Video: Airlines could cut millions of seats

updated 8/26/2008 4:27:18 PM ET 2008-08-26T20:27:18

Southwest Airlines Co., which had resisted the kinds of capacity cuts being made by other carriers, will eliminate nearly 200 flights early next year as it struggles with high fuel costs and a weakening economy.

The move raised doubts about the company's publicly stated goal of growing modestly in 2009 despite the airline industry's troubles.

Now, Southwest will cut 196 flights while adding only six new ones in its schedule that takes effect Jan. 11.

That is nearly 6 percent of the airline's daily schedule of close to 3,400 flights.

Southwest spokesman Chris Mainz said Tuesday that some of the eliminated flights, which span Southwest's nationwide network, could be restored later in 2009. Late winter is typically a slow travel period.

"This is a response to a slower traffic period, and we're giving ourselves some operational flexibility in the winter months," he said.

Southwest is better insulated than its rivals from high jet fuel prices because it bought options to get most of its fuel at below-market prices. Still, the airline's fuel bill has been rising, eating into margins at the most consistently profitable U.S. carrier.

Chairman and Chief Executive Gary Kelly said in June that the Dallas-based low-cost carrier hoped to grow modestly in 2009. But he tempered that outlook by saying the expansion plans could be scrapped if oil prices remain high or the economy weakens.

At the time, Kelly said Southwest still planned to add 14 new planes next year. Mainz said Tuesday that new planes will be added while older aircraft are retired, keeping the airline's fleet "relatively flat." Southwest has about 530 jets, all Boeing 737s.

Southwest is the only major U.S. carrier to earn a profit in the first half of the year — it has not lost money in a quarter since early 1991. Like other carriers, Southwest has been raising fares to offset rising fuel prices, and Kelly has said more increases are likely.

Southwest serves more than 60 U.S. airports and is not leaving any of them under the new schedule. But it is ending some nonstop service, such as that between Nashville, Tenn., and Oakland, Calif. The carrier is mainly reducing the frequency of flights on routes across its network.

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A few routes will lose two daily departures, such as Tampa-Philadelphia, which will drop from five daily flights each way to three. On others, like Dallas-Houston, the change will be less noticeable.

"When you have 30 frequencies a day, are you going to miss one or two? Come on," said Tom Parsons, CEO of travel Web site Bestfares.com.

The airline will add six new flights; round trips between Phoenix and Burbank, Calif., Las Vegas and Orange County, Calif., and Baltimore and Orlando, Fla.

Southwest's reduction of nearly 6 percent is still far smaller than capacity cutbacks at other U.S. airlines.

American Airlines, the nation's largest carrier, is cutting about 8 percent of capacity after Labor Day — and up to 12 percent of its domestic flying. United Airlines expects to cut domestic capacity about 16 percent, and Delta, Northwest and Continental also have announced cuts.

Mainz said Southwest's lighter winter schedule will not bring layoffs, but other airlines are grounding planes and laying off thousands of workers to save money in the face of higher fuel bills.

The Air Transport Association, a trade group for the big carriers, expects U.S. airlines to spend $61.2 billion this year on fuel, up from $41.2 billion last year.

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