Southwest to study 2014 fleet size with Love Field plans

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Southwest Airlines could possibly increase its fleet size in 2014 to dovetail with the lifting of flight restrictions at its Dallas Love Field base the same year, even as it emphasises a focus on capacity discipline through at least 2013.

The airline announced earlier this year that it would defer 30 Boeing 737 deliveries scheduled for 2013 and 2014 to 2017 and 2018, as it aims to keep capacity flat or slightly down in order to hit a 15% return on investment capital (ROIC) target.

While this capacity discipline is still very much the focus at Southwest, its chief executive Gary Kelly says 2014 is "eligible for increasing the fleet". "We have not made that decision, and it's depending on the right economics," he says at the sidelines of the Boyd Group International Aviation Forecast Summit in Dallas on 17 September.

Southwest is based at Love Field, which operates under restrictions enforced by a piece of legislation called the Wright Amendment. Introduced in the 1970s to protect the then newly built Dallas-Fort Worth International airport, the Wright Amendment limits Love Field's non-stop flights to within Texas, Alabama, Arkansas, Kansas, Louisiana, Mississippi, Missouri, New Mexico and Oklahoma. Flights from Love Field to other states would have to make a stop in these states or be flown on an aircraft with less than 56 seats.

The Wright Amendment is set to be repealed on 13 October 2014, opening up opportunities for the airline to launch non-stop flights to other states .

Saying that Love Field has "languished" and that it will always be in the shadow of Dallas-Fort Worth, Kelly says that the lifting of the flight restrictions will be "a pretty big change for us".

"We have a vision of what routes we want to undertake in 2014, but it doesn't make sense to lock that down," says Kelly, adding that the airline would need to have a clearer idea of its fleet size in 2014 before it decides on new routes.

"Because of the dynamic nature and uncertainties of the economy, we have not committed to increasing the fleet yet for 2014. We want to buy ourselves as much time as we possibly can before we are forced to make that commitment."

According to Southwest's latest fleet plan released with its second quarter earnings, it will add five 737-700s and 24 737-800s in 2014. It had deferred a net total of 10 737s for 2014, but still has options for 15 aircraft for that year.

Kelly says that the airline will likely begin studies on routes out of Dallas Love Field in a year's time, noting that the carrier typically starts working on flight schedules nine to 11 months ahead, and markets them six months before they are due to launch.

Kelly said that Southwest is optimistic on hitting its 15% ROIC goal in 2013, a target that will be supported by various fleet-related initiatives at the airline, during the carrier's second quarter earnings call in July.

These include the 737 deferrals, the ongoing integration of AirTran Airways aircraft following Southwest's acquisition of AirTran in May 2011, the sub-leasing of AirTran's 88 717s to Delta Air Lines, and an ongoing project to add more seats to Southwest's 737-700s.

Called the Evolve project, the cabin retrofit on the 372 737-700s will add six seats to each aircraft, taking the number of seats on board to 143 from 137. Southwest said this week that 139 aircraft have gone through the retrofit. The airline aims to complete the retrofit on all the aircraft in the second quarter of 2013.

Kelly had previously said that it would extend the Evolve project to its 737 Classics as well, which it views as a revenue opportunity. About 100 737 Classics will get the additional seats, but Kelly says this week that the airline has not decided on the exact number.

Southwest operates 140 737-300s and 21 737-500s, Flightglobal's Ascend Online database shows. The airline has said that the -300s, which have the same number of seats as the -700s pre-retrofit, will be the aircraft to get the extra seats.

Kelly says that all of the 737 Classics will be retired by the end of the decade. The airline has not announced a retirement plan yet for the aircraft.