Airways should play the lengthy recreation with regards to planning routes, staffing, and tools wants. You’ll be able to shift a airplane from one airport to a different or change round route frequency, however you possibly can’t spin up new planes shortly.
That implies that if you wish to add capability, you must make these choices years forward. The issue — and it is a massive one for Southwest (LUV) – Get Free Report — is that the covid pandemic modified the equation.
The airline, like its opponents had to enter survival mode, and that meant pausing just about each expense that you possibly can pause. That didn’t embody layoffs, Southwest has by no means had layoffs, however it did imply incentivizing some employees to take early retirement.
On the bottom, that is a difficult downside, however a solvable one. A customer support individual, gate agent, or baggage handler have to be skilled, however their inexperience causes points that the airline can work by way of.
The identical goes for flight attendants. That is a troublesome job with duties that go properly past bringing you a drink and a snack, however you possibly can spin up new flight attendants after just a few weeks of coaching. (And the tightening economic system might make that difficult job a bit simpler.
Even a scarcity of planes could be overcome as rival airways have canceled orders and plenty of corporations have tightened up their spending. What you possibly can’t overcome is a scarcity of pilots, and that is an issue Southwest has.
Southwest Wants Pilots
When an airline doesn’t have sufficient capability to satisfy demand, costs go up. CEO Bob Jordan admitted that the airline doesn’t have the out there seat miles (ASM) to satisfy buyer demand for tickets.
“If we may fly all of our plane, that’s we had sufficient pilots to fly the plane on property, we might be roughly 5%, 6%, 7%, 8% greater share of capability or ASMs this yr proper now. That is about how rather more we may fly. It is actually extra that is the issue that it’s the mixture of the flying short-haul, medium-haul, long-haul,” he mentioned through the airline’s third-quarter earnings name.
Jordan was extra blunt throughout a CNBC look after earnings had been reported.
He mentioned that the airline was “in search of up revenues once more on down capability,” which he blamed on the dearth of pilots.
Mainly, you will pay extra to fly as a result of Southwest doesn’t have the pilots it must employees its planes.
Southwest Has Good (and dangerous) Information
Piloting an airplane takes years of coaching and expertise. The pandemic set Southwest’s plans again because it each misplaced pilots and coaching stopped or not less than paused for many individuals trying to develop into pilots. The airline has, nonetheless, addressed these points.
“We’re on monitor to rent 1,200 pilots this yr and a couple of,100 pilots subsequent yr as deliberate. we wished to revive our operational reliability, and we’re headed in the suitable route, having made a variety of strong progress,” Jordan mentioned through the name .
That is excellent news for the 2023 vacation season, however it’s not going to assist anybody touring this yr. That is one thing the newly-promoted CEO addressed.
“Going ahead, we imagine we have now capability higher matched seasonally to demand,” he added.
Southwest continues to be aggressive in its hiring/coaching plans.
“Our pilot hiring and coaching proceed to be the pacing issue for progress as we transfer ahead. We proceed to draw high-quality pilot candidates, and the coaching program to onboard a brand new pilot to Southwest Airways are strong. We’re working at our most coaching capability for pilots, and that can proceed properly into 2023,” he shared.