This week will mark a turning point for Southwest Airlines and, without a doubt, its Hawaii operations. All eyes are on two critical dates: September 24th, when the airline releases its financials, and September 26th, when Southwest’s Investor Day is set to reveal what could be its most significant changes yet.
With mounting pressure from activist investor Elliott Investment Management, major flight reductions in Hawaii are increasingly likely, leading to what can only be described as “D-Day” for Southwest’s presence in the islands.
Southwest entered the Hawaii market with high hopes and plenty of fanfare.
They promised affordable fares and increased competition. However, in recent months, its operations have faced turbulence. With low ridership, particularly on interisland routes, ongoing financial losses, and stiff competition from Hawaiian Airlines and the newly combined Alaska-Hawaiian Airlines entity, Southwest’s Hawaii venture has reached a critical juncture.
Despite already cutting back on 50% of its Hawaii flights and significantly raising prices on mainland-to-Hawaii routes, the airline’s Hawaii operations still appear unprofitable.
Southwest plans for assigned seats, a premium product, and Hawaii red-eye flights are not enough.
Chief Operating Officer Andrew Watterson, previously a Hawaiian Airlines executive, made it clear in a recent video to employees that these measures alone won’t be enough to turn things around. He stated, “Steps the carrier has already announced, including ditching a 50-year history of not assigning seats, offering a premium product, and beginning red-eye cross-country flights, aren’t sufficient to improve its finances to the extent needed.”
The pressure from Elliott Investment Management – what that means for Hawaii.
Adding to Southwest’s challenges, Elliott Investment Management is applying intense pressure on the airline. They have been pushing for leadership changes, including the potential ousting of executives, including CEO Bob Jordan and others, and reshaping Southwest’s board. As a result, Southwest is on high alert, with its leadership now forced to make decisions it might not have made otherwise, which could drastically reshape its Hawaii operations.
Elliott’s involvement has shifted Southwest’s focus even more. This spells potential trouble for its Hawaii flights, which have long been seen as underperforming and have been specifically so highlighted by Elliott in its presentations. Given that COO Watterson has already mentioned “difficult decisions” ahead, the stakes couldn’t be higher for Southwest’s future in Hawaii.
When will the axe fall?
The financial results on September 24th will set the stage, providing insight into Southwest’s overall performance and any immediate changes. However, the real fireworks are said to be expected two days later, on September 26th, during Southwest’s Investor Day in Dallas. Watterson, Jordan, and other executives are expected to unveil Southwest’s big plan there.
While it’s unclear whether the drastic changes will be announced on the 24th or the 26th, both days are likely to bring clarity about Southwest’s future Hawaii operations. According to Watterson’s recent video, “There are some difficult decisions coming as well. Not city closures. But you know, bigger changes for some cities.” This suggests that while Southwest won’t pull out of Hawaii entirely, significant cuts to its routes could be on the horizon.
Which Southwest Hawaii flights are most at risk?
The question on everyone’s mind is, “Which flights will get chopped?” Here’s what we might expect:
- Interisland routes: Southwest has struggled to gain a foothold in the interisland market, facing stiff competition from Hawaiian Airlines’ dominance. Low ridership and high operating costs make this segment the most vulnerable. We might see a significant reduction or complete withdrawal from certain interisland routes.
- Mainland-Hawaii flights: While Southwest has performed better on its remaining mainland-Hawaii routes, rising costs and competitive pressures from Alaska Airlines and Hawaiian Airlines could trim flights, particularly on those less profitable routes.
Community impact and reactions to upcoming Southwest changes.
Hawaii residents and visitors anxiously await news on the future of Southwest flights. Online forums and our Hawaii coconut wireless reveal a mix of opinions. Some believe that Hawaiian Airlines might step back into its monopoly role should Southwest scale back, leading to fewer options and much higher airfares. Others argue that won’t happen and that Southwest will maintain the status quo. At the same time, some continue to see Southwest’s attempt to capture the market as a highly risky venture, given the islands’ distance and quirky travel dynamics.
Are there lessons from Aloha Airlines, and what’s next for Southwest?
Southwest’s situation is similar to Aloha Airlines’s fate, which struggled under competitive pressures from other carriers before eventually ceasing operations. While Southwest overall is a huge and still highly viable airline, its Southwest’s Hawaii operations may be following a similar path of struggling against entrenched competitors and mounting financial losses.
Read: Why Airlines In Hawaii Are Always One Step from Chaos.
Can Southwest adapt in ways that allow it to remain competitive in Hawaii, or could it become yet another casualty in the islands’ aviation history? Watterson’s acknowledgment that the airline can’t rely on cutting costs or tweaking its service model signals that some more radical strategy might be coming this week.
What do you think will happen next? Are you a frequent Southwest Hawaii traveler, and do you rely on their interisland routes? We’d love to hear your thoughts as this story unfolds.
