Sunday, June 18, 2006

Wright Amendment Changes

The Wright Amendment is in transition. Southwest is so big that they are struggling to find meaningful airports to grow into and maintain their self-imposed growth rate of 8%-10%. So with DAL they are fighting for the lifting of regulations that will allow for growth at home since other low-risk options throughout the country that would have a meaningful impact to their growth rate are starting to dwindle. This growth requirement has slowly driven them away from their core point-to-point model since the mid-90's. The growth rate that they have sought has been met, but has resulted in a less cost-effective network...such as its substantial operations at PHL and, for all intents and purposes, a hub & spoke operation at BWI.

When we say that Southwest is not the LCC that it once was, this networking issue is a large part of the underlying problem that is driving a less productive fleet and workforce. Of course on top of this their pay rates are high, their staff is very senior and, being around 30+ years, Southwest's infrastructure is just plain old.

5 Comments:

At 11:27 PM, Anonymous Anonymous said...

So are we talking about a faliure or a pull back at SWA here in Chicago it seems they are the only opition for travel.

 
At 1:32 AM, Anonymous Anonymous said...

Southwest will be in business in 100 years while some of the airlines will be out of business. Southwest has the best cost model.

 
At 8:12 AM, Anonymous planespotting@gmail.com said...

Not anymore! While Allegiant isn't half the size of SWA, their cost model is much more competitive. They outsource much of their staff, unlike SWA, which is killing SWA.

 
At 9:50 AM, Anonymous Anonymous said...

You should see them here in chicago you find people sleeping in trucks, tugs, its really amazing. So much for employees actually working.

 
At 2:03 PM, Anonymous Tucano Bandeirante said...

You can put lipstick on the pig, but it looks like AA benefits more from this than Southwest.

 

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