Southwest will slow its growth, cease
service on a few of its transcontinental routes in October and
unveil a new seating and boarding method in the fourth quarter of
this year as part of an attempt to boost its revenue and
profitability, the airline said June 27.
Also in the fourth
quarter, the airline plans to "enhance its low-fare structure,"
although it didn't specify what that means; "enhance" its Rapid
Rewards frequent flyer program to increase its appeal to business
travelers; and launch a new advertising campaign aimed at those
business travelers.
It's widely assumed
the new boarding and seat method will include some assigned
seating, which Southwest has been testing, and while CEO Gary Kelly
didn't quite confirm that, he did say the upgrades Southwest had to
make to its systems to enable assigned seating would be ready by
2008.
The
transcontinental routes Southwest will be ending as of Oct. 4 are
Baltimore-Los Angeles, Baltimore-Oakland (Calif.), Philadelphia-Los
Angeles, Philadelphia-Oakland, Chicago (Midway)-Orange County
(Calif.) and Cleveland-Phoenix. In addition, Southwest is ending
its El Paso (Texas)-Midland/Odessa (Texas) service Nov.
4.
They are part of the
39 frequencies Southwest is taking out of its current flight
schedule. At the same time Southwest is adding 46 flights in what
it called "growth markets," such as Denver and New Orleans. For
details on the flight changes, visit
www.southwest.com/about_swa/press/070627_chart.pdf.
Denver is getting the most new routes in
October and November, with new service to Albuquerque, N.M.;
Amarillo and Austin, Texas; Oklahoma City; and Seattle.
Kelly said rising
fuel costs and a softer-than-expected U.S. economy necessitated
some schedule "optimization" to redeploy aircraft to more
profitable routes. But he said the cessation of some of the
transcontinental routes does not signal a shift away from long-haul
flying.
More than a third
of the airline's departures are to airports more than 750 miles
away, and many of its longer-haul routes are successful, he
said.
As for the slowdown
in growth, the airline said it plans to grow its available seat
miles, the standard measure of airline capacity, by 6%
year-over-year for the fourth quarter of this year and for all of
2008. That's two percentage points less than under its previous
plan.
As part of that
slowdown, Southwest now plans to grow its fleet by 19 aircraft in
2008, which is 15 fewer than its previous plan.
"In this economic
environment, we simply need to take less risk and grow more
slowly," Kelly said.
To
contact reporter Andrew Compart, send e-mail to [email protected].