SocraticGadfly: Southwest bullish in the face of high fuel costs

May 20, 2008

Southwest bullish in the face of high fuel costs

Southwest Airlines is expanding Denver service, with flights to San Francisco and Omaha, among other things, at a time when other airlines are cutting flights in order to force up costs, rather than adding more and more surcharges to flights.
To do so, Southwest will be keeping two airplanes that it had planned to retire. In all, it now plans to expand its fleet by a net of 13 airplanes this year, compared to the seven that it projected on April 17.

In all, Denver service will grow from 79 to 95 daily departures.

As often is the case, Southwest is playing against type. Since it continues to turn profits, it has the leverage to do this. Given that Frontier has filed for bankruptcy, Southwest has room to do this, and that can’t help Frontier’s reorganization plans.

This will also put pressure on United’s Denver hub, just as we all wonder whether it’s merger talks with Continental are still off, or about to turn on again.

Hmm — is a Continental/Frontier, or United/Frontier, marriage a possibility?

Funny, just a few years ago, Southwest was acting like somebody had put a gun to its head to force it to return to Denver. (It had refused to fly DIA for several years.)

That said, I’m still surprised that Southwest hasn’t cast an eye on Colorado Springs. The Springs has two problems; the airport is just accessed by a boulevard and not a freeway, and winter weather. But, the weather isn’t that cloudy, and if the Springs’ city government said it would provide freeway access as an economic development incentive, I think Southwest would have to jump; at the least, it would beat DIA over the head for lower landing fees, a Southwest specialty tactic.

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