The saga of the conflict between Southwest and WestJet continues with Southwest implying that they’ll consider direct competition with WestJet on flights from the US to Canada if the agreed upon codeshare falls through.   Many speculate that Southwest is just blustering and that they’ll never fly those routes themselves.  A frequent flying friend who has made many trips to Canada and through Canada asked me if I thought they would ever really do it.

 

I do.

 

First and foremost, this isn’t Southwest Airlines of 1989.  This is Southwest Airlines of 2010 and a very different beast.  If you had predicted to people that Southwest was going to institute flights out of NYC’s La Guardia airport in 2006, almost no one would have believed you.  Guess what?

 

Second, Southwest has something that not a lot of airlines have.  Employees who relish competion.  When this initial codeshare was announced, some of the loudest opposition came from Southwest employees.  They recognized that flights to and from Canada could easily be flown by them rather than another company.   The pilots were particularly peeved about that and made it known during their contract negotiations.  But all employees saw that the company could and, perhaps, should fly those flights themselves.  Most also rightly recognized that similar flights to Mexico probably weren’t as easy to do for SWA and were, at best, a long term goal.  My point is that SWA employees are very aware of their capabilities and very motivated to succeed as a company.

 

I think that in the 2 years since this codeshare pact between Southwest, WestJet and Volaris were announced, even Southwest management has realized that they can do more and try more and succeed.  That said, Southwest is also an honorable company and I feel certain that their preference is to work out differences and continue with the initial plan.  Don’t mistake that for SWA being afraid though. 

 

I think they’ve made some mistakes in the past year.  I think delaying the codeshare as a result of re-prioritizing IT upgrades was, in hindsight only, a mistake.  However, given the dire conditions SWA was facing when they made that decision, perhaps it was the right decision at the time.  Remember that WestJet didn’t have to face those same economic problems at that time, already was experienced with flying internationally and it is somewhat disingenuous to act as if they’ve done all their work while their partner is lagging behind.  WestJet knew what it was getting into when it made that agreement.

 

Southwest recognizes that future growth is going to come from entering markets that previously they avoided.  That isn’t abandoning their model, it is accepting that the future is different.   As a function of entering these kinds of new markets, there will be new challenges for them and they’ll make mistakes.  They have made some mistakes.  That said, they’ve also stayed true to themselves and not allowed their mistakes to drive themselves into more mistakes.  Indeed, they are quite humble about internally acknowleding their mistakes and not too proud to reverse course and make something right or at least not repeat a mistake.

 

So, yes, I do think that SWA can and would enter into Canadian markets.  They have a number of focus cities where that would make imminent sense for them such as Detroit, Chicago, Baltimore and even Seattle and Denver.   They could change the NYC – Toronto market if they found enough slots at La Guardia to start flights on that route. 

 

Southwest’s real business model is about earning a profit consistently.  If adding routes to Canada can be done a consistently profitable basis and it yields profits that are better than other opportunities, they’ll do it remarkably quick. 

 

Personally, I think this WestJet spat will get worked out but I think that will happen at the chairman level rather than the presidential level.

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