Officials at Southwest Airlines, which will mark its first anniversary in Hawaii in March, say so far the market has exceeded expectations and is primed for more growth.
That’s despite turbulence related to the 2018 government shutdown and the Federal Aviation Administration’s March 2019 grounding of Boeing’s 737 Max aircraft, which has caused Southwest to take the planes out of its schedule through mid-April.
The shutdown caused the carrier to enter the Hawaii market March 17, a delay of maybe three or so months from its target start. Southwest made its long-anticipated entry into the Hawaii market with service between Honolulu and Oakland, Calif.
It launched its initial interisland service April 28 with flights between Honolulu and Kahului. But the Max grounding slowed Southwest’s Hawaii rollout by another five or six months.
“Where we will be in April, we expected to be in 2019,” Andrew Watterson, Southwest Airlines’ new executive vice president and chief commercial officer, said Friday during an interview with the Honolulu Star-Advertiser.
Still, as Southwest rounds into its first anniversary in Hawaii, the carrier has made up for lost time. By April it will be offering 14 flights daily from Hawaii to California and 38 departures a day on interisland routes.
“We’re very bullish on Hawaii,” Watterson said. “We started flying international in 2014 and Hawaii is a bigger market and a faster maturing market. We see a much stronger consumer response to Hawaii than, say, the Caribbean. The Hawaii brand, the Hawaii experience, is just second to none and we have a customer base that responds to Southwest’s low prices.”
Watterson, who was vice president of planning and revenue management for competitor Hawaiian Airlines’ before taking the job at Southwest, said the carrier’s Hawaii interisland service is on pace with anticipated growth and its trans-Pacific service to and from Hawaii has outperformed targets.
According to Southwest’s network planning, its Hawaii interisland load factors (percentage of seats occupied) averaged nearly 77% between the carrier’s April 2019 start and September 2019. Its Hawaii trans-Pacific load factors averaged almost 91% from their March 2019 start to September 2019.
“In general our flights have been much fuller than expected. When we start a new geography, we generally think those first flights will take up to three years to mature. We were full so fast,” Watterson said. “The trans-Pacific, in particular, is ramping up very quickly. It’s ahead of the curve and could mature as quickly as half the time, although it may take a little longer.”
Likewise, Watterson said Southwest’s interisland service in Hawaii has met expectations despite the fact that Southwest’s slower than anticipated trans-Pacific rollout meant that the carrier didn’t have as many customers who were transitioning from Honolulu to the neighbor islands or on multi-island hops. So far, the bulk of Southwest’s interisland base has been local residents.
“Because we weren’t able to ramp up as fast … we’ve been relying on locals and the planes have been full — that’s impressive,” he said.
Watterson said for now the carrier’s interisland expansion is “pretty close to done” though they’ll be “incremental flights over the next years.”
That might give Hawaiian Airlines, which had enjoyed a monopoly since the November 2017 shutdown of Island Air, some breathing room in its home turf. However, both Hawaiian and Alaska Airlines, Southwest’s other major competitor in the Hawaii market, should expect trans-Pacific competition to continue heating up.
Maui Mayor Mike Victorino said Friday that increased competition from Southwest’s expansion into the isles has “been very important to locals and visitors.
“I was very pleased by how much better the rates have been across the board, both going to the mainland and interisland. Competition just makes everything better and everyone benefits from that.”
Brad DiFiore, Ailevon Pacific Aviation Consulting managing director, said Southwest’s entry also has been good for the destination as “Southwest carries a big PR presence — whether paid or unpaid they get a lot of attention.”
“For them, Hawaii was probably the most significant new market launch in potentially their history, certainly within the last few years,” he said.
The Southwest effect is far from dwindling in Hawaii, where more announcements are likely forthcoming. The carrier still has its sights set on more trans-Pacific expansion, which Watterson said isn’t necessarily tied to the ungrounding of the 737 Max planes. Although, Watterson said the Max’s return to service “does control how much we’ll expand.”
Just after the carrier’s entry into Hawaii, two deadly crashes of 737 Max planes operated by other carriers in Indonesia and Ethiopia prompted the FAA to ground the craft.
Southwest doesn’t yet deploy Max planes in Hawaii, where it flies 175-seat Boeing 737-800 planes. But Max aircraft are in Southwest’s long-term Hawaii plans and the groundings and resulting flight cancellations on the mainland have had significant operational and financial impacts across its network.
Ultimately, Watterson said, the Max planes, which are estimated to stretch flying range by about 15% beyond what the 737-800s can go, are part of the carrier’s plane for Hawaii, which includes more West Coast expansion. Watterson declined to name specific destinations that Southwest could add to its trans-Pacific service.
However, in the past, industry analysts have speculated that the capabilities of the Max planes could allow Southwest to add service to more of the roughly 17 cities Southwest serves west of the Rockies that it hasn’t connected Hawaii to yet. They include San Francisco, Burbank, Los Angeles, Ontario, Long Beach and Orange County, Calif.; Portland, Ore.; Seattle and Spokane, Wash.; Boise, Idaho; Reno and Las Vegas, Nev.; Phoenix and Tucson, Ariz.; Denver; Albuquerque, N.M.; and Salt Lake City.
Understandably, Southwest is keen to return its Max planes to service. When the Max ungrounding occurs, Watterson said it would likely be a minimum of 60 days before the carrier can meet training recruitment and deploy them on the mainland. Once Southwest is ready to deploy Max planes to Hawaii, he said it would probably take a minimum of six months to add them to the carrier’s ETOPS program. ETOPS, which stands for “extended-range twin-engine operational performance standards,” is a certification for aircraft that fly over places with sparse or non-existing landing areas.
Watterson said another major variable that could influence Hawaii expansion plans (although it hasn’t yet) is the recent crackdown on the vacation rental market.
“We’re monitoring vacation rental laws and development plans across the islands,” Watterson said. “You can’t add more seats than there are places to stay. There has to be a balance. ”
