Airlines have to play the long game when it comes to planning routes, personnel and equipment. You can move an aircraft from one airport to another or change the frequency of the route, but you cannot run new aircraft quickly.
That means if you want to add capacity, you have to make those decisions years ahead. The problem — and it’s a big problem for Southwest (LUV) – Get a free report — is that the covid pandemic has changed the equation.
The airline, like its competitors, had to go into survival mode, and that meant pausing pretty much every release you could. That didn’t include layoffs, Southwest never had any layoffs, but it did mean some employees were incentivized to take early retirement.
On the ground that is a challenging problem, but a solvable one. A customer service representative, gate agent, or baggage handler must be trained, but their inexperience creates problems that the airline can resolve.
The same goes for flight attendants. That’s a tough job with responsibilities that go way beyond bringing you a drink and a snack, but after a few weeks of training, you’ll be able to hire new flight attendants. (And the tightening economy may make that challenging job a little easier.
Even a lack of planes can be overcome as rival airlines have canceled orders and many companies have tightened spending. What you can’t fix is a lack of pilots and that’s a problem Southwest has.
Southwest needs pilots
When an airline does not have enough capacity to meet demand, prices rise. CEO Bob Jordan admitted that the airline does not have the available seat miles (ASM) to meet customer demand for tickets.
“If we could fly all our planes, that is, we had enough pilots to fly the planes on real estate, we would have about 5%, 6%, 7%, 8% higher percentage capacity or ASMs this year That’s about how much more we could fly. It’s really more that the factor is that it’s the mix of short-haul, medium-haul and long-haul,” he said during the airline’s third-quarter earnings call.
Jordan was more blunt during a CNBC appearance after the earnings were reported.
He said the airline was “looking for increased revenue from reduced capacity”, which he blamed on the lack of pilots.
In short, you pay more to fly because Southwest doesn’t have the pilots it needs to man its planes.
Southwest has good (and bad) news
Flying an aircraft takes years of training and experience. The pandemic messed up Southwest’s plans as it both lost pilots and stopped or at least stopped training for many people who wanted to be pilots. However, the airline has addressed those issues.
“We are on track to hire 1,200 pilots this year and 2,100 pilots next year as planned. We wanted to restore our operational reliability and we are on the right track, having made a lot of solid progress,” Jordan said on the call. .
That’s good news for the 2023 holiday season, but it won’t help anyone travel this year. That’s something the newly promoted CEO focused on.
“We think we will have capacity in the future that is better aligned with demand,” he added.
Southwest remains aggressive in its hiring/training plans.
“Hiring and training our pilots continues to be the driver of growth as we move forward. We continue to attract high-quality pilot candidates and the training program to onboard a new pilot at Southwest Airlines is robust. We are operating at our maximum training capacity for pilots, and that will continue well into 2023,” he shared.