December airline passenger figures are out. The figures highlight something we’ve talked about before: Southwest’s current expansion strategy, and the odds that they will come to the CLT.
Southwest has traditionally filled a far lower percentage of seats (“load factor”) than any other large U.S. airline. In December 2008, for example, Southwest had a 69.7 percent load factor. The next lowest load factor among the nine largest U.S. carriers was American, at 79.2 percent. In 2009, Southwest cut flights in many of its (weaker) existing markets — and used much of that capacity to open four new markets in 2009 (for a total of 68) and further build up its Denver operation. Overall, its fleet shrank by two planes last year. This resulted in a substantially increase in its load factor, which was up 6.5 percentage points to 76.2 percent. While that still trails other large airlines, the gap closed considerably.
This strategy works fine as long as the economy is in the dumps. When the economy starts to recover, and business demand for air travel increases, Southwest planes will be packed. And that means plenty of quite profitable growth possibility without having to add new destinations. That’s especially true as Southwest doesn’t have that many planes on order.
For now, Southwest seems content to continue shifting capacity from weak existing markets into new destinations. But the higher load factors suggests that strategy can only last so long. So either Southwest comes to Charlotte in 2010 or early 2011 — or it could be a long time (think mid-decade).
