The grounding of the 737 MAX worldwide will have more of an impact on some carriers than others. As the world’s biggest operator of the jet, Southwest Airlines are likely to feel pain more than most. In fact, since yesterday, almost 7% of their passenger capacity has vanished, leaving us wondering if they’re going to be in trouble.
Airlines in the US are generally downplaying the significance of the grounding of the MAX, indicating that there’s enough slack in their fleets to accommodate the loss of aircraft.
While American Airlines, who have grounded 2.4% of their fleet, and United who have grounded 1.8%, may well be able to absorb the losses, Southwest’s loss of 4.5% of their aircraft could be a little more difficult to swallow. But that’s not even the whole picture.
Counting aircraft is not really an adequate measure of the impact the grounding will have. For Southwest, the 737 MAX is the largest aircraft they use, seating 175 passengers compared to the 143 of their 737-800s. They have no other models in their 754 plane strong fleet.
Clearly, the loss of the MAX will have a much greater impact, and be much more difficult to replace, in a fleet structured like Southwest than in other fleets. A more diverse fleet, such as Americans with A330s, Dreamliners and 777s at their disposal, will find it much easier to pick up the slack. But how much of an impact is the 737 grounding likely to have on Southwest?
Available seat miles
A better measure of the consequence to Southwest is to look at the available seat miles (ASM) they’ll have lost through the grounding. This is worked out by taking into account the number of seats available by the length of the journey taken.
Cutting to the chase (and avoiding unnecessary math), analysts have checked out Southwest’s schedule and have calculated they had planned to use the 737 MAX to fly 6.7% of their routes next month. By July, they were due to up this number to nearly 8% of their overall capacity.
In comparison, American Airline’s MAX aircraft would have taken care of just 1.5% of their seat miles in April. United’s 14 737 MAX 9s would have flown 1.7% of their ASMs. The reason United’s is higher, despite being a smaller fleet, is because they’re often used on Hawaii flights, which generates a skewed number of ASMs thanks to the large distances covered.
What can airlines do to solve the problem?
Of the US carriers, there are a number of options open to them to mitigate the impact of the 737 MAX being out of action. Although the next few weeks may be a bit messy, with cancellations and delays likely, longer term most will be able to take care of business.
One strategy may be to fly for a longer period of the day. Instead of flying between 6am and 11pm, they may adjust timetables to start at 5am and finish at midnight. They can also change frequency of flights, flying busy business routes seven or eight times per day instead of the usual nine or ten. The spare aircraft can then be deployed on ex-MAX routes.
For American and United, there’s another trick up their sleeves too. Both carriers contract a number of regional airlines to provide services under the banners of United Express and American Eagle. Some of these contractors may have spare capacity, which could be leveraged to pick up the slack.
Southwest, on the other hand, don’t fly any regional jets, so this is not an option for them.
Are Southwest in trouble?
With by far the most risk exposure from the 737 MAX fallout, you’d be forgiven for thinking this would have a major impact on Southwest’s profits. However, when you’re talking about a company that takes $22bn in revenue every year, a hiccup such as this is unlikely to be significant.
Undoubtedly Southwest will have some issues to resolve over the coming weeks, but long term they’re unlikely to suffer unduly as a result. Passengers tend to be understanding when an airline is struggling with something which is not in its control, and the reasons people fly Southwest will still remain despite the grounding of their MAX.