Author Topic: Is Southwest Airlines gaining or losing market share?  (Read 418 times)

clarkfan1979

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Is Southwest Airlines gaining or losing market share?
« on: August 18, 2020, 08:18:55 AM »
I apologize if the article below is garbage, but the author really has my mind in a knot. The thesis statement is that because air travel is down Southwest is unable to gain market share.

However, based on the numbers provided I can't help but notice that Southwest is actually gaining market share during a time of reducing the number of flights. Southwest flights are down 40%, Delta flights are down 42%, American flights are down 43% and United flights are down 59%.

Because the number of flights are down, the size of the pie is shrinking. However, Southwest is gaining a larger percentage of the pie. They are actually gaining market share, even though the author below claims that they are not.

https://skift.com/2020/08/12/southwests-reduced-schedule-means-its-share-grab-formula-may-not-work-this-time-around/

2Birds1Stone

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Re: Is Southwest Airlines gaining or losing market share?
« Reply #1 on: August 18, 2020, 08:55:08 AM »
They are just losing less market share.

clarkfan1979

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Re: Is Southwest Airlines gaining or losing market share?
« Reply #2 on: August 18, 2020, 09:14:29 AM »
They are just losing less market share.

According to the article, they are losing less flights as everyone else. In my mind, they are gaining market share.

Actual market share numbers are not stated in the article, which is disappointing because that is the thesis of the article.

JetBlast

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Re: Is Southwest Airlines gaining or losing market share?
« Reply #3 on: August 19, 2020, 10:18:19 AM »
The article is garbage because the author didn't provide any actual insight into whether Southwest is gaining market share in the current environment or not.  Unfortunately the DOT statistics are only up to date to February, but it would have been easy to pull the 10Q reports for all the major airlines for this year and last and compare passenger totals. Or pay a little money for statistics from one of the companies that provides industry analysis.

The article is correct though that it isn't clear that having a larger market share now will result in a larger market share once we are past COVID.  Different airlines are taking different strategies in dealing with the pandemic and it is too early to say who will be proven right.  For example, United and Delta were far more aggressive in Q2 on holding the line on fares, and chose to not deeply discount in order to chase the few people that were traveling and the minimal revenue in the market.  Both actually saw yields increase year over year.  They want to preserve pricing power post-pandemic and not spend years rebuilding toward profitable fares.  American and Southwest flew far more capacity and slashed prices to grab more of the few people traveling, hoping to steal frequent flyers away from competitors while snagging as much revenue as possible now.   

Also, when airline analysts like Hunter Keay discuss capacity they are usually using a statistic called ASMs, Available Seat Miles, and not number of flights. Right now it is a messy statistic because some airlines have decided to reduce capacity on flights to ensure middle seats can remain open but those middle seats still count as ASMs, while others are booking to 100% capacity.   

Duke03

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Re: Is Southwest Airlines gaining or losing market share?
« Reply #4 on: August 19, 2020, 02:01:27 PM »
My own personal opinion from seeing things with my own eyes is SW is losing market share right now, but it's their own doing.  I've flown 4 times in the last month twice with SW and twice with AA.  I'm a huge SW fan, but after flying American twice I will say their experience is better and seeing how they have dropped their prices to either meet or beat SW it's a huge win for them.  SW is trying to fight with one hand tied behind their back with leaving every middle seat open....  Well guess what the 2 planes I road on from SW only had 60 some people on a plane that holds 175 so even with the middle seat open they still didn't fill the plane... On AA every seat was full.  Yes AA charges for a checked bag, but only a sucker or someone that might fly two times a year will actually pay a baggage fee. 

One more thing.  What made SW so popular is that they used to offer a huge amount of non stop flights.  I live with in 40 miles of two different large SW hubs and it's crazy that I can not get a direct flight to most of the destinations I need to go to.  Granted I know this is a covid thing, but if they miss the rebound and try to hold off on bringing all these direct flights back people will fly elsewhere.  That's why I started to fly American.
« Last Edit: August 19, 2020, 02:07:14 PM by Duke03 »

JetBlast

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Re: Is Southwest Airlines gaining or losing market share?
« Reply #5 on: August 19, 2020, 02:45:09 PM »
One more thing.  What made SW so popular is that they used to offer a huge amount of non stop flights.  I live with in 40 miles of two different large SW hubs and it's crazy that I can not get a direct flight to most of the destinations I need to go to.  Granted I know this is a covid thing, but if they miss the rebound and try to hold off on bringing all these direct flights back people will fly elsewhere.  That's why I started to fly American.

Their business model is almost certainly making it more difficult to match capacity and demand right now.  The simplicity of all 737s with only two seating configurations works great in normal times, but when demand is down 70% there's not really an option to downgauge flying onto smaller aircraft.  Further, instead of reliance on a handful of large hubs their network has more diffuse connections and through flights.  The only way to cut flights to aggregate the fewer connecting passengers is eliminating some non-stop routes and forcing those few passengers to connect somewhere else.  For big hub airlines it means less frequency and/or smaller aircraft to the hubs but fewer routes are eliminated. 

Rdy2Fire

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Re: Is Southwest Airlines gaining or losing market share?
« Reply #6 on: August 20, 2020, 08:39:22 AM »
One more thing.  What made SW so popular is that they used to offer a huge amount of non stop flights.  I live with in 40 miles of two different large SW hubs and it's crazy that I can not get a direct flight to most of the destinations I need to go to.  Granted I know this is a covid thing, but if they miss the rebound and try to hold off on bringing all these direct flights back people will fly elsewhere.  That's why I started to fly American.

Their business model is almost certainly making it more difficult to match capacity and demand right now.  The simplicity of all 737s with only two seating configurations works great in normal times, but when demand is down 70% there's not really an option to downgauge flying onto smaller aircraft.  Further, instead of reliance on a handful of large hubs their network has more diffuse connections and through flights.  The only way to cut flights to aggregate the fewer connecting passengers is eliminating some non-stop routes and forcing those few passengers to connect somewhere else.  For big hub airlines it means less frequency and/or smaller aircraft to the hubs but fewer routes are eliminated.

Ironically I fly a lot and a bunch of times since COVID..  I think a lot of the perception (personal, not market) on airlines is the market you're in. For example, I hate SW because they have like NO direct flights and serve a secondary airport in my area.

With that said I totally agree with your post and in the last day alone American announced they are cutting like 15 cities from service. We are going to see more and more of this over the next year from all airlines. I think this is probably a good thing for the world (less flights) but bad for consumers as business travel is going to get cut by over 50% (maybe as much as 75-80%) in the next year or so and this is going to cause the cost of flying, for the average person, to rise. Of course right now and in the immediate future you can fly pretty cheap just about anywhere but I think over the next couple of years the cost to fly will rise significantly.