The Corner

What’s Going On with Southwest Airlines?

Grounded Southwest Airlines Boeing 737 MAX 8 aircraft at Victorville Airport in Victorville, Calif., March 26, 2019. (Mike Blake/Reuters)

It’s not about vaccine mandates.

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The short version: Southwest Airlines stretched itself too thin and bad circumstances threw off its entire operation. It’s not about vaccine mandates.

Southwest does not have a hub-and-spoke route network like United or Delta or American. When you book a flight on United, for example, from Boston to Seattle, you might have a connection through Chicago O’Hare since that’s a major hub for United between those two destinations. From your point of view, it’s a flight from Boston to Seattle with a layover in Chicago. From United’s point of view, it’s one flight from Boston to Chicago and a second flight from Chicago to Seattle. That you happen to be on both flights is incidental to United for scheduling purposes. Further, if there’s bad weather in Boston and the flight can’t leave, it’s a problem for you, but it’s not a huge problem for United. There will be dozens of other planes at O’Hare, and schedulers will have other options to keep the network running. The Chicago-to-Seattle flight is completely unaffected since that was a totally different flight from United’s point of view anyway.

Southwest does not work this way. It mostly flies point-to-point between cities. Its planes fly long, sometimes convoluted routes across the country. So, for example, you might book a Southwest flight direct from Atlanta to Denver. That’s all you see. But from Southwest’s point of view, it’s a flight from Fort Lauderdale to Atlanta to Denver to Las Vegas to Houston. You just happen to be on the Atlanta-to-Denver leg. Someone else might be on the Fort Lauderdale-to-Atlanta-to-Denver leg. Someone else might be on the Las Vegas-to-Houston leg. With these long routes, cancellations can cascade into major disruptions since people in four or five different cities can be dependent on the same flight, and there’s no hub to pull other planes from.

The hub-and-spoke and point-to-point scheduling systems each have advantages and disadvantages. Southwest is the largest American airline to not use the hub-and-spoke system, so it is able to offer direct flights between many cities that aren’t served non-stop by its competitors. The hub-and-spoke system’s major drawback is that if something does go wrong at a hub — say, a power outage or computer malfunction or inclement weather — it can throw off the entire network.

What happened to Southwest this weekend was that its point-to-point network was faced with a hub-and-spoke problem. Southwest’s network is not centralized on any one airport, but it is heavily concentrated in the state of Florida. Many people want to fly to Florida, and Florida has four (Orlando, Miami, Fort Lauderdale, and Tampa) of the top-25 busiest airports in the country, the most of any single state. There was bad weather in Florida this past weekend, and “close to half of Southwest’s planes fly through Florida on any given day, so disruptions there can ripple out to the rest of the country,” reports the Wall Street Journal. So your hypothetical Southwest flight from Atlanta to Denver could be canceled because the plane that was supposed to fly it is stuck in Fort Lauderdale.

You’re probably thinking, “Okay, but bad weather in Florida is pretty common, and this level of cancellations doesn’t happen all the time.” You’re right, and Southwest’s more-distributed flight network often makes it more resilient to bad weather in one place than hub-and-spoke airlines. This time, however, Southwest stretched itself very thin. The air-travel market came back much faster than many airlines expected after the pandemic, and they had a tough time meeting demand.

Southwest saw its competitors off-balance and decided to strike. “‘Predatory and Opportunistic’: Southwest Airlines Seizes the Moment as Rivals Struggle” was a Wall Street Journal headline on November 16, 2020. Southwest expanded into new cities it hadn’t flown to before and scheduled more flights than its competitors. Aggressive strategy has long been Southwest’s corporate M.O., and it is the only American airline that consistently makes a profit (2020 was the first time it reported an annual loss in 48 years). So Southwest had good reason to believe that it could make this work.

The summer had other plans. During the pandemic, Southwest encouraged many of its employees to retire early. The Wall Street Journal reports, “Southwest had about 5,000 employees leave permanently and 11,000 go on extended leaves. Once demand shifted, the airline struggled to call them back and retrain them quickly enough, Southwest executives have said.” Southwest was running more flights than its competitors with fewer workers than it thought it would have. The airline offered more overtime pay, but it still wasn’t enough. With very little slack in its operations, ordinary disruptions became major problems.

Southwest now admits its strategy was a mistake. Southwest president and COO Mike Van de Ven told the Wall Street Journal, “It’s clear to me that we were too aggressive going into the summer with those assumptions.” CEO Gary Kelly was in a position that airline CEOs never want to be in: doing the rounds on TV morning shows. Kelly said to George Stephanopoulos on Good Morning America, “I want to apologize to all of our customers.” He said on CNBC that “our customers didn’t get their best from Southwest Airlines” over the summer and “you get no argument from me that this is not, not the kind of service that we want to offer from Southwest.” The airline is cutting its flight schedule for fall in the hopes that these problems don’t continue.

You’ll notice that vaccine mandates never came up as a factor in explaining Southwest’s problems. The airline announced a vaccine mandate for employees on October 4. That would mean that all summer long, when Southwest was facing many of the same problems that came to a head last weekend, there was no vaccine mandate in place at all.

Kelly said that while he did not want to mandate vaccines, the government forced his hand because Southwest is a federal contractor. Southwest is requiring employees to get vaccinated by December 8, which is the deadline President Biden set for all federal contractors.

The real tell that the vaccine mandate is not the issue is that airline management and the pilots’ union agree that it’s not. Both the CEO and the union president have said that employee opposition to the vaccine mandate has not caused staffing shortages. The union has been complaining all summer that its members were overworked because of Southwest’s aggressive strategy. Union president Casey Murray told CBS News that the level of employees calling in sick after the mandate was announced is “right in line with what was occurring this summer,” and no demonstrations were planned. He blames Southwest’s business decisions for the disruptions. “Once a little hiccup occurs due to the internal processes, our pilots aren’t getting to where they need to be. We’ve been sounding this alarm for about four years and have seen very little approach to correcting it,” Murray told CBS News.

Southwest’s problems the past few days were not caused by imposition of a vaccine mandate. They seem to be the consequence of a long series of business decisions in response to the pandemic recovery that didn’t work out as well as planned, with bad weather mixed in for good measure.

Shutting a complex system down is much easier than starting it back up. We’ve seen this dynamic across the economy as the patterns of specialization and trade that were so routine before the pandemic have been upended and reconstructed. The Southwest debacle is only the latest example of this recurring phenomenon as businesses and consumers do what they can to get back to normal.

Dominic Pino is the Thomas L. Rhodes Fellow at National Review Institute.
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