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    Southwest Airlines CEO Kelly Talks Expansion, Cuba, TSA and Checked Bags

    Southwest Airlines CEO Kelly Talks Expansion, Cuba, TSA and Checked Bags
    Southwest itself is growing, with a capacity increase of nearly 5% in
    current quarter
    June 22, 2016 4:44 p.m. ET

    The U.S. airline industry is growing faster than the gross domestic
    product, and that has created “some real pockets of aggressiveness
    throughout the country,” Southwest Airlines Co. Chief Executive Gary
    Kelly said Wednesday.

    Lower fuel prices, rapidly expanding discount carriers and the improved
    financial health of the major airlines has led to more flights and lower
    fares, he said.

    The nation’s No. 4 airline by traffic and the biggest hauler of domestic
    passengers, Southwest itself is growing by a relatively fast clip, with
    a capacity increase of nearly 5% in the current quarter. But that
    expansion is the continuation of a trend begun in 2014 when it boosted
    its number of flights at Dallas Love Field by 50% after federal flight
    limits on that field were lifted.

    Moreover, Southwest is adding international routes, something it never
    did until it acquired AirTran Airways in 2011 and later integrated some
    of AirTran’s Caribbean and Mexican routes into its own operations.
    Today, flying to 11 international destinations accounts for just 3% of
    Southwest’s capacity, but it plans to make additions, particularly when
    its new international terminal opens in Fort Lauderdale, Fla., next year.

    Southwest recently won authority to fly to a couple of secondary Cuban
    airports and hopes to win approval to serve Havana, once the
    Transportation Department chooses among the many competing applications.
    Mr. Kelly said in an interview that Southwest tied its application for
    Havana authorization to the route rights to the small airports. If it
    doesn’t win any flights to Cuba’s capital, he said, the company will
    have to decide whether to proceed with the smaller destinations.

    He noted that Southwest had no history on which to base its forecast for
    Cuban flights and “guessed” on its route application. There have been no
    scheduled flights between the U.S. in Cuba in more than 50 years and
    there will be many challenges as Cuba’s infrastructure develops. For
    now, U.S. citizens aren’t allowed to visit strictly for tourism and
    their trips must fall into categories allowed by Washington.

    On another matter, the longtime CEO said the Transportation Security
    Administration is managing through a crisis that began earlier this year
    when a shortage of security screeners led to such long lines for
    travelers that some fliers missed their planes. The agency has added
    some screeners and authorized overtime pay for others, which has reduced
    the lines.

    Southwest alone is spending about $5 million this summer to hire
    contracted employees to help the TSA by performing nonsecurity
    functions, such as helping manage the lines and restocking the screening
    bins and checkpoints. Other airlines and airports are doing the same.
    The TSA has told the industry it intends to take back those duties after
    Labor Day, raising questions about whether the faster processing of
    passengers is sustainable.

    Mr. Kelly also said the loss of flights to some of the nation’s smallest
    cities in recent years was inevitable for economic reasons, and has
    little to do with four megamergers creating four carriers that control
    more than 80% of the domestic market. When oil prices go up, fares go up
    and small cities lose traffic because more people drive, do their
    business remotely or find other means, he said.

    Fifteen years ago, Southwest served numerous short-haul markets. Today,
    those routes are less numerous, medium-length routes are flat and long
    flights have grown in number, he said. But recently, with low fuel and
    low fares, short-haul routes are making a bit of a comeback.

    In news from the luggage carousel, Mr. Kelly reiterated that Southwest
    currently has no “discussion, thought, debate or plan” to end its policy
    of allowing passengers to checked two suitcases without charge. “Our
    customers would be enraged if we started charging for bags,” he said.

    Write to Susan Carey at

    Source: Southwest Airlines CEO Kelly Talks Expansion, Cuba, TSA and
    Checked Bags – WSJ –