Say it ain't so, Gary. Say it ain't so.
Southwest Airlines CEO Gary Kelly let drop in a discussion of resurgent earnings last Friday that the all-domestic airline is thinking about launching international service. One word: Don't. Or is that two words? Regardless, it would be a bad move for Dallas-based Southwest - the world's largest discount carrier and the only major U.S. airline that is consistently profitable - to tamper with the brilliantly simple business plan that got to where it is today.
From its first flights in 1971, Southwest has been a model of consistency: It is no-frills, it is folksy, it has low fares, it flies entirely within the United States, usually with short-haul flights. Because it is making money, even in the Great Recession, Southwest doesn't have to nickle and dime passengers with add-on fees; it is the only U.S. major that allows customers to check two bags free of charge, and its witty "Bags Fly Free'' ad campaign is great for winning friends and influencing people.
Why does Southwest think adding international routes - in this case, to Canada, Mexico and the Caribbean, not right away but maybe by 2013 - would be good? Plenty of carriers already have them, including other low-cost carriers such as JetBlue Airways. News accounts didn't make it clear what Kelly and cohorts are thinking, giving rise to the suspicion - at least for me - that they're thinking of going international because they can, and because the airline has stopped growing in the U.S. In 2009, Southwest trimmed capacity 5 percent - less than competitors who cut even more and took to parking unused planes in the desert. Growth, however, is very much part of the corporate culture in the company that Herb Kelleher built.
"We'll be looking for opportunities to grow, and we're still a growth company,'' Bloomberg quotes Kelly as saying. "It's just that, right now, we don't see the wisdom of doing that.''
It's hard to see the wisdom of flying internationally. Such routes are typically longer than the short hops Southwest is used to taking. Already, flying coast-to-coast on Southwest, with multiple stops and changes of planes, feels like taking a Conestoga wagon with wings. The no-frills thing works fine on short-hauls; typically, people on long-haul flights over oceans and continents want creature comforts. Maybe the shrewd executives at Southwest have some wisdom they're not sharing, but fixing something that doesn't seem broken is seldom a good idea.
In the meantime - gangway! -the juggernaut rolls on. Southwest earned a second-quarter 2010 profit that more than tripled - to $216 million USD from $59 million - over the weak second quarter in 2009. Earnings jumped to 29 cents a share from 8 cents a share a year earlier.