Is Southwest Airlines Planning International Expansion, Or…?

Southwest Airlines has just made an interesting regulatory request, which is causing some people to wonder whether the airline is planning a significant international expansion. However, there’s likely a boring explanation.

Southwest requests approval for international expansion

@IshrionA flags how Southwest has just filed with the Department of Transportation (DOT), requesting permission to operate service to any country that is part of the Open Skies agreement with the United States. This includes many countries in Europe, Latin America, Asia, Africa, etc.

In other words, pending airport slots and availability, this would allow Southwest to massively expand internationally, without needing to request regulatory approval for each new route.

What’s actually going on here? Is Southwest getting ready to plan a big international expansion? Currently, the airline operates domestically, and also flies to select destinations to Mexico, Central America, and the Caribbean.

The answer is likely pretty unsexy. We know that Southwest is starting to partner with international airlines, with the first partnership being with Icelandair. To start, this is an interline agreement, but one certainly assumes that the airline eventually hopes to launch codeshare agreements.

If Southwest wants to codeshare with foreign airlines, it needs this authority to do so, so of course it’s logical that the airline is finally filing for this. It’s easy authority to get, and even beyond that, there’s no downside. So is it possible that Southwest plans some major international expansion at some point in the future? Sure. But I wouldn’t view this announcement as being indicative of that, as this is something that needed to be done anyway.

Could we see Southwest expand internationally, though?

As mentioned above, I don’t think this regulatory filing is indicative of Southwest expanding internationally, but rather it’s about the carrier’s new strategy of partnering with international airlines. Furthermore, it’s useful to have this flexibility anyway, if the airline does decide it wants to expand internationally in the future.

That being said, Southwest is seemingly changing everything about its business model at the moment, so could we also see the airline increasingly pursue international flying opportunities? Admittedly Southwest is kind of growth constrained at the moment, given the number of 737 MAX delivery delays we’re seeing.

Personally, I wouldn’t be surprised to see Southwest increasingly pursue more international flying within the Americas, where it’s to more destinations in the Caribbean, or to Northern South America. It’s not a great time to add service to Canada, but maybe that could happen in the future as well (though that comes with so many challenges, given the operating cost disadvantage, plus high airport and government taxes and fees).

We can’t rule out that Southwest may eventually operate some sort of flights to Europe, given that Breeze claims it wants to do that with A220s. But I just think the opportunities there aren’t amazing:

• Southwest would be really limited in terms of the markets in which it can operate, using Boeing 737 MAXs; the Northeast to Dublin might work, but not much more than that
• I just don’t see much upside, since economy fares across the Atlantic are cheap for most of the year, and Southwest can’t tap into premium demand

But heck, with the pace at which Southwest is changing right now, who knows, maybe the airline will be flying all-business class 777Xs a decade down the road…

Bottom line

Southwest has requested blanket authority to take advantage of the Open Skies agreement that the United States has. This will allow the airline to expand internationally. However, don’t expect anything too exciting. The most likely explanation is that this is just being requested in anticipation of codesharing with foreign airlines.

What do you make of this Southwest regulatory request?