Southwest is clearly positioning itself to operate a family of aircraft.  They also clearly see a strong need for the -800 (5 more aircraft ordered) and I think they recognize a need to enjoy all the fuel efficiency benefits available to them at this point in the company’s life.

SWA has made its intentions to compete in major markets and at major airports throughout the country.   Those airports require more capacity per flight in order to grow and enjoy health profits.  In light of their challenges in getting slots to operate from NYC airports as well as slots for Washington (National), I suddenly wonder if the -900 and MAX9 won’t enter into the picture.  If they can get enough frequencies in and out of those airports to operate an accomodating daily schedule, they can at least benefit from larger and larger aircraft.

The question is what to do about their traditional smaller markets that have enjoyed a lot of Southwest service.  Many of those markets get served with 737-500 aircraft or they enjoy the -700 by being a part of follow on service to another destination.  For example, my mother flew to the DFW area last week on SWA by going nonstop to ABQ and then onwards (on the same aircraft) to Dallas. 

This is how Midland, Lubbock, Amarillo, Oklahoma City, Tulsa, and Little Rock enjoy more frequent service with mainline aircraft.  In fact, each of those cities enjoys 5 daily round trips each except Little Rock which has 6.  That is on Southwest alone and does not include service provided to the DFW area by American Airlines/American Eagle who offer as many or more frequencies using primarily ERJ-140 aircraft and a few MD-80s.  But once Love Field in Dallas becomes available for non-stop flights to destinations within the 48 states, those cities suddenly don’t look so good for the mainline aircraft they have today.  I don’t think they’ll lose that kind of service entirely but I do think that such cities will see reduced service or they’ll need smaller aircraft.

In light of Southwest’s order, I no longer think they are necessarily going to embrace the CSeries.   The truth is, more and more, the turbo-prop offers the right economics for those flights.  And, yet, I’m not sure SWA wants to be a turbo-prop operator.  So I wonder if we’ll see Southwest morph into a larger, more mainline airline that starts to ignore those smaller cities it has so successfully served for decades.

I also notice that while they’ve made their orders today work for a stable fleet count, they can also change their minds and grow if opportunities present themselves.  It’s a flexible plan and I like that.  Southwest *will* order more MAX airplanes but the follow on orders will be in single digits mostly and very incremental over time.  Southwest will likey obtain more options as time passes but mostly it will use the ones it has today strategically. 

Finally, time for another prediction.  I think we are going to next see Ryanair jump on the bandwagon for new aircraft.  Odd favor the MAX and I’ll predict that their goal will be a 250 aircraft order that focuses more on the MAX than it does on replacing existing aircraft in their fleet.    When?  If it’s Boeing they really want, it will be very soon.  I would expect it to happen in the next 30 to 40 days.  If they truly want to evaluate Airbus against Boeing, then I’ll guess that we’ll see an order announcement somewhere in March or April.

Filed under: Airline Fleets by ajax