The title of this post could relate to taking off in an airplane. Or, it could relate to the flights of fancy that some people's imaginations seem to have recently taken, as they've latched onto the latest conspiracy theory related to covid. As someone who a) understands business in general, and the decisions that businesses make, and why; b) knows a thing or two about the airline industry, having flown millions of miles over the course of my career and leisure travels; and c) is very familiar with Southwest Airlines' business model, and how it differs from other airlines'; I feel compelled to set the record straight.
The bottom line, in a nutshell, is this:
No, Southwest's recent spate of cancellations and delays did NOT result from a pilot "sick-out" in protest against the airline's October 4 announcement that all employees will be required to be vaccinated against covid by December 8.
Let me repeat that for the people in the back row:
Southwest Airlines' recent spate of cancellations and delays did NOT result from a pilot "sick-out" in protest against the airline's October 4 announcement that all employees will be required to be vaccinated against covid by December 8.
Rumors to the contrary were started by some internet conspiracy theorists who shall remain nameless, but who have enough of a following of near-worshipers to get their - *ahem* - bovine excrement repeated across social media, and it was promulgated by some other media types (who shall mostly remain nameless, but one example's initials are Tucker Carlson) who poured gas on the fire.
In short, there was no pilot "sick-out." It's an internet myth. If you insist on buying into it after you read this, at least straighten your tin-foil hat.
It doesn't take deep knowledge of the airline industry, or of Southwest Airlines, to pretty quickly recognize this nonsense for what it is. The feedlot smell was wafting off this story pretty much out of the chute, and a little common sense should have deep-sixed it post-haste.
But the thin space between the fear-mongers and the conspiracy theorists grows ever-thinner as the pandemic grows longer in the tooth, and those of us who dwell therein are getting lonelier by the minute. So the Curmudgeon is weighing in, with the aforementioned common sense, along with some of his usual research, and the benefit of a strong familiarity with the airline in question.
First, let me speak to that. I've been a pretty loyal Southwest (SW) customer for many years, having flown with them extensively throughout most of my business career, since 1992. I've had A-List Preferred status - the top of their frequent-flyer program - for the last six years. I've had the Companion Pass for the same number of years, which allows my lovely wife to fly free with me on any SW flight I'm on, with a guaranteed seat, even if the flight fills up. It's the best perk in the business. It takes a lot of flights to get the Companion Pass; I'll admit I only get it because I augment my flights with spending on the SW affinity credit card. But I do typically fly a ton on SW.
To wit: I'm currently sitting on more than a half-million SW points. Needless to say, my leisure travel is down a bit the last couple of years, so I've been stockpiling points.
I've also been a SW shareholder for the last six-plus years. Now, anyone who follows this blog, or knows me, knows that I don't make uninformed investment decisions. I buy companies I know, and that make money. Because if they make money, I make money.
So suffice it to say, I'm pretty familiar with SW, and with what differentiates it from other airlines. And that's a big part of what has contributed to its problem with cancellations and delays - not just over the past several days, but throughout this year. If people had been paying attention to anything but the company's recent vaccine requirement, they'd know this: SW has had problems with cancelled and delayed flights all. year. long. Ah, but that doesn't fit the vaccine conspiracy narrative. No matter; we'll get to it later.
Okay, first let's look at the recent news, and apply a little common sense.
Monday, October 4: SW leadership announces that the company will require all employees to be vaccinated against covid by December 8, 2021.
Beginning on Friday, October 8, SW began experiencing cancellations and delays that lasted through the weekend. The airline blamed bad weather and air traffic control issues. However, while the FAA admitted that isolated bad weather in the Southeast, military training exercises, and a temporary staffing shortfall at one air traffic control center did cause some cancellations and delays, these were brief, and other airlines were minimally affected, and the FAA said as much.
And so the rumors began. If it wasn't the weather, and it wasn't widespread air traffic control issues, and other airlines weren't affected that much, what was the issue with SW?
The conspiracy theorists thought they'd found their "aha!" with the October 4 vaccine requirement announcement, so they put 2 and 2 together and came up with 22, and the rumor train turned into the crazy train, complete with soundtrack by Ozzy Osbourne.
So let's apply a little common sense here, and ask ourselves a few very simple questions:
1. SW leadership made the announcement on Monday, October 4. Why did the pilots wait until Friday, October 8, to start calling out sick? Are you going to tell me it took them that long to get organized? A bunch of ex-military pilots who used to fly sorties against the enemy? Please ... how long does it take to have the union send a blast email to all the pilots to have them call out sick? Heck, by Friday they had filed a class action against the company on behalf of the pilots (more on that later).
What's the next theory - they wanted to wait until weekend travel hit, for maximum disruption? I recently flew during the week on another airline, and all the mid-week flights were full. So the disruption would have been pretty much the same anytime. Besides, disrupting business travel wreaks more havoc than screwing up the Joneses' vacation plans - canceled meetings, etc.
What's the next silly theory - the pilots wanted the weekend off, so they could go fishing with their kids? It just doesn't make sense that they'd wait several days after the announcement. However, if you really want to pursue that angle, I could give you that one. It still doesn't make sense, but I recognize that things don't have to make sense for you to believe them.
2. You're probably not aware of this, but on October 1 - the Friday before the SW announcement - the leadership of American Airlines, Alaska Airlines, and Jet Blue all announced that their employees must be vaccinated against covid by December 8 (there's that pesky date again - I'll explain its significance later). Frontier had already required that all employees be vaccinated, by October 1. And United Airlines and Hawaiian Airlines announced in August that their employees would have to meet the December 8 deadline to be vaccinated. You didn't hear about these airlines' announcements, because they didn't have widespread delays, so the conspiracy theorists couldn't link their announcements to anything, and let's face it, you're only paying attention to covid conspiracy theories, not general business news.
So - why didn't any of the other airlines' pilots (or other employees, for that matter) stage a "sick-out" to protest those companies' vaccine mandates? Especially since three of them made their announcements just one business day before the SW announcement?
One really laughable explanation I saw tossed out by a conspiracy theorist for this one is that SW is based in Dallas, and well, you know, Texas, right? I mean, don't mess with Texas? They don't cotton to that BS down there, y'all - they stand up to that corporate overreach.
Hey, FYI, one of my clients was among the first three credit unions in the United States to require that all of their employees be vaccinated against covid. Guess where they're headquartered? Dallas. Guess how many of their employees were already vaccinated when they made the announcement? More than 70%. Guess what the fallout has been, from employees and members? Virtually zilch. Don't mess with Texas, my arse.
Further, anybody who embraces this nonsensical notion doesn't know squat about how airlines operate. You think all of SW's pilots live in Dallas, and are native Texans, Pollyanna? Sorry, that's not how airlines operate.
Airlines have crews that live and work in cities throughout the U.S. Some of them wake up in the morning, drive to their local airport, and work a flight out of that airport. Some of them "deadhead" (fly on the airline for free) to the city they're going to be working out of, and then hop on a flight from there. So you might have a liberal SW pilot from Seattle or San Francisco or Madison or Minneapolis flying your plane out of Dallas or Birmingham or Mobile or some other conservative city. Just because the company is headquartered in Dallas, that doesn't mean that all the pilots are conservative cowboys who wear "Don't Tread on Me" t-shirts and ten-gallon hats. (Although it's true that nearly all commercial airline pilots are ex-military, but that's true for all the airlines.)
Sorry, but it makes zero sense that SW is the only airline whose pilots would stage a "sick-out" to protest their employer's vaccine mandate, and especially that they'd be the only one to do it shortly after the October 1/October 4 timeframe, since no less than four major U.S. airlines announced such mandates on those dates.
Another rather - well, stupid notion that I saw offered up was that, after the announcement, the SW pilots decided they had to use up their accrued sick leave before they all quit en masse in early December, rather than get the shot. Think about it: they have two full months to use it. Why the rush? And why just pilots? Also, again, why wouldn't the employees of American, Alaska, and Jet Blue rush to do the same, as their announcements came just one business day prior to SW's? Think, people. Sheesh.
3. One of the posts that I saw making the rounds that claimed a SW pilot "sick-out" was responsible for the outages also stated that "Jacksonville ATC walked out too ..." Again, let's apply a little common sense, but for this one, you actually have to know what the hell you're talking about, and have a bit of context.
This bit of conspiracy theory likely stems from the truth: that the Jacksonville Air Route Traffic Control Center did have some staffing shortages (meaning some workers were unavailable, not that they all walked out - more on that in a minute), which contributed to the temporary cancellations and delays that affected multiple airlines that I mentioned earlier. The FAA confirmed this.
Now, the JARTCC isn't a run-of-the-mill air traffic control tower, like you'd have at every airport in the country. It's one of 22 Area Control Centers in the U.S., located in Hilliard, Florida, just north and west of Jacksonville (not at the airport). Google-map it. I'll wait. It handles traffic not just at Jacksonville International Airport (JAX), but in parts of FL, GA, AL, SC and NC, plus parts of the Atlantic and the Gulf of Mexico. That's a lot of air traffic, from a lot of airlines, domestic and international. Keep that in mind as you read on.
A temporary and partial staff shortage there would cause some cancellations and delays for all airlines operating in the area, and that's just what happened.
Now - think about what would have happened if all of the employees of JARTCC had walked out, as the conspiracy post ignorantly implied. Chaos. Pandemonium. ALL flights from ALL airlines operating in the area canceled. That didn't happen.
Further - why the hell would FAA employees choose that weekend to walk out? Are they that loyal to SW (assuming we buy the SW pilot "sick-out" conspiracy theory in the first place)? The Biden Administration's vaccine mandate for federal employees (and yes, FAA employees are federal employees, in case you didn't even know that) has been in place since September 9. Why would they wait until October 4? And why just Jacksonville? Why not the whole country, since all FAA employees are affected? The post I saw did say, "Milwaukee ATC is expected to follow today" (posted October 10).
Well, guess what? Just like the world didn't end when the Mayan calendar said it would, and the U.S. didn't split in half due to an earthquake on the New Madrid fault in 1990, as Iben Browning predicted it would, nothing happened on October 10. You know what else?
There is no Area Control Center in Milwaukee. Pure, unadulterated, uninformed BS, swallowed whole by the equally uninformed masses. I'd laugh if it weren't so sad. It's every bit as bad as the sheep who wait for Fauci's permission to send their kids out trick-or-treating.
Okay, so if the conspiracy theory is wrong, just what did happen with Southwest? I'm glad you asked. It's a function of their business model, which I'm very familiar with, as it's a big part of the reason I've been an investor. It's also a function of the after-effects of the pandemic on their flight schedules. The convergence of these two factors has resulted in flight cancellations and delays - again, not just recently, but on several occasions throughout 2021. It's one of the reasons I haven't flown SW since March, and that I've pared the number of shares I own this year.
SW is the only domestic airline that is consistently profitable without gouging its customers with fees. The reason is its business model. There are a number of factors that differentiate it. I'll name two.
One is that its entire fleet consists of the Boeing 737 series. It currently only has 737-700, -800, and -MAX planes, but it previously had some of the earlier models in the series. However, all were 737s, and that's always been the case.
What does that mean? They can keep the parts inventory down. Also, it's easier to train pilots and mechanics, because they're working with a common standard, with only relatively minor variations thereon. Other airlines, like Delta, have Boeings and Airbuses, with numerous different models across the two manufacturers' fleets. So their costs for parts inventory and training are a lot higher. (As an aside, it also means that, under normal conditions, it's easier to replace a plane if there's a cancellation, because you're replacing a plane with the same capacity; you don't have to replace a larger Airbus with a smaller Boeing, you're replacing a 737 with a 737. But that's under normal conditions, and conditions this year haven't been normal.)
The second - and for purposes of this year's issues with delays and cancellations, more significant - factor is the fact that SW uses a point-to-point model, rather than the traditional hub-and-spoke model used by the other major airlines. I'll explain the hub-and-spoke first.
Let's take Delta. It has hubs in Atlanta, Cincinnati, Minneapolis, and Salt Lake City (it has others, but I'm just listing a few key examples). If you want to fly from, say, Kansas City to Miami, the most efficient route - and the one with the most options - will take you through Atlanta. If you want to fly to Sacramento, your best bets will take you through Salt Lake or Minneapolis. If you want to go to Philly, you'll find routes through Atlanta, Cincinnati or Minneapolis.
Now, if you're flying on SW from KC to Miami, you might go through Dallas, Atlanta, Denver, Nashville, or Chicago-Midway. Going to Sacramento, you could go through Denver, Vegas, San Francisco, LA, or some combination of two of those. Philly? Midway, Denver, Orlando, or Nashville. Not quite as direct as Delta's hub-and-spoke setup, right? But more ways to get you there.
Moreover - and this is key - on Delta, if you go through Atlanta to Miami, when that connecting flight leaves Miami after dropping you off, guess where it's going next? Right back to Atlanta. From there, it may go back to KC, or it may go on to another point. The key is this:
There's always a plane there at the hub in Atlanta, with a crew routed to that hub to work the next flight scheduled on that plane. The upside is availability and fewer delays, if all goes well. The downside is that it's more expensive to always go back to the hub, if you understand logistics.
Now, with the SW point-to-point model, that flight from KC to Miami that stops in Dallas might go on to New Orleans, then Charlotte, then Washington National, etc. The connection to Miami might go from there to Tampa, then Nashville, then St. Louis, etc. It's cheaper to not have to go back to the hub every time. You can cover more routes, more cost-effectively. But ...
If there's any kind of scheduling snafu - a brief, temporary weather or air traffic control-related delay, etc. - there's a plane out of place, and a crew out of place. And that means the next plane and crew are out of place. And the next one. And so on and so on.
And to get aircraft and crews in place, you have to deadhead them to where they need to be from other places, which means you're probably disrupting other flights. And all of that leads to massive, snowballing delays and cancellations. And situations that can overwhelm your logistics systems.
(As an aside, SW has always gotten around this to some degree by having fewer delays to begin with due to a third differentiator: no assigned seats, and a more efficient boarding process. Love it or hate it, it allows SW to turn a plane around at the gate faster than any other airline, which reduces gate delays.)
Now, combine the point-to-point model with the post-covid situation (and we can blame our government for this, just as we can blame them for other related disruptions, like the supply chain). Here's the problem: in the aftermath of the covid shutdown, SW has still grounded about half its fleet, and has slowed deliveries of new jets. That means it has cut its schedules. That's one of the reasons I haven't flown SW much this year; most of my travel these days is for business, and their schedules just don't fit my schedule that well. I mostly fly to Jacksonville, and the flights that get in at a reasonable hour have three- to four-hour layovers. By comparison, I can fly Delta and layover in Atlanta for an hour to an hour and a half, and not spend my entire day traveling.
Grounded planes and reduced schedules mean furloughed crews, so there are also fewer crews to move around in the event of delays and cancellations.
So with limited flights, there are fewer planes and crews available to deadhead to cover for any delays that do crop up, and that leads to the kinds of problems that have plagued SW ALL YEAR, not just since they announced the vaccine requirement. But I'm confident that after the pandemic is over and they're back up to full-fleet capacity, they'll get it all sorted out, and they'll be back to the efficient, profitable airline they've long been. I sure hope so, as a shareholder, and a guy sitting on half a million points and a Companion Pass.
Oh, and why did SW blame the weather and the FAA, leaving themselves open to speculation as to what the real reason for the issues was? Gee, do you think management wanted to say, "Well, in the current environment, our business model, which is normally what makes us more profitable than the other airlines, puts us at a competitive disadvantage, so we're going to have more delays and cancellations than the other guys"? They might as well just say, "Fly Delta until all this pandemic stuff shakes out."
Now, a note about why all the airlines are imposing these vaccine requirements for their employees. For the record, I oppose the requirements vigorously, as much as any of the wannabe internet right-fighters who, with the best of intentions, naturally gravitate toward these conspiracy theories, hoping against hope that these brave pilots are standing up against Big Brother and raging against the machine. But let's not be too quick to blame the airlines.
All U.S. airlines perform contract work for the U.S. government. As such, they are government contractors, as well as being private businesses. And Biden has mandated that all employees of government contractors get the vaccine by December 8, hence the magic date imposed by the airlines. So you see, the airlines aren't a bunch of Fauci-following vaccinistas trying to impose their medical will on their employees. (Delta Airlines is employing the unique tactic of requiring frequent testing of non-vaccinated employees, plus charging them out the wazoo for health care insurance, which is really no better. In any event, industry observers find it a curious gambit that isn't expected to work, and Delta is widely expected to cave and require the vaccine by December 8.) They're following a government mandate imposed on them.
I suppose you could play the indignant, militant revolutionary and expect the company to give up its government contracting revenue. Sure, you could do that. Just don't bitch when you have to pay two or three times as much the next time you hop on a plane, because they have to raise commercial fares to cover the lost revenue. And don't forget that while you're probably really good at talking a strong, tough game from behind a keyboard, when push comes to shove, you're probably better at talking that game than playing it, as most are. Sitting in that corner office, you don't know what you'd do. (Admit it, you probably didn't even understand, up to this point, that all the airlines are doing this, why they're doing it, how they operate, or how their business models differ.)
So let's place the blame where the blame belongs: on Biden, Fauci, and the fear-mongers. The airlines are just trying to preserve their businesses, no different than the restaurants that spaced their tables last year to meet ridiculous capacity requirements. We supported the restaurants, we didn't punish them.
As for the union class action against the company's mandate, it doesn't even seek to permanently stop the mandate. At issue is the fact that the company imposed the mandate under a force majeure clause in the collective bargaining agreement with the union, rather than negotiating the mandate with the union. Who knows what concessions the union is after in exchange for the mandate - increased health care benefits, more liberal leave time policies, maybe increased staff coverage in the event of delays. Who knows? But it appears that even the union recognizes the inevitability of the requirement given the government mandate on contractors.
Also, understand this: there's no way in hell that the pilots would damage their union's collective bargaining position by walking out on the very day that the union filed a class action against the company for breaching the collective bargaining agreement. To have done so would have given the company an immediate upper hand in the litigation, much less any subsequent negotiations: it would be the epitome of "bad faith," even before any proceedings began. For anyone with even a modicum of understanding of legal proceedings, the absurdity of that notion should be sufficiently obvious as to not require explanation, but herewith is the explanation, just in case.
If there's a lesson in this, it's that when we see something spreading across the interwebs, our first and best instinct should be to assume that it's BS, because that's what BS does: it spreads. Then, we should apply a little common sense, and think about whether it passes the smell test. And while we're at it, we'd do well to ask ourselves, "Why am I so quick to believe this? Is it because it resonates so much with me? Because it fits a narrative that makes me say, 'YESSS!!' and pump my fist in the air?" Because if it does, there's a really good chance that we need to fact-check it very thoroughly to make sure that we're not once again falling victim to what's referenced in 2 Timothy 4:
"For there is going to come a time when people won't listen to the truth but will go around looking for teachers who will tell them just what they want to hear."
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