A Whole Lot Of Improv: Southwest Readjusts To A World Without The Boeing 737 Max
Enveloped in soft, blue, dim LED light, Southwest Airlines Network Operations Center in Dallas looks a little like a Hollywood set piece on a science-fiction film. It's the heart and mind of the largest domestic carrier in the country, with a 4,000-flight dance card every day. Bad weather, mechanical breakdowns, delayed flight crews — improvisational dispatch is performed here day and night.
That day in March when the Federal Aviation Administration said, "Park all your Maxes right now," demanded a whole lot of improv.
"We had to go in and ... piece things together to where we were able to run an operation with 35 less airplanes," said Tim Anderson, superintendent of dispatch in the Network Operation Center.
The Boeing 737 Max was grounded this spring after two of the jets nose-dived into the earth, killing nearly 350 people. The airline most impacted by the FAA's action is Dallas-based Southwest, which flies only 737s and has nearly three dozen of the new Maxes.
Southwest has kept its 35 Boeing 737 Maxes off its base schedule through Labor Day, although that is almost certain to be extended into the fall. Regulators at the FAA have indicated the Max could stay grounded through the end of the year.
Unlike United, American or Delta, Southwest doesn't use a hub-and-spoke network but flies point to point instead. A Southwest jet will start the morning in Oklahoma City, fly to Dallas Love Field, then to Austin, Texas, on to Houston Hobby, turn west to Phoenix, followed by San Jose, Calif., and end the evening in Portland, Ore. If that plane's a Max, that's 175 seats times six flights — somewhere around 1,000 passengers with no plane that day. Multiply that by 35 Maxes and you've got an unholy mess. Anderson says they had one stroke of good fortune: The published flight schedule was ending in three weeks.
"And our team that that does the schedule planning was able to then kind of erase those planes off the books, come out with the new schedule that came out let's say April 8," he said. "That had less flights on it."
Schedulers targeted routes between cities that had numerous flights each day and tried to subtract the flight that averaged the fewest passengers. Those planes were then used to plug the holes the Max groundings had left in the carrier's schedule.
Once the new base schedule was in effect, Southwest could begin acting instead of reacting — notifying the affected passengers in advance they needed to call and rebook. Still a major inconvenience, but considerably less trauma than getting your flight canceled a few hours before departure. Which was what had been happening in spades: 10,000 canceled flights.
At Southwest's home airport, Dallas Love Field, operations have largely returned to normal. The airline has grown into such a behemoth that the grounded Maxes represent just 6% of the airline's flights.
How much is this costing Southwest?
The mass grounding is a "net negative financially," says Andrew Watterson, executive vice president and chief revenue officer.
Fewer seats means less revenue even though fewer seats also translates into those seat prices going up. Prices are set by supply and demand, Watterson said, but the grounding is still a net negative. "We wish it had not happened."
The cost in forgone revenue due to the grounding, weather and other factors was north of $200 million in the first quarter. Still, the airline managed to beat analysts' expectations in spite of all the canceled flights. But airline analysts like Helane Becker, a managing director at Cowen, say the Max grounding will act as a drag on the carrier through the lucrative summer months. And not just Southwest either.
"We've said it's in the hundreds of millions of dollars, possibly as high as a billion for the airlines in the Americas," Becker explains. "But because it's a moving target, we haven't been able to quantify it specifically."
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