Andrew Watterson, Senior Vice President Network and Revenue Management, Southwest Airlines, believes sustained, coordinated support for new routes can make all the difference.
Q) What is the philosophy behind your network development – do you want to increase the number of routes or is frequency a bigger driver?
A) “We take a very balanced breadth-versus-depth approach with our primary network design being point-to-point traffic, complemented with international flow where beneficial. The great news for Southwest, and our customers, is that we have strong demand in many existing markets, meaning we can increase frequency where we have some spill today. We also have a significant number of new routes on our roadmap that connect existing cities which don’t currently have non-stop service. We will also launch new routes to new geographies within our Boeing 737 reach.
Q) How closely do you work with your fleet development planners, or is it a case of using the aircraft you are given?
A) “Our network team is very active with the various groups that coordinate on the fleet plan. In the long term, we will engage regularly with our COO, CCO and CFO to communicate demand so we can make sure that it is aligned with our growth, capital and operational plans. In the near term, when the number of aircraft is fixed, our team works in an integrated fashion to allocate aircraft appropriately to meet the airline’s commercial and operational needs.
Q) Do incentives attract you at all?
A) “Our philosophy on all routes is that they need to be long term, sustainable and accretive to our network. That said, on a very select basis we are open to various incentives if they help mitigate development risk and help expedite the maturation process necessary to be a part of our core network.
Q) What other assistance do you like from a new destination?
A) “We have great partnerships with airport, community and key business leaders across the country. What we have seen to be the most impactful is when we can work with these groups that represent a city and they are all aligned and have collective goals that are good for both the city and Southwest. In those cases, we see focus and follow through to make the routes today more successful and new routes mature at a faster pace. It sounds like common sense, and it is, but it is rare to see a sustained effort. However, when it happens the results are powerful.
Q) How has the US market changed since consolidation?
A) “The US market has experienced a significant change since consolidation. The mergers have played a role, but the bigger drivers are the expansion of the US economy since the financial crisis and fuel prices at a decade’s low. The result is an environment with some of the greatest returns and margins this industry has ever seen. The consolidation creating the Big Three legacies has created “white space” in former hubs and focus cities. You’ve seen us integrate that into our plans, and you can see that other low-cost carriers are doing the same.
Q) Will NextGen – the air traffic management upgrade in the US – make a big difference to operations and how you approach your network strategy and frequencies?
A) “At Southwest, we are focused on keeping costs low and the utilisation of assets high. NextGen will have a positive impact on our business and create opportunities, but it won’t cause a fundamental shift in our network strategy. The efficiencies that can be created by implementing the NextGen system will enable greater operational tempo, allowing us to fly our aircraft more for commercial service. We are already seeing more short-haul opportunity return – if not to pre-9/11 levels – so keeping the operation on time with new NextGen capabilities presents even more upside for future growth.
(This article first appeared in Routes News – Issue 1, 2016)
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