shado

Relevance of 717 to Southwest continues to diminish

Relevance of 717 to Southwest continues to diminish
By Lori Ranson (www.flightglobal.com)

Southwest Airlines continues to see less of a role for the Boeing 717 as the markets the aircraft serves increasingly become unviable in a high fuel cost operating environment.

Through its acquisition of AirTran finalised in May, Southwest obtained 88 of the small narrowbodies.

Citing the small role 88 aircraft play in the combined AirTran-Southwest fleet of roughly 700 aircraft, Southwest CEO Gary Kelly declared to attendees today at the International Aviation Forecast Summit hosted by the Boyd Group that the 717 does not "bring any unique benefit that Southwest cannot get with the 737".

Kelly stated the 717 is roughly the same size and offers close to same economics as the 737-500s the carrier operates. However, he did highlight higher maintenance costs on the Rolls-Royce engines powering the 717s.

Rising fuel costs are also leading to some 717 markets operated by AirTran to become unsustainable, as evidenced by the carrier's decision to cut four markets that are all or partially served by 717s - Asheville, NC; Atlantic City, New Jersey; Moline, Illinois and Newport News, Virginia.

Underscoring that smaller-gauge aircraft are tough to operate in those markets as fuel costs climb, Kelly said in the long term he does not see the 717 playing a strategic role in Southwest's fleet.

He stated some of the lease expirations on the 717s begin in 2017 and continue through 2024. Southwest is in discussions with Boeing regarding the 717 leases, Kelly explained.

Noting the 717 is a "good airplane", Kelly stressed it is a type Southwest does not want to operate for the next 20 years.

Bucking Bar

What Southwest isn't talking about is what their cost structure does to an airplane designed and used as a regional feeder.

AirTran's RASM on routes served by the 717 are much lower than where they need to be under SWA's CASM. My guess is that SWA will pull Florida and low revenue flying out of Atlanta and go after core markets which drive higher revenues. The 717 is not suited to that kind of flying.

Head to head with a CRJ700/900, the 717 doesn't have a clear advantage.

nwaf16dude

Do you think it's a question of the aircraft, or just the routes? It seems to me that there are several cities on AAIs route map that just won't be profitable under SWAs biz model, no matter which jet they put on it. I think they have a lot of route/aircraft rationalization left to do.

tsquare

Gary Kelly = Carl Ichan

shredder

Did you mean Carl Icahn? Carl Icahn - Wikipedia, the free encyclopedia

from that wiki article:

Icahn began his career on Wall Street in 1961. In 1968, he formed Icahn & Co., a securities firm that focused on risk arbitrage and options trading. In 1978, he began taking control of positions in individual companies.[2] He has taken substantial or controlling positions in various corporations including RJR Nabisco, TWA, Texaco, Phillips Petroleum, Western Union, Gulf & Western, Viacom, Uniroyal, Dan River, Marshall Field's, E-II (Culligan and Samsonite), American Can, USX, Marvel Comics, Revlon, Imclone, Federal-Mogul, Fairmont Hotels, Blockbuster, Kerr-McGee, Time Warner and Motorola.

In 2011 his net worth was US$12.5 billion, making him the 23rd richest American and the 61st richest man in the world.

If you meant to make that comparison, I think it's a pretty big stretch.

SkyWolf

Discontinuing service to the mentioned cities wasn't AirTran's call, it was Southwest's, and it had little to do with the 717. SWA doesn't seem to think it's profitable or reasonable to fly to those cities when either one of the now-the-same airline flies to another that's within... what was the number, a 3 hour drive?
I don't get PHF... AirTran flies nearly HALF the pax at that airport...

forgot to bid

PHF is an odd move. I guess they think everyone can go out of ORF but thats a massive misunderstanding of the area. PHF-ORF cover a very large congregation of cities with nearly 2 million folks. There isn't one big city although ORF tries to be, but if there was it'd be bigger than BNA, JAX, MEM, RIC, BUF, ABQ, MSY, RDU or PVD. But it's decentralized and frankly not that rich. It's a military "town" and primarily Navy that dwarfs a important USAF base and lots of USMC and Army bases spread around not to mention CIA and shipyards.

But you've got bridge tunnels that back up for miles that make anyone on the peninsula shun ORF. ORF is for the southside, PHF is for the peninsula, richmond is for richmond and the savvy drivers may move between all 3.

I've non-reved out of RIC and met folks who drove all the way from Virginia Beach and I've heard the gate house announcement: "we're oversold our Newport News flight, if you'd like to fly to Norfolk in an hour..."

I mean ATL-RIC is 8 mainline aircraft including MD88s, 738s and 757s. ATL-PHF is 5 flights 4 of which are MD88s and 1 a CRJ900. ATL-ORF is 7 flights mostly 88s with 757 and MD90 mixed in.

That's 20 flights a day for 1 airline to basically the same area. And SWA pulling out of PHF that Valujet started at their outset and Delta ignored for over a decade is to me a strange move.

GizmoNC

Yes I have to agree, I was at TWA when Ichan was there. He STOLE $1.3 billon CASH he got from the LHR routes. Then the jerk started that Caribou Ticket deal which in the end put TWA down for good. I had 11 great years at TWA. But Ichan made a real mess of the airline.

Ed Harley

I think that this statement is just one more piece of evidence that indicates we (Delta) may have 717's in our future.

BigGuns

There's a poster in the training center that shows the cockpit of the 88/90 being converted to to 717 layout. This would allow one pilot category for 717/88/90. It also then would allow for the 30+ Saudi 90's that are looking for a home.... Just saying!