Airliner World – May 2018

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Investing in its Future
In May 2017, the company completed
a major infrastructure change when
it implemented the Amadeus Altéa
Passenger Service System (PSS),
trumpeting that it would “generate
approximately $500 million in
incremental annual earnings before
interest and taxes (EBIT) by 2020”. Van
de Ven recalls: “Our old system served
us so well for many years, but it was
really a stripped-down system. It
basically took reservations for flights, it
had very rudimentary pricing
functions and was designed to be really
a standalone system.
“This Altéa system gives us a tremen-
dous amount of revenue management
capabilities that we didn’t have before.

That’s what is helping us drive those

EBIT improvements. So, we’re on track

in 2018 to have $200 million of EBIT

improvement, and we think that rate

will grow up to the $500 million mark

by 2020.”

While the economics speak for them-

selves, the COO revealed that Altéa has

also added much needed functionality

and new capabilities. It connects all

Southwest Airlines’ systems – boosted

by easier interfaces – allowing

partnerships, interline agreements and

codeshares with other airlines, and

can automatically re-accommodate

customers where necessary.

He is proud of the Southwest team’s

handling of the cut-over between

systems: “We have almost 10,000 people

who deal with that system in one way

or another and one day you have an

old system and the next you’re operat-

ing on a new system. Our people did a

magnificent job, planning that, training

everybody, and then delivering it

without a hitch.”

But he does not confine his plaudits

to his colleagues alone and has high

praise for the Amadeus personnel. “To

find partners that can work through

that with you and understand what that

means in terms of the support of that

technology, is extremely important,” he

stresses. “I joke a little bit about when

you see a dog chasing a car, and you

wonder what the dog will do when it

catches the car – well sometimes people

chase us to be our vendor or supporter

and when they catch us, [their reaction

is], ‘Oh my gosh, I’ve caught something

really big and I’m not really sure if I’ve

got the infrastructure to handle that’.

That’s what’s been great about working

with Amadeus. They’ve made sure they

have the infrastructure to support our

volume of activity.”

To Upsize, That’s the

Question?

While many low-fare carriers have

looked towards larger single-aisle mod-

els for their fleet renewals, Southwest

has remained loyal to the 737 MAX 7

and MAX 8 (albeit the former has had

deliveries deferred). It begs the

question: will this strategy continue

or will either the MAX 9 or MAX 10 be

needed in the future?

“For as long as we’re planning out at

least the next decade or so, I don’t see

us moving off the MAX 7 or the MAX

8, with seating configuration between

143 and 175 seats,” van de Ven declares.

“What we focus on in our point-to-point

network is the right combination of

frequency and non-stop service in

those markets. We like to get our low

Boeing 737 MAX 8, N8714Q

(c/n 36934) moments from

touch-down at Las Vegas/

McCarren Airport on a sunny

January day.

AVIATION IMAGE NETWORK /

SIMON GREGORY

The state-of-the-art flight

deck of one of Southwest’s

new Boeing 737 MAX 8s.

AIRTEAMIMAGES.COM/

DIPANKAR BHAKTA