN and COS, can flights between ORD and MDW be far behind? :-)

    It would be faster than an Uber or taxi to get between the two airports.

    That might make sense if someone on the South side of Chicago wanted to fly internationally.

    And a good way to build up Rapid Rewards status without leaving the metro Chicago area! LOL

    1. I’ve flown ORD-MKE, which clocks in at 58 nautical miles… I want to say I flew that on UA, but possibly AA.

      At the time, the pilots informed us that it was the shortest (mainline?) route in the entire network of the airline.

      Back when CVG was a big hub for Delta, many people in the Cincy area would drive an hour up the road to Dayton and fly from DAY (with a connection in CVG) to save money over a nonstop directly from CVG, though I’m not sure if those flights were ever on mainline jets. I know similar behavior occurs between routes like LAN-DTW, CHA-ATL, etc.

      1. Kilroy

        I have flown that route (ORD-MKE-ORD) on United also.

        It was sweet because as a 1K, United gives you 500 flight miles each way.

        In fact, I was able to retain my 1K status one year when I had a few projects in Milwaukee and flew each time I needed to work on-site.

        So maybe MDW to ORD is not that crazy after all :-)

  11. Aa of 1997, with the passage of the Shelby Amendment, WN could fly nonstop from DAL to Mississippi. They didn’t, but it was possible.

    1. Xnuiem – Yes they could, but they couldn’t connect that anywhere beyond the neighboring states, so there was no value in that as a hub.

  12. I would love to have been a fly on the wall at a recent WN management strategy meeting. They really must smell blood.

    I’m just glad my airport (BWI) is one of Southwest’s major hubs – more options for us.

  13. All of the speculation on this topic reminds me of one of my favorite Mark Twain quotes, “There are three kinds of lies – lies, damned lies, and statistics.”

    This is an unprecedented time for the airline and tourism industries. No one can be 100% certain how things will work out. Let’s see what things look like in the next two to three years. We may have a better idea of the “new normal” by then. On the other hand, we may not.

    Based on the current trends, and interviews I’ve seen with both CEOs and analysts, most of the airlines will be at least 20% smaller than they are now post-pandemic. Maybe some of those who are rooting for the liquidation of one or more of the major airlines will get their wishes fulfilled. We’ll see.

  14. Ghost,
    You are absolutely right that no one knows when this whole pandemic will end, let alone how any individual or company will fare when all is said and done.

    Let’s all be very clear that no one is or ever has rooted for anyone’s failure.

    However, airline history is full of company failures resulting from macroeconomic crises that were far less severe than this covid crisis.

    There is also forty years of history that shows who has gained and who has lost since the US airline industry was deregulated. As hard as it is for some to accept, that history shows that AA and UA have lost the most and DL and WN have been the beneficiaries. And that cycle has been repeated over and over again.

    I get that everyone has loyalty to their own airline and thinks they can find evidence to support their theory which is why I am a big proponent of going back at articles and subjects that proved to be particularly controversial and seriously ask the question “how did it turn out?” CF sort of does that with his predictions regarding the industry but there are literally scores of discussions that are had on here that require a look back and an assessment through an unscratched backward looking lens.

    Thanks to all for a stimulating but respectful discussion.

    1. Tbahamguy – Were I a betting man, I’d say Dallas, Phoenix and/or Vegas, Nashville and/or Atlanta, and possibly a Florida city. Depending upon how big of a schedule Southwest puts out, we could see Chicago, Baltimore, and Denver.

      1. I think Love, Den, PHX,MDW for sure. Maybe BWI, ATL? Someone said they think they will run a shuttle to Hobby to connect international one time a day but think that may be a little far fetched. However Continental did it from another small airport in the Houston area to connect with flight out of IAH many years ago. Didn’t last long.

        I am anxious to see what is up their sleeve.

        Take care.

        Love your articles!

  15. UA will fight tooth and nail for ORD DEN. I definitely see some old NWA style capacity dumping, fare give aways, mega mileage awards and additions that target WN bread & butter city pairs.

    It’s interesting how the contrarians in 01 & 08 shouted ” you can’t shrink yourself into profitability”. Seems that that theory will be tested in the coming months.

    1. Eric,
      it will be very interesting to watch but NW did not operate in the current environment which is the most financially challenging in the history of aviation.

      And the reason why legacy carriers were able to shrink was because they went through bankruptcy to shed costs. Most industry assets are now pledged as collateral and there is very little unsecured debt. Bankruptcy will only serve to shrink one’s asset base by allowing assets to be rejected, allowing competitors to grow where that asset might have operated.

      WN’s move proves that not all airlines will be in the same position as those that need to file for bankruptcy. The US has 3 legacy/global carriers each serving hundreds of US cities including via their regional carriers via multiple hubs. All 3 serve all 3 global regions (transatlantic, transpacific and Latin America).

      There simply will not be the demand for 3 global carriers serving all of the world for years and not all carriers – legacy and non-legacy – can continue operating until finances return to normal. Every carrier is now competing for the same domestic leisure passenger and whatever business travel is out there. TSA counts are falling again.

      Add in that AA and UA are both seeing larger competitive incursions in their key markets than has happened in those cities since the last round of mergers and there is a huge amount at stake.

      And the UK just announced another round of lockdowns joining other European countries. The European airline industry and transatlantic travel is highly at risk.

      US airlines have a domestic marketplace as long as there is no nationwide lockdown ordered here. The key to survival is for each carrier to get their costs down and aligned as close to current revenues as possible. Some airlines won’t be able to do that and they will slowly have to quit defending peripheral markets in order to focus on what they want to keep. WN is simply helping AA and UA prioritize their market lists.

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