The airline industry is in flux; what does that mean for American and Southwest?
Texas is home to two of the nation’s biggest airlines, and while American and Southwest have thrived in the past with innovation and classic service, an industry in flux means they now need to adapt.
Both airlines are making fundamental changes to their model in an attempt to cut off fat for investors. However, these changes are hardly confined to airlines in Texas as airlines across the country are scrambling to find profitability.
Here are the trends you need to know about:
American Airlines cutting routes and adding seats
American Airlines announced last Monday that it had identified five flights it will no longer service from Austin-Bergstrom International Airport. The cuts were in line with previous reductions of service from the state capital that began last year and led to the elimination of 21 routes.
The new flight cuts will start as early as October and will target year-round nonstop routes to Las Vegas, New Orleans and Orlando, Fla. The airline will also end seasonal service to Palm Springs, Calif., and Reno, Nev.
“American will continue to offer customers access to our comprehensive global network of more than 350 destinations with one-stop connections. We’re proactively reaching out to impacted customers and apologize for any inconvenience this may cause,” the company said in a statement.
Coinciding with the cuts was American’s second-quarter earnings report, in which the company posted its highest quarterly revenue ever at $14.3 billion. The company reduced its total debt by approximately $850 million during the quarter.
Moreover, the second quarter generated a net income of $717 million, or $1.01 per diluted share, and the company saw an operating cash flow of approximately $1.1 billion. However, the airline remains in recovery mode as it has been battered in the stock market this year and still had a debt of $40 billion as of March.
Southwest ditches polarizing seating model
In a July news release, Southwest Airlines outlined a number of changes to its seating model, stating that “preferences have evolved with more customers taking longer flights where a seat assignment is preferred.”
With the onslaught of changes happening in the airline industry, Southwest hopes moving to assigned seating and revamping its boarding process will cast a wider net for the airline’s appeal to both new and current customers: Research found that 80% of current Southwest customers and 86% of potential customers prefer assigned seating.
The airline did not provide a date for the switch. In addition to assigned seating, Southwest is rolling out premium seating options on all flights and introducing red-eye flights.
Spirit and JetBlue make structural changes as Delta does damage control
Elsewhere in the industry, Delta’s IT debacle, caused by Austin-based CrowdStrike, has resulted in a turbulent few weeks for the company, filled with mass delays and cancellations. In that time, the airline, thought to be the stalwart of the industry, claims to have lost $500 million. The company has seen its stock price drop almost 9%.
East Coast powerhouse JetBlue once had dreams of merging with Spirit Airlines to compete with bigger airlines. Instead, that merger was blocked and the airline is now cutting 20 routes and pulling out of five cities altogether. In line with Southwest, Spirit recently announced it would offer premium seating — a move that effectively put the final nail in the coffin of budget airlines as we knew them.
Beck Andrew Salgado covers trending topics in the Austin business ecosystem for the American-Statesman. To share additional tips or insights with Salgado, email [email protected].
This article originally appeared on Austin American-Statesman: These Texas airlines are about to look different; here’s what to know
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