Two months shy of its first full year serving Gulf Coast air travelers, Southwest Airlines announced this week they are temporarily dropping one of three daily flights out of Pensacola International Airport.

Southwest spokesperson Michelle Agnew said beginning Jan. 1, 2015, the Dallas-based airline will reduce nonstop service to Nashville, Tenn., from twice daily to once daily.

The dropped Nashville flight will be the one with a 9:50 a.m. departure time. The remaining available nonstop to Nashville will be the afternoon flight departing at 4:50 p.m.  

"Sometimes we see the demand go down, so we'll reduce service on a particular route for a given time until demand returns," Agnew said. "This is the case for the Pensacola-Nashville route."

However, the good news is that second daily nonstop Nashville flight will be restored March 7, along with the launch of a Saturday-only flight to Chicago (Midway), Agnew said.

Pensacola airport officials said the Saturday-only flight to Chicago, in effect, is a test by Southwest to determine if there is enough market demand to offer that flight seven days a week.

Despite the temporary loss of the second Nashville flight, the once daily flight from Pensacola to Houston will not be impacted by the "seasonal" schedule changes, Agnew said.

The seasonal schedule changes made by Southwest were not unexpected.

January and February passenger counts historically are the weakest two months of the year for Pensacola's city-owned airport.

In January of this year the airport handled 98,600 passengers and 96,850 in February, the lowest monthly total of the 12 previous months.

Conversely, May saw 152,250 passengers travel out of Pensacola International, and July of this year more than 153,500, a 6 percent increase over July of 2013.

Aside from  Pensacola's relatively weak January-February market demand, Agnew said there are other factors "that determine whether we can/should continue service on a specific route.

"Load factor is piece of the puzzle, but does not always determine whether a flight is profitable," Agnew said.

Southwest, according to figures released by Pensacola International, is averaging an 83 percent load factor.

In fact, all airlines serving Pensacola -- Delta, American, United, US Air, Southwest and Silver-- have average load factors of 83-85 percent range for the past three months.

Airport officials said they are "very pleased" with those numbers, considered healthy by industry standards.

Airport finances

The City of Pensacola’s third quarter financial report shows airport revenue was below expenses by $717,700 for the third quarter, and revenues are not anticipated to meet budget.

When compared to the third quarter of fiscal year 2013, passenger traffic at the airport is down 0.30 percent. However for the third quarter of FY 2014 (April, May June), passenger count is 2.2 percent higher than the same period in 2013.

That increase is partially attributed to an increase in the number of seats available  because of American AIrlines using MD80s and Southwest using 737s.

Overall airport revenues were down $560,400 below last year. Southwest is operating under a two-year incentive plan, reducing revenues that would have been otherwise received from AirTran (Southwest replaced Airtran last November).

The airport’s agreement with the airlines provides for the airlines to fund any shortfall, excluding incentives, that should occur.

Dan Flynn, assistant director of airport operations, in an email said United also will have some changes coming to Pensacola in 2015. On March 5, Flynn said, United will begin daily service to Chicago O'Hare as a normal seasonal addition.

More Southwest changes coming

 Pensacola isn't the only airport Southwest serves that is seeing schedule changes.

"Our network planning teams are doing a lot of reallocating of flights between Southwest and AirTran, based on demand and profitability," Agnew said. "Plain and simple, we have to fly routes that are profitable for us, and high fuel prices are making that tough.

For example, weak demand and high fuel costs resulted in Southwest eliminating its nonstop flight from Houston (Hobby) to Seattle.

Other Southwest schedule changes may be in store in the coming months, thanks to the repeal of what's known as the Wright Amendment.

Passed by Congress in 1979 and named for Texas Congressman Jim Wright, chief sponsor of the amendment, the legislation originally limited most nonstop flights by Southwest, and other regional airlines, out of Dallas-area airports to within Texas and neighboring states.

Congress approved legislation that added additional states to the permissible area in 1997 and 2005.

All provisions of the Wright Amendment will expire in October.

Southwest Vice President Bob Montgomery told Pensacola area business leaders last fall the expiration of the Wright Amendment will be a boon to the airline, freeing it to expand its nonstop, long-haul flights out of Dallas to the large West Coast and East Coast markets.

But whether the Wright Amendment will help or hurt Pensacola's Southwest air service is unknown at this time.

However, most industry experts expect it to help Southwest's bottom line.

Southwest’s Pensacola incentive

Southwest is operating under an air service development incentive program in Pensacola that goes through November 2015.

Dan Flynn, assistant director of airport operations, said the program is designed to help attract new operations or new activity by to some extent helping to offset a portion of the risk faced by the airline.

“I say a portion of the risk because the airline has already expended funds to first and foremost research the market potential for the service, has brought in equipment (aircraft and flight crews) that could be used in other markets, and, in cases such as Southwest, has expended significant funds to outfit and staff a new station,” Flynn said.

The program also is limited with respect to term. It’s designed to help a carrier get its feet on the ground so to speak as it competes with service from the other carriers that may be somewhat established, Flynn said.

At the end of the term, the airport’s position is that at that point, the carrier, through its ongoing activity should hopefully have developed the market to where it is self-sustaining.  Therefore, the airline still assumes a financial risk even during the term of the incentives.

“Is there an element of risk to the airport? Yes because there is the possibility of a carrier pulling a flight or pulling service,” Flynn said. “However, we help mitigate that risk at the beginning by talking with the carrier about their proposed route structure as it relates to our market demographics.  The program is not a blank check.

“We will only provide incentives if our market data also shows the route to be needed or underserved, and supports what the airline proposes.  This in turn helps gives us a certain level of assurance that the service can continue past the incentive term.”

Shannon Nickinson contributed to this report.

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