Southwest Airlines already flies in approximately the top 85 U.S. markets.
As it looks where to grow in the coming decades, there are a few spots here and there it'll enter, but for the most part the carrier will beef up its strong domestic network, said Chief Executive Gary Kelly during the J.P. Morgan 2019 Aviation, Transportation and Industrials Conference. Kelly touched on a variety of topics during his presentation Tuesday morning.
"I think back to the thought that there’s an opportunity to expand the fleet by as many as 500," Kelly said. "The majority of that expansion over the next 25 years, I think, will be in the continental U.S. adding depth, adding more breadth and potentially adding a few more dots."
Kelly added that Southwest Airlines Co. (NYSE: LUV) will continue to evaluate international options. Right now, Southwest international locales heavily tilt towards where U.S. residents vacation. The Dallas carrier will need to add the ability to handle foreign currency among other things.
Mechanic squabble continues
Negotiations with the airline's mechanics have stretched on for the better half of this decade, and the relationship between the airline and the union that represents the employees, the Aircraft Mechanics Fraternal Association, has grown more toxic this year.
Southwest said in February a group of 100 mechanics was responsible for virtually the entire increase in out of service aircraft, a charge the union sharply rebuked. The airline took another big step last week when it sued the AMFA and asked the court for damages caused by the network disruption.
The disruptions caused by out of service aircraft are costing Southwest millions of dollars a week in lost revenue from flight cancellations and delays, Kelly said Tuesday.
"While clearly this negotiation has dragged on far too long — much longer than our other large union groups — all efforts at this point should indeed be focused on good faith negotiations that will allow us to reward our superb mechanics," Kelly said.
Why Southwest chose Hawaii
In case you didn't hear, Southwest started selling tickets to Hawaii Monday.
The announcement was met with much fanfare as two California cities, Oakland and San Jose, will get their service started in the coming months. Two other cities, San Diego and Sacramento, will come online soon, the airline said.
Kelly offered some guidance as to why Southwest opted for a Hawaii expansion in the first place. Southwest is the largest carrier in California, and many Californians vacation in the Aloha State.
"It's not practical to think that Californians go to the Caribbean, that is a really long flight," Kelly said. "Their vacation spot is Hawaii, and we need to be there."
Kelly added the monopoly Hawaiian Airlines, part of Hawaiian Holdings, Inc. (NYSE: HA), has on inter-island travel also presented an opportunity. When Southwest announced its Hawaii schedule Monday, it said it would start inter-island service in April at prices starting as low as $29.
