Southwest Airlines, born of airline deregulation, could inspire re-regulation

If the Southwest Airlines Holiday Meltdown of 2022 invites new US government intervention in the travel industry, it will be a turning point for the country’s long experiment in airline deregulation.

Already the Biden administration is examining the matter and demanding that Southwest keep the commitments airlines made to customers over the summer for stronger customer service. Now, regulators, elected leaders, and regular flyers are demanding stiffer rules for airlines along with fresh investment in other types of travel, such as rail.

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The frustration is a result of Southwest, the largest airline in the US by seat capacity, canceling more than 11,000 flights over the past week after winter storms left the carrier unable to get its airplanes and employees back in place to operate a full schedule.

Why did Southwest cancel flights?

The winter storms caused cancelations for all airlines, but Southwest’s unique business model left it more vulnerable to a major weather disruption—and its aftermath.

“With our large fleet of airplanes and flight crews out of position in dozens of locations, and after days of trying to operate as much of our full schedule across the busy holiday weekend, we reached a decision point to significantly reduce our flying to catch up,” Southwest CEO Bob Jordan explained on a video posted to Twitter.

Airlines that operate traditional hub-and-spoke systems, requiring many flyers to change planes at airports hubs to reach their final destination, reduced cancelations once the pre-Christmas storms cleared, and by today (Dec. 28) were nearly back to normal.

But cancelations at Southwest, with a network designed for nonstop flights, got worse. On Dec. 26, the Dallas-based carried canceled 70% of its flights, according to the flight tracker FlightAware. News reports showed airports full of stranded flyers, trying to change their travel plans and sorting through mounds of bags to find their luggage.

Workers also pointed to an outdated crew scheduling system that crippled employee efforts to restore the airline’s schedule.

On Dec. 27, US Transportation secretary Pete Buttigieg did a round of media interviews pledging to hold Southwest to customer service commitments it and other airlines made earlier this year to make stranded passengers whole. And in an interview on PBS NewsHour, he signaled the possibility of further reviews.

“Clearly, they need to demonstrate that they can’t allow a system, a problem like this, to happen again,” Buttigieg said in an interview with PBS Newshour host Judy Woodruff.

“I also think we need to take a look at things like whether their schedule was realistic and other things that they need to do. Ultimately, of course, they have a responsibility as a company to their passengers and employees. But, as a watchdog, we’re watching very closely to make sure that they’re meeting their customer service commitments,” he said.

Bipartisan criticism from Congress

Other hints that the Southwest meltdown could have consequences for the industry came from US lawmakers, both Republican and Democrat.

“Congress gave the airlines billions to keep them afloat during Covid. With that money they still furloughed pilots and crew. They have been playing catch up since. @SouthwestAir needs to answer a lot of questions. The arrogance of the airlines needs to stop,” tweeted Adam Kinzinger, a Republican House member from Illinois.

Senator Elizabeth Warren blamed airline consolidation and tweeted that the Transportation Department “should use its antitrust tools to protect fliers.” The Massachusetts Democrat suggested the agency start by blocking the proposed sale of Spirit Airlines to JetBlue.

And House member Colin Allred, a Texas Democrat who represents part of Southwest’s home city of Dallas, called the cancelations “unacceptable, and given the federal support they received, the public deserves answers.” Allred is a member of the aviation subcommittee of the House Transportation and Infrastructure Committee.

Southwest used to be the poster child for airline deregulation

Starting in the early 1970s, Southwest created a small, nimble business model of inexpensive, short-haul flights to low-traffic airports, first within Texas and then across the Southwest. As the airline grew across the country, it continued to apply that same business model—some say stretching the model to its limits.

Along the way, Southwest pushed governments, both federal and local, to ease more regulations to allow for its unusual approach. Most famously, Southwest bucked against the Wright Amendment, a federal law that restricted flights from the secondary airport in Dallas to destinations in Texas and neighboring states. It took another act of Congress to change the law, and Southwest prevailed in 2006.

But Southwest’s explosive growth never could have happened without federal airline deregulation in 1978, which allowed carriers to set their own fares and routes. Decades later, even as the US Department of Homeland Security added strict security procedures for airports and airlines, carriers were still free to design their own networks and pricing schemes.

But as Americans have grown weary of the hassles of air travel and fed up with flight cancelations, interest in business regulations may be swinging the other direction.

Is high-speed rail a solution?

Trying to sort it all out.

Fliers this week scrambled for any mode of travel to get to their destinations, including buses, rental cars, limousines, even road trips with strangers, with many posting on social media that it would be awfully nice to have a reliable high-speed rail system.

Nearly a decade ago, Southwest helped kill a proposal for a rail line in Texas it saw as competition to its regional routes. Since then, a new company has come along with plans for a bullet train in Texas, but the project is mired in eminent domain fights over land acquisition.

After the Southwest Airlines meltdown, dozens of regular people on Twitter, mostly without blue checks, pointed to trains as a solution to air travel issues. As NYU energy and climate professor Amy Myers Jaffe posted: “@SouthwestAir Time to support high speed rail”

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