Why Southwest Hawaii flights could now be in danger

The announcement this week that Alaska Airlines has acquired Hawaiian Airlines has suddenly sparked a new dynamic in air travel in Hawaii and raised questions about the future of Southwest Airlines in our islands.

Southwest, which is still struggling to gain traction with its Hawaii flights, is now under even more pressure from a massively strengthened rival alliance between Alaska and Hawaii. It seems increasingly likely that Southwest will significantly scale back its Hawaii flights. Here’s why.

Southwest’s ongoing problems in Hawaii.

Southwest’s expansion into Hawaii was initially met with enthusiasm by visitors and locals as the airline introduced its signature low-cost fares on interisland routes and direct flights from the mainland. Over time, however, the airline’s performance fell short of expectations.

Despite reducing flights to Hawaii by 50% and making ongoing adjustments that increase the cost of flights to the mainland, Southwest is, by all reports, struggling with low passenger numbers and mounting financial losses in Hawaii. The interisland market in particular has proven difficult as Southwest continues to be unable to compete with Hawaiian Airlines’ dominant market share.

In previous articles, Elliott Management, the airline’s largest activist investor, has indicated that it is in favor of downsizing or even withdrawing Southwest from Hawaii if profitability does not improve.

For more information on Southwest’s problems, see “The Southwest Effect in Hawaii: Is It Officially Over?”

What does Alaska Airlines’ acquisition of Hawaiian Airlines mean for Southwest?

The purchase of Hawaiian Airlines by Alaska Airlines, which took effect today, creates a new competitive force that Southwest’s position in Hawaii will change significantly. Hawaiian Airlines has long been the preferred choice for inter-island flights thanks to its local loyalty, high flight frequency, dedicated fleet methodology and strong presence in the islands.By acquiring Hawaiian, Alaska Airlines gains access to this established market share.

Although Alaska’s primary focus has always been on mainland service to Hawaii, the acquisition of Hawaiian could encourage the combined company to refocus on solidifying its inter-island dominance. This could further push Southwest out of the race, making it more difficult for them to continue to compete in our region, especially given their lack of their own inter-island fleet and less frequent/convenient flights.

If that’s not enough, Alaska has even more tricks up its sleeve.

That includes converting Hawaiian Airlines’ troubled call center in the Philippines back to a U.S. operation. And we can look forward to a complete technology overhaul of both Hawaiian Airlines’ website and its mobile apps, neither of which have been working properly since a failed system upgrade in 2023.

These challenges are discussed in more detail in “The Next Shoe to Drop in Hawaii Travel: Southwest.”

The dilemma between the islands of Southwest.

The interisland market has been particularly difficult for Southwest to break into. Low passenger numbers and poor financial results have plagued Southwest’s Hawaii flights, and the merger of Alaska and Hawaiian Airlines could more or less spell the death knell for any major interisland ambitions.

Alaska will take over and possibly extend Hawaiian Airlines’ dominance on the interisland routes, leaving Southwest with even fewer passengers to compete for. Southwest’s cost structure and the complexity of operating these shorter routes make it difficult to be profitable, especially compared to a merged Alaska-Hawaii route.

Routes from the mainland to the Hawaiian mainland: Will Alaska force Southwest to realign itself here as well?

Alaska Airlines already has a strong presence on the West Coast, and the acquisition by Hawaiian will allow the company to strengthen its mainland Hawaii routes, creating another challenge for Southwest. Alaska could focus its resources on improving its already robust West Coast Hawaii network. This will undoubtedly leave Southwest facing a much tougher competitor on all Hawaii routes.

It won’t be long before Southwest figures out whether this means further reductions in their Hawaii flights or a switch to routes exclusively to mainland Hawaii, where they appear to have fared much better than in the interisland market.

In addition to the recent development, Southwest is facing other problems here in Hawaii. For example, the long-planned night flights from the islands have not yet been implemented.

What’s next for Southwest?

1. Faced with increasing pressure, mounting financial losses, and numerous issues with investors, Southwest will undoubtedly seek to make significant changes to its operations in Hawaii.
2. Southwest may choose to maintain key mainland connections, but it is very likely that inter-island connections will be limited.
3. Alternatively, although less likely, Southwest could try to fight back with aggressive pricing strategies, but the financial consequences this would have at such a difficult time for LUV could prove unsustainable.
4. Southwest’s more likely option is to consolidate and reduce its Hawaii routes and focus on markets where the company has performed better financially.

Southwest’s withdrawal from Newark: A parallel to Hawaii?

Southwest’s struggle to gain a foothold in Hawaii is at least somewhat similar to its previous attempt to enter another competitive market, Newark Airport (EWR). After nearly a decade of operations at Newark, Southwest pulled out in 2019, citing several reasons for doing so. These included financial performance, competition from United Airlines, which dominates that airport, and the retirement of the Boeing 737 MAX fleet. CEO Kelly said at the time, “Financial results at Newark fell short of expectations, despite the efforts of our outstanding team in Newark.”

Southwest once operated up to 20 daily flights from Newark to 10 cities. Southwest also entered the Hawaii market with great expectations, but faced strong competition there, particularly in the interisland market dominated by Hawaiian Airlines. This market in particular proved to be a tough nut to crack, as Southwest’s planes were larger, passengers were few, and financial losses continued to mount.

While the situation in Hawaii appears to be driven more by competition and financial issues than operational challenges, there are still similarities compared to Newark. Southwest may need to make decisions in Hawaii to refocus on markets with proven performance.

The challenges in Hawaii have become significantly more severe this week, making the competitive landscape appear significantly tougher. Unlike Newark, where Southwest has switched to a nearby market, LaGuardia, Hawaii flights face geographic and logistical issues that may not give them the same flexibility.

Conclusions about current flights to Southwest Hawaii.

The acquisition of Hawaiian Airlines by Alaska Airlines marks an unprecedented shift in the Hawaiian airline market, and the impact on Southwest Airlines will undoubtedly be profound. While nothing is certain yet, several signals point to the possibility of a sharp decline in Southwest’s Hawaii flights, particularly in the interisland market where they have struggled to remain competitive.

Visitors and residents of Hawaii can expect significant changes to flights to Hawaii in the coming months, including Southwest’s Hawaii service, as the Alaska-Hawaii merger strengthens its position and presents Southwest with difficult decisions.

We look forward to your input!