Capacity Cuts Show Effect Gas Prices Have Had

Southwest Airlines, which has talked recently of a four percent expansion in capacity this year, now says a slumping economy and expectation of falling demand this winter has prompted a decision to cut its winter schedule.

Southwest tells the Dallas Morning News it will drop 196 flights systemwide, and add only six, for a net reduction of between 5-6 percent of its daily schedule. Spokeswoman Brandy King said the reductions reflect economic factors, and will make more aircraft available to work around winter storms.

"The changes we are implementing are wide-ranging but relatively minor in magnitude. They are in part necessitated by holding the fleet count steady as we enter the first part of 2009, with the one-two punch of nasty winter weather and low traffic," he said.

Some of the dropped flights may return in March, but King added "...that being said, we have mentioned that we will be taking steps in 2009 to adjust our capacity growth rate in response to a slowing US economy and added fuel cost pressures."

The changes will affect Chicago the most. Midway Airport will lose a net of 22 departures to 20 cities. Three routes -- Phoenix and Birmingham, AL.; Nashville and Oakland; and Nashville and Seattle -- will lose Southwest nonstop service, though passengers will still be able to travel Southwest with a stopover along the way.

Southwest's hub at Love Field (DAL) will lose six nonstop flights, going to Houston, San Antonio and Albuquerque, NM. Those cities are served by multiple Southwest flights already; Houston, for example, will still be served by 29 daily flights to Dallas.

What about Southwest's plans to aggressively add capacity next year? CEO Gary Kelly suggested to investors July 24 those plans may be on hold, even as the carrier posted a  $321 million profit in the second quarter.

"The more the time goes by, the more concern we get about our overall economy in 2009, and certainly that's weighing very heavily on our views about growing capacity next year," Kelly said. "But right now, we're not real bullish about adding flights at all vs. where we are operating today."

FMI: www.southwest.com