Southwest Says New City Pairs Is The Way To Survive This Crisis

Expansion is not a phrase we hear often associated with airlines during the pandemic. However, for Southwest Airlines, it’s been a key focus of its survival. CEO Gary Kelly spoke about how adding new city pairs is ensuring Southwest’s recovery and hopes it’s enough to see it through the winter.

Southwest’s CEO believes new city pairs are key to surviving the crisis. Photo: Getty Images

Opportunistic expansion to beat the crisis

While many airlines are pulling back from their flight services amid the pandemic crisis, Southwest has taken a different route. Aggressive expansion and predatory opportunism are the name of the game for the airline, a move that has seen it launch a swathe of new routes in the last few weeks alone.

Even as surging COVID cases across the US began to strip demand back out of air travel, the airline announced its 10th destination in the Sunshine State. Sarasota-Bradenton will launch in the first quarter of 2021, making it the 10th destination to be served by Southwest in Florida.

But that’s not all the airline is up to. Just weeks ago, it announced 10 new routes from Chicago and Colorado starting next year, as well as a major expansion into O’Hare International Airport. Houston has seen some ‘LUV’ too, while new routes to ski destinations have been high on its list of priorities.

While major expansion in the midst of a pandemic could be a questionable strategy, Southwest’s CEO Gary Kelly believes it’s what’s required to assure its survival. Speaking at a recent Aviation Week webinar about his new route announcements, Kelly said,

“All of those make sense for us now because they will reduce our cash burn. We’re using idle assets and people that we’re paying for that are otherwise not generating any revenue. It doesn’t take much to at least cover those costs, and I’m glad we have those opportunities.”

With no way to expand capacity, Southwest is expanding its breadth of destinations instead. Photo: Getty Images

Kelly explained that, because of the lack of demand, it’s difficult to expand in existing markets. For Southwest, despite having a robust network pre-pandemic, there were still places to go and opportunities to leverage. Some of its competitors were not in such a good position.

“A lot of our competitors don’t have ways to increase their breadth. Right now, you can’t get any depth in a market, there’s only so much demand in a given city pair, but if we can add new city pairs and add new customers and more flights, that’s the way to help mitigate this crisis.”

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Outdoor destinations are key

Southwest’s route strategy leans heavily on its leisure travelers. With business travel predicted to take some time to come back, this makes sense, and the focus is very much on ‘sun and snow’.

Flights have been added to Palm Springs, Jackson, Georgia and other sun destinations, while Steamboat Springs, Montrose and other snow destinations in Colorado cater to the seekers of something cooler. Kelly is betting on people wanting to be outdoors, to have their own space and to enjoy fresh air. He commented,

“For the most part, it’s sort of an outdoors, leisure-oriented destination scenario that we find most successful right now. And I’ll be curious to see how the ski season goes. Colorado has been really popular up to this point.”

Outdoorsy leisure destinations are the focus for this season. Photo: Getty Images

Although Southwest is betting on getting some winter traffic, Kelly was clear that we’re not out of the woods yet. He is projecting a healthy December, but is concerned about a dip in January traffic. He said,

“Our November projections would suggest that it will be better than October, and we still, we still feel pretty confident that December will hold up and be better on a trend basis again, then, then November was. I’m a little more worried about January.”

With no holiday bump in January, airlines like Southwest are right to be bracing for a tough start to the year. COVID cases continue to rise across the US, and with the cold weather setting in, that’s likely to be a trend that continues for some weeks. Nevertheless, Southwest is betting on its new city pair strategy to see it through the worst winter in history.