How Southwest Airlines lost its groove to unexpected costs and challenges

Three years ago, Southwest Airlines started flying out of Bellingham, Washington, a growing city near the Canadian border, aiming to do what it had done in dozens of smaller airports—sell lots of tickets to people who have few other travel options.

- NIRAJ CHOKSHI

Officials and residents in Bellingham, which sits between Seattle and Vancouver, British Columbia, were thrilled as the airline added new nonstop service to cities on the West Coast at affordable prices.

"The community embraced them, and we loved having them," said Rob Fix, the executive director of the Port of Bellingham, which oversees the airport.

But the expansion didn't work as planned. This year, facing unexpected costs and challenges, Southwest left Bellingham and a handful of other cities it had started serving during an ambitious period of growth early in the recovery from the pandemic—markets that it said were underperforming.

The retreat was a telling reversal for Southwest. The airline's simple strategy of providing cheap flights and good service, often at smaller airports near large metropolitan areas, was tremendously successful for a half-century, earning consistent profits as many other airlines stumbled. But its playbook is showing signs of wear, raising questions about whether it can regain its momentum.