Gary Kelly, Chairman of the Board and Chief Executive Officer at Southwest Airlines, joined the Greater Baltimore Committee (GBC) on November 20, 2020, for a Newsmaker Speaker Series on the state of the airline and travel industries amidst the coronavirus pandemic and the effects on the regional economy. Kelly discussed the return of the Boeing 737 Max, route updates, holiday travel, operating in the pandemic and the company’s approaching 50th Anniversary.
GBC President and CEO Donald C. Fry, who served as moderator, said about Southwest, “We’re tremendously appreciative of Southwest as a corporate citizen and your investment at BWI [Baltimore/Washington International Thurgood Marshall Airport] means a lot to our regional economy. It means a lot to all of us in the region from just having the nation’s number one low cost airline to provide us incredible customer service.”
Kelly started the discussion by noting Southwest Airlines’ successful partnership with BWI and the fact that it meant “tremendous route expansion” for the airline.
“We’re huge fans of Maryland and huge fans of BWI. We’re really devoted to the market and we have great plans for the future,” he said.
Concerning the company’s original attraction to BWI, Kelly said, “There’s a real focus by the state of Maryland to support aviation. The community is devoted to travel and tourism and having a great airport.”
When asked about predictions for holiday travel, Kelly noted that in April they were flying planes that were almost empty and were down about 98%. He said currently the airline is down approximately 70%, but November and December should be better.
“I think we’ll still have a lot of people traveling for Thanksgiving,” he said. “It’s going to be what it’s going to be and we’ve just got to get through this.” He added that while the COVID-19 vaccine is promising, “It’s not going to fix everything all at once.”
Here are some more highlights from the discussion.
On safety precautions and adapting for the pandemic:
- Kelly noted that the key questions are: “What do we need to do to protect our people? What do we need to do to protect our customers?”
- The airline is requiring masks of all employees and customers.
- They have put several cleaning protocols into place.
- “The air is refreshed every two to three minutes with hospital-quality filters. The airflow systems were developed with an eye toward preventing the spread of disease a long time ago.”
- As for the middle seat in a row, “We haven’t been booking the middle seat out of an abundance of caution,” Kelly said, but added that will change on December 1 (due to updated research).
- “It’s helpful to have the seatbacks high and everyone facing forward with their masks on.”
On the pandemic’s impact on business travel:
- “I always resist the notion that things are never going to be the same. We’re going to have to have a plan that assumes business travel is soft and will be for a very long time,” Kelly said.
- He added that he’s cautious for several reasons, including the fact that travel is usually one of the first budget items to be cut by businesses during a recession. “The longer this goes, the more I hear people saying, ‘Hey, I kind of like this remote thing.'”
- “If this is going to behave like a normal recession, you’re looking at 5 years” before business travel returns and recovers.
- However, he believes the company can grow consumer travel, based on providing discounts and other incentives. “We’re still going to have a fantastic frequent flyer program,” he added and reiterated that the company is going to do everything they can for travelers, as well as maintaining a flight schedule that makes it worth flying.
On the Boeing 737 Max being cleared for flights after being grounded for 20 months:
- Due to the grounding of the aircraft, Southwest had to make several radical changes to their flight schedule.
- “We fly only the 737 — always have,” said Kelly. “We only hire pilots that have been captains.”
- Training materials have to be approved by the FAA.
- Every pilot will be trained on the changes to the Max.
On Southwest Co-Founder and CEO Herb Kelleher who died in 2019:
“Herb has to be the G.O.A.T. [Greatest of All Time] when it comes to CEOs,” Kelly said. “It was one of the highlights of my life to have him as a teacher and a mentor. He was knowledgeable on all subjects. He died before the Max was grounded, but it would have been invaluable to sit down with him” to discuss the topic.
On job cuts, furloughs and layoffs:
- The company has offered employee separation programs and extended leave programs.
- There is also going to be a 10% reduction in pay effective January 1.
- Kelly said there will be no layoffs in 2021.
- “We’re a family and all share in this. If we all take a little haircut for a year, we can save every single job,” said Kelly who is not currently taking a salary. “I feel like it’s the moral thing to do. Job security is more important than anything else.”
On Southwest Airlines’ 50th Anniversary in 2021:
“It is an interesting time to have such a big milestone and we’ll have a lot to celebrate,” he said. “I, for one, am very confident that we’re going to beat this pandemic and it will be nice to have that coincide with the anniversary.”
The goals as Southwest moves through the pandemic:
“Try to keep costs low so we can keep fares low so we can keep traffic levels high” and “providing a high quality experience.”
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