June 21, 2024

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Southwest Collecting ‘Ingredients’ for Travel Recovery

5 min read
David Harvey

Southwest’s David Harvey talks:

  • Adding 17 markets in a year
  • Signs of business travel recovery
  • Future international opportunities

Southwest Airlines this week began service out of Houston’s Bush Intercontinental Airport for the first time since 2005, with 15 daily departures to five markets: Dallas, Chicago, Nashville, New Orleans and Denver. The first flight to the airport on Monday morning was from Dallas, a callback to the first flight in the carrier’s history on June 18, 1971, from Dallas to what was then Houston Intercontinental Airport. “Here we are, 50 years later, and we were able to bring the cocktail napkin back to its original routes,” VP of Southwest Business David Harvey said, referring to the oft-told story of Southwest founder Herb Kelleher doodling his idea for the airline on a cocktail napkin, showing the connection of the Dallas, Houston and San Antonio triangle. Houston is only one of several new markets in Southwest’s plans this year, however. Harvey spoke to BTN transportation editor Michael B. Baker about the network expansion and how it fits with the carrier’s plans to expand its corporate business.

BTN: What will these new markets mean in terms of corporate travel sales?

David Harvey: From November 2020 to the end of 2021, we’ll have initiated service to 17 new markets. Covid has provided a unique opportunity to fast-forward some of our growth plans. Most of those markets are beaches and mountains, but we also had this incredibly opportunity to get into places like Bush Intercontinental, Chicago O’Hare and access into Miami, which are tremendous business markets. These are things that have been on our radar for a long time. Getting access to these key business markets in a recovery is tremendous. For the last 10 years, you couldn’t go on a sales call [without getting] questions about going back into Intercontinental. This has been a big gap in their travel program, because of all the business on the north side of Houston, so this is going to be great news for our corporate customers.

BTN: Several carriers have reported significant demand growth in the past few weeks. Has Southwest seen that as well?

Harvey: For the last 12 months, we’ve been following what’s being going on with Covid-19 cases and hospitalizations. When those pop up, demand tends to go down and cancellations tend to go up. It does look like with how strong the vaccination schedule is—I just saw we hit a record of 4 million daily doses—you are seeing hospitalizations and deaths going down dramatically, and after 12 months, there’s a lot of pent-up demand. We saw post-Presidents’ Day going into March a nice acceleration and momentum for the spring and the summer, still being led on the leisure side, but we’re seeing more and more businesses open up their campuses. That is directly tied to the travel program. Even 60 days ago, a lot of them were saying post-July 4 or post-Labor Day, and a lot of those are moving it up now and saying they want to get people back in the office in the spring or early summer to be prepared for the back half of the year.

BTN: Will there be opportunities for different types of corporate business due to different working patterns post-pandemic?

Harvey: We are definitely seeing the need for more commuter patterns for people working remotely. We’re starting to hear a lot about groups and meetings, where it’s not a grand scale of hundreds or thousands but the ability to bring a group of 20 or 50 together at a hotel, so what kind of packages can we put together there? We’ve made it so much easier for companies to pick Southwest, and now we can just go in and understand the travel needs and figure out how to best meet those. 2022 could be the roaring ’20s all over again. We’re hearing more and more about groups and meetings and conventions. Some of them are sticking to the second half of the year, but basically everyone is going to try to get back to in-person as you get out to 2022.

BTN: How is work progressing in your new agreement with Sabre?

Harvey: Our guidance continues to be the second half of 2021. A lot of the technology and some of the implementation is going very smoothly, and I’m optimistic that we can continue to pull that date in. It’s going well, and we’re on track for going live with Sabre later this year. Apollo and Worldspan went live in 2020, and later in the year we went live with Galileo in the summer and Amadeus in October. We’ve seen some very healthy incremental demand with that in place, which is why we’re eager to get going with Sabre as well. We have a strong direct-book business we’ve built with Swabiz and our direct connect in the last 20 years. We know there will be a shift, as some prefer the industry-standard GDS.

BTN: Even though Southwest’s network is primarily domestic, have you been monitoring the various health passport technology that is under development?

Harvey: We already worked the 72-hour negative [test] for international travel, which took effect Jan. 26. Because things are changing rapidly, you have to be prepared. Our tech teams have great solutions. We’re tied in with both [the International Air Transport Association] and [Airlines for America] for strategy. That’s the big drive, to get more uniformity, because you have a lot of tech providers and different standards popping up. You need a single solution that all the airlines can aim toward. 

BTN: Is there still talk of expanding Southwest’s international footprint either through new service or agreements with other carriers?

Harvey: It’s under consideration. The technology work is not in the plan for 2021. We have a great line of sight and know what we need to do with the capabilities: foreign point of sale, foreign currency and foreign language. We want to fly to some of the business markets in Canada, Mexico and Central America with our own metal. When you think about the codeshare and interline for long-haul international—Europe, Asia and deep South America—that’s on our intermediate road map of things that we want to do. That’s going to be more of a conversation this fall for prioritization and when we ultimately get to this. We think that opens another huge opportunity for us. There’s just so many exciting opportunities for Southwest to grow. We just announced a new order book with Boeing where we committed to another 100 firm orders of the Max, so we have a huge order booked all the way out to 2031. We were the only carrier that didn’t have any furloughs or layoffs throughout the whole pandemic, and we’re thankful for to the government for stepping up with the stimulus and payroll support. We have all the ingredients to really accelerate growth in recovery.

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