In recent years, Southwest has evolved more and more into a hub operator as a result of using larger aircraft and being able to serve more of the U.S., something the hub and spoke system does very efficiently. Southwest’s route system was built around operating point to point routes, eschewing the hub and spoke networks of the legacy carriers such as Alaska ( ALK), American ( AAL), Delta ( DAL), and United ( UAL). Denver has long been a major hub for United Airlines so a stark contrast in how the storm was handled by each airline was set up in that city. Denver has become Southwest’s largest operating base due to strong economic growth in the mountain states and a large airport that can accommodate considerably more air traffic than it handled pre-COVID. were buried under high snow totals, particularly this early in the winter.Īirline operations have long been subjected to severe summer and winter storms but a combination of the size and scope of the winter weather and its timing right as the Christmas travel season began spelled doom for airline passengers. Rapid changes in air masses led to fog in some locations while parts of the northern U.S. As the storm moved across the United States, bone-chilling cold air followed in many parts of the U.S., sending temps well below zero degrees Fahrenheit in the northern tier of states with even parts of Florida freezing. Starting in the Pacific Northwest, the storm forced the rare closure of Seattle’s airport as ice made it impossible for ground crews to clear runways since airports cannot use the same methods for ice removal as used on roads due to their corrosive effects on aircraft. It's no surprise to many Americans that a massively disruptive series of winter storms began moving across North America in the week leading up to Christmas. In order to begin to assess the impact of the mass cancellation event on Southwest’s finances and its future as well as of the airline industry, it's necessary to first understand what happened and why. I wrote just months ago that Southwest would trail its legacy carrier peers in profit growth post-pandemic and this latest event is certain to confirm that trend. While it's hard to assess the cost and impact of an event while it is still in process and neither Southwest or any market analysts have provided any guidance on the implications of the massive cancellation events which have engulfed Southwest, the toll is bound to be much, much higher than the airline industry has ever seen and will also lead to transformational change not just for Southwest but also for the airline industry. However, the events of the past two weeks have deeply scarred Southwest. Southwest Airlines ( NYSE: LUV) has grown in its 51 years of service from a scrappy Texas intrastate airline that has repeatedly defied airline industry convention to now becoming one of the world’s largest, most consistently profitable, and most valuable airlines in the world as measured by market cap.
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