WN loses money at ICT; maxes out the guaranteed $6.5 mill reimbursement for losses
 

quite a contrast between ICT and Panama City (ECP) where Southwest was apparently so pleased with the early numbers that they cancelled a multiple-year minimum revenue guarantee less than a year into the agreement.

These smaller markets are quite justified in their fears that Southwest may discontinue service. I'd have never predicted them cancelling Key West or Branson after serving those markets for such a short time.

Apparently they got lost finding Branson.

Pretty pessimistic article, makes it sound like it's just a matter of when they close the operation with just a slight of hope of it standing on its own.

I'm a little surprised, I knew ICT wasn't going to put up amazing numbers but I figured it would do okay in the Southwest network.

Are load factors publicly available?

SWA's Dan Lansdon, June 27, 2014

"The airline posted a loss of $6.83 million from July 2013 to February 2014 on the two routes to Dallas Love Field and Chicago Midway, the information said."

This much in 8 months on two routes? Is there 8x a day daily service to each? I suspect some very creative accounting here, heavy allocations of corporate expenses...

Yeah, I don't know much about accounting, but I can imagine there may be some games to play.

Maybe the contract was reviewed and signed by ICT after a bit too much free Wild Turkey 101.... Maybe Southwest got to define "Loss" as loss of "Potential" profit assuming, 90% of people booked business select and the other 10% were habitual no-shows who forfeit their fares.

Either way, I think we may have just uncovered a partial source of that "Cost Neutral" money for paying the consultants, rebranding, repainting the planes, etc.

There are two flights daily from DAL to ICT during the week and one flight on the weekends.

WN can't find 300 people who want to fly to ICT instead of OKC?

They are. You just need to pull the T-100 data for segments which will give you the total pax and total seats offered per month.

http://www.transtats.bts.gov/DL_Sele...Air%20Carriers

I suspect that Southwest management and lawyers are aware of penalties (and taxpayer ill will) for defrauding a government entity. Allocations will be consistent across geography and time absent compelling reasons to change the methodology.

I'd imagine the contract has some very specific language about how to calculate the "loss" which may or may not mean Southwest actually "lost" money on those flights. We know Southwest was able to make money with lower load factors in the past. For example the loss may be a theoretical loss of income based on the route performing up to the system average or some specific benchmarks.

Wonder whether United, Delta and American are receiving similar revenue guarantees for their service? I like WN, but Kanas is laying out some serious money for duplicative service to Chicago and Dallas. And apparently the passengers aren't willing to pay WN sufficient fares for those flights (or else WN would have been profitable and wouldn't need to collect the revenue guarantee).

Unless the other airlines are also collecting subsidies, the only winners here are WN and the too-small pool of WN customers. The losers include the taxpayers and UA, DL and AA.

I wonder if there has been a positive impact on fares on the other carriers. That's the usual reason for paying a Low Cost Carrier for service.

If the other carriers have cut their fares to compete with Southwest that could be a positive benefit for flyers and the community. It could even save money in the local economy if the fare cuts saved more than the subsidy cost.

Wasn't ICT just another place to drop a plane for DAL-MDW 1-stops under Wright? If so, WN would have to be stingy with the cheap fare classes so they could sell the capacity as thru traffic. Now, the thru traffic is just going to take the nonstop.

It's a shame that WN can't figure out a way to profitably operate E-170s.