This is a great article I read on Southwest Airlines / AirTran Airways new international service which began this past Thursday May 24, 2012. I will get to experince this new service first hand as I work for Southwest Airlines at John Wayne Orange County Airport (SNA/KSNA) where our flights to Mexico City (MEX/MMMX) and Cabo San Lucas (SJD/MMSD) commence on June 3, 2012. It should prove to be a very interesting experience to be part of as Southwest Airlines adds another chapter to its colorful and sucessfull history.
Michael Carter
Aero Pacific Flightlines
Southwest, which flies more
domestic passengers than any other U.S. airline, is going international.
The airline is picking up AirTran's flights to Mexico and the Caribbean after buying its rival last year. It's getting a new reservations system to handle overseas bookings and is seeking to build an international terminal at Houston's Hobby Airport, where it says it could ultimately add 25 flights abroad a day.
Building an international presence is a significant shift for Southwest, which flew to success by focusing on reliable, low-fare service within the U.S. And it's another sign that the one-time niche carrier is increasingly competing on the same turf as the big network airlines, the so-called legacy carriers, such as United, Delta and American.
"Flying into more congested
markets, now trying to go overseas … it seems like they're becoming a legacy
carrier," says Basili Alukos, an airline analyst at Morningstar. But, he adds,
if Southwest can replicate its domestic network and success internationally, "I
think there's a lot of opportunity there."
Having a footprint beyond the U.S.
was a key reason Southwest decided to buy AirTran, says Bob Jordan, Southwest's
executive vice president and chief commercial officer.
"We have always wanted to get to a
point where we added international capabilities," said Jordan, adding that
AirTran's staff, aircraft, and perch at Atlanta's Hartsfield-Jackson
International, the world's busiest airport, also figured into the decision to
merge.
Combined with AirTran, Southwest
has roughly 25 percent of the U.S. market in terms of passenger traffic, Jordan
says. While there is still room to grow domestically, he says, "You do get to a
point where the next best set of destinations becomes international."
For now, Southwest's international
flights are still operated by AirTran, which flies more than 20 a day and plans
to add more. Service between San Antonio and Mexico City will start Thursday,
while flights from Orange County to Mexico City and Cabo San Lucas, Mexico, will
launch on June 3.
Eventually, however, those flights
will be under Southwest's banner. And Jordan says passengers heading to foreign
destinations will have access to low ticket prices that Southwest is known for
domestically.
"We've looked at the fares, and in
every single case, using our typical Southwest structure, Southwest will be able
to lower fares on the routes we're considering," he says.
Southwest recently announced it
was deferring delivery of 30 Boeing 737-800 jets to cut costs roughly $1 billion
over two years and strengthen its cash flow amid uncertain economic times and
volatile fuel prices. But, it says, the move won't affect its plans to fly
internationally.
Jordan says low prices, a strong
record for on-time flights, and a good staff have fueled Southwest's popularity,
and those hallmarks will stay in place as it stretches abroad.
"None of that changes with
international service," he says. "Our service, our frequencies, our low fares,
all of that comes with it. And that's what makes us different from the (large
network carriers), not whether we do or don't fly internationally. I have no
doubt we'll be successful."
New Terminal Plans
Southwest reached an agreement
last month for a new reservations system that can handle international bookings,
technology it previously lacked.
The airline also is seeking
approval from Houston's city council to build a five-gate international terminal
at Hobby Airport, whose private flights are the only ones that go to foreign
destinations. The city's mayor, Annise Parker, announced her support for the
terminal on Wednesday. Federal aviation officials will also have to give their
OK.
Southwest would like to open the
terminal, which would cost $100 million to $125 million, by 2015. It envisions
it as the launching point for flights into Central and South America in addition
to Mexico and the Caribbean.
A report commissioned by the
Houston Airport System determined that the new portal would bring in an extra
1.5 million passengers annually, lead to 10,000 jobs for the Houston area, and
amount to an economic benefit of $1.6 billion a year.
"The report projects that opening
Hobby to international service would create a more competitive landscape" and
lower fares, Houston Airport System's aviation director Mario Diaz wrote in a
memo to Mayor Parker that supports the new terminal .
Plans were for the council to take
up the matter by the end of May, said mayoral spokeswoman Janice Evans.
United, the biggest of the network
carriers and which counts Houston's larger Bush Intercontinental Airport as its
biggest hub, is not on board with Southwest's plan to turn Hobby into its
international launch pad.
United flies the majority of
passengers headed to foreign destinations from Houston. And it says its own
study found that the proposed terminal at Hobby would result in the area taking
an economic hit.
"Dividing the air service between
the two airports … will mean that Houston is competing with itself for
international connecting traffic rather than competing with very successful
cities that have one international airport, like Atlanta and Dallas," says
United spokeswoman Mary Clark. "We believe it will result in a loss of jobs and
also there will be an economic loss for the city of Houston."
Clark says there is room for
Southwest at Bush Intercontinental.
Southwest's Jordan counters that
United is concerned about itself rather than the community.
"United Airlines doesn't want the
competition," he says. "We're asking to bring more flights, and lower fares for
the people of Houston, and bring in the economic benefits that come from
that."
The Southwest Effect
Southwest's impact on the markets
it enters led to the coining of the term "the Southwest effect" in the airline
industry. It refers to how its low ticket prices would spur competitors to lower
their fares, too.
But nowadays Southwest fares are
not necessarily the cheapest.
Spirit, Frontier
and Allegiant
are considered the truer low-cost carriers, industry watchers say.
And in some markets, airlines such as American or US Airways
have been found to offer a better price, says Henry Harteveldt, an
airline and travel industry analyst.
Additionally, Southwest's growing
foothold in larger, more congested markets could jeopardize the on-time
performance that it's known for, says Akulos, the Morningstar analyst.
Yet, Southwest still stands apart
from its peers, experts say. Unlike the network carriers, it continues to let
passengers check two bags for free. And while travelers flying Spirit or
Allegiant have to pay for everything from booking a ticket online to an on-board
snack, Southwest still offers the services at no cost.
"Southwest won't be as inexpensive
as Spirit or Allegiant on a ticket price alone," Harteveldt says. "But when you
factor in what Southwest includes … Southwest still provides good value."
That value may be ultimately
enhanced by service to far-flung destinations, he says.
"The critical thing in terms of
making sure this is a smart move will be the cities that Southwest is serving …
the number of flights they operate between those cities and the prices they
charge," Harteveldt says. "But I think this is a logical and understandable part
of Southwest's evolution as an airline."
Destinations Abroad
AirTran's current international
destinations that eventually will be flown under Southwest's banner:
-
Bermuda
-
Cancun
-
Nassau/Paradise Island, Bahamas
-
San Jose/Cabo San Lucas, Mexico
-
Mexico City
-
Montego Bay, Jamaica
-
Punta Cana, Dominican Republic
-
Aruba
(Charisse Jones - USA Today)
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