Dec. 8 (Bloomberg) -- Southwest Airlines Co., the U.S. industry leader in on-time arrivals since record-keeping began in 1987, finds itself in an unprecedented spot this year: eighth place.
Second a year ago, Southwest is slipping as it expands at congested airports such as New York’s LaGuardia while US Airways Group Inc., Alaska Air Group Inc. and other rivals improve their performance, according to federal data released yesterday for the 12 months ended in October.
The 2010 slide marks a blow for the carrier with the best cumulative rating since the U.S. started tracking results 23 years ago. With the drop, Southwest loses the “corporate prestige” from being at or near the top of its peers, said Steve Martin, senior vice president at InterVistas Consulting in Bethesda, Maryland.
“They would like to be able to deliver good news to their passengers that ‘the rest of the industry is still on the rocks, but we’re getting you there on time,’” Martin said. “There’s a certain amount of bragging rights that are involved.”
Southwest, which painted a plane in 1997 in partial tribute to its timeliness, finished among the top four airlines for the seven consecutive years before its current decline. The Dallas-based carrier is among eight in the U.S. for which the Transportation Department has maintained records since 1987.
Falling to eighth place “must bother them immensely,” said Jay Sorensen, president of consultant Ideaworks in Shorewood, Wisconsin. “This obviously is one of the top three things on the agenda at senior staff meetings.”
Alone Among Peers
Southwest, the biggest U.S. discount carrier, was alone among major airlines in posting a drop in on-time performance in the 12 months ended in October, falling to 81 percent from 82.1 percent on a year-over-year basis. Its all-time rate is 81.9 percent.
“It is a priority for us to make improvements,” said Chris Mainz, a Southwest spokesman. “We have actually added more complexity to our network, along with record loads, and have not seen a dramatic decrease in performance.”
While Southwest has kept on-time arrivals at more than 80 percent for nine consecutive years, rivals’ gains have helped put the industry on course for its most punctual year since 2003. Airlines cut flights during the recession, helping ease airport congestion.
United Continental Holdings Inc., Delta Air Lines Inc., AMR Corp.’s American Airlines, JetBlue Airways Corp. and AirTran Holdings Inc., which Southwest is acquiring, are among carriers that joined US Airways and Alaska in improving on-time arrival rates in the 12 months ended in October.
Southwest for at least five years in the 1990s had the best on-time performance, best baggage handling and fewest customer complaints of all major airlines on an annual basis. After topping all three categories in 1992, the airline said it was the first sweep ever and gave itself a “Triple Crown” award.
In 1997, Southwest unveiled a Boeing Co. 737 dubbed “Triple Crown One,” with a paint scheme that included a depiction of a ribbon holding a large, heart-shaped medal bearing a golden No. 1. That aircraft still flies, Mainz said.
“Southwest Airlines said, we are going to get you there on time,” Herb Kelleher, then the carrier’s chairman, told a congressional panel in 2008. “And we did.”
Southwest’s on-time performance since then has been challenged by record load factors, or the average number of seats filled on its planes, Mainz said. That figure hovered in a range of 65 percent to 70 percent from 2000 through 2005, and expanded to 79.1 percent through October of this year.
Jets that once sat idle at airport gates for only 20 minutes between flights helped Southwest make efficiency gains on competitors in years past. That so-called turn time has swelled to 30 minutes, Mainz said.
“When you do carry more people you are going to require more time to process those flights,” said Sorensen, the consultant. “As Southwest ages, it will pick up more and more of the characteristics of an older airline. It’s really unavoidable.”
While Chief Executive Officer Gary Kelly has kept alive an annual profit streak dating to 1973, the shares’ 2010 gain of 13 percent before today trailed the 26 percent advance for the Bloomberg U.S. Airlines Index. The shares fell 6 cents to $12.95 yesterday in New York Stock Exchange composite trading.
Competing at Hubs
Kelly, who took the job in 2004, has been willing to trade some of the scheduling advantages of smaller, secondary airports such as Chicago’s Midway to compete at hubs and win more passengers.
In 2007, Southwest said it would return to San Francisco International, followed by the decision a year later to start flights at LaGuardia. In March, it adds service to Newark’s Liberty International. LaGuardia, Newark and San Francisco had the worst on-time performance among major airports through October, according to the Bureau of Transportation Statistics.
“LaGuardia is a cesspool of late flights,” Sorensen said.
Southwest remains the only U.S. carrier that doesn’t charge for a first or second checked bag, a policy that Kelly says has helped add traffic. Much of its no-frills service, such as a lack of onboard videos or seat-back televisions, also has remained in place.
“Southwest has other things that appeal to travelers that makes them grow faster than others,” said David Swierenga, president of aviation consultant AeroEcon in Round Rock, Texas. “Travelers like to have things on time, but that’s not the foremost consideration when you’re traveling Southwest.”