There was lots of noise in the airline airwaves last week but one item that bears notice is Southwest Airlines.  The short version is that despite warnings to the contrary, they earned a profit of $98 million due to fuel hedging augmenting their income.  Excluding one time gains, the airline has an $18 million loss.  Should we be concerned?  No, we shouldn’t.  The fuel hedge gains are legitimate and an area where Southwest excels.  Furthermore, they will earn more profits as they consolidate the Airtran operations into their own.

Also notable is their decision to contract with Amadeus for international reservations with the expectation of being able to handle international reservations by 2014.  I think this is good news.   I think there are big opportunities for Southwest when it comes to international flying and especially so from the US to Canada and Mexico and it continuing the Airtran flights to the Caribbean.

But this points out the fact that, once again, a revamp of the reservations systems and, in particular, the ability to codeshare is going to be deferred again in favor of the international priority.   The truth is, this whole system should be revamped by now.  It’s shameful that it isn’t and it put a very real strategic partnership with WestJet into the toilet because of these complications.  Furthermore, Southwest doesn’t realize much gain in its relationship with Volaris as a result.

I and many others would be a lot happier to see Southwest contracting with a real reservations system to accommodate real needs across the board.  The idea that Southwest can remain “independent” in its reservations system as an airline with 702 aircraft and 97 destinations.  There is a time and a place to be independent and then there is a time to have a an infrastructure that matches your operations.  It’s notable that Southwest continues to grind on with their 40 year old Braniff system (originally named Cowboy) that they’ve “improved” over the last few decades.  It’s notable that this is a system that my own father was involved in when he was a vice president at Braniff.  My father hasn’t been with Braniff since 1981.

It’s time for Southwest to get a modern reservations system and the sooner, the better.  Make the investment now as there is one thing for sure:  Reservations systems aren’t going to get cheaper and they will get more difficult to build yourself.

Filed under: Airline News by ajax