Las Vegas Sun

November 29, 2015

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Southwest Airlines positioning itself as national juggernaut


Sun file photo

Southwest Airlines planes sit at McCarran International Airport.

Count on Southwest Airlines being both juggler and juggernaut in the months ahead.

The discount air carrier is by far the busiest airline at McCarran International Airport, with 44.1 percent of each day’s commercial flights — in September it flew more than 1.3 million passengers to and from Las Vegas. But Southwest is still making moves to win more customers’ hearts and money.

Keeping all the balls in the air is Southwest Chairman and CEO Gary Kelly, who relishes the juggler role and is confident that his company can pull it off. By the time Southwest is done with an extreme makeover, it could well be the profit-making juggernaut analysts are expecting.

Here’s what’s on tap:

• Southwest is in the early stages of integrating AirTran, which it is buying for $1.42 billion. The acquisition, announced in September, would enable Southwest to enter the largest market it currently doesn’t serve: Atlanta. It also would give the company more gates at New York’s LaGuardia International Airport and a new presence at Ronald Reagan National Airport near the Capitol in Washington, D.C.

• After months of testing, Southwest is rolling out its in-flight Wi-Fi. The airline announced it will cost passengers $5 per flight to use it.

• Southwest will soon announce whether it will begin flying Boeing 737-800 jets, which are longer and carry more passengers than its current planes. Boeing 737-700 and -300 jets carry 137 passengers. The 800 planes have a greater range, making possible flights to Hawaii.

• The airline unveiled some details about its partnership with Volaris, Mexico’s second largest airline and a discounter in the mold of Southwest. Volaris tickets are for sale on Southwest’s website, and plans include more opportunities to connect each other’s customers at airports where both carriers fly.

• Southwest’s marketing push to emphasize that “Bags Fly Free” has been a big success. Next, the airline plans to emphasize buying on and, after that, pressing that unlike most carriers, Southwest doesn’t charge extra for canceling and rebooking a flight. Executives acknowledge that message may be a little harder to convey.

“We want to be bold, we want to be aggressive, we want to be the agitator. We’re very pro-consumer, we’re very pro-competition,” Kelly said recently. “Without somebody like Southwest Airlines, you don’t have that. You have a very comfortable, country club-like industry.”

Buying AirTran is the biggest project on Southwest’s plate. It’s also the topic with the most unknowns because company executives can’t talk publicly yet about details such as routes and schedules.

Although Southwest will pick up 37 cities on AirTran’s route map and add 138 aircraft, it’s too early to tell how the blending of the airlines would affect Las Vegas.

Southwest has said that it and AirTran would operate independently until details are worked out and they work under one operating certificate.

Most of AirTran’s flights use a hub-and-spoke model, meaning that most of the airline’s flights go to its primary cities of Atlanta, Milwaukee and Orlando, Fla., with connecting flights to 67 airports in the AirTran system. By contrast, most Southwest routes are point to point, meaning that flights could operate randomly among any of the 69 destinations on Southwest’s map.

Most AirTran routes are in the South. AirTran’s routes in the West include cities served by Southwest with nonstop flights to Las Vegas — Los Angeles, San Diego, San Francisco, Seattle and Denver.

Prospective cities on the AirTran route map for Las Vegas include Wichita, Kan.; Des Moines, Iowa; Moline-Quad Cities, Ill.; Bloomington-Normal, Ill.; and Memphis, Tenn.

The deal has been approved by the boards of both airlines, but must be approved by AirTran shareholders and regulators with the Justice and Transportation departments, and the Federal Aviation Administration. Labor unions won’t need to approve the deal, but support it.

The different operations of the two carriers raise many questions, some of which have been answered by Southwest and some that have been deferred.

For example, Southwest has made it clear that AirTran’s assigned seating policy and two-class service on aircraft would go away as soon as the carriers are integrated. But the new cities would get service without baggage fees.

AirTran customers have mixed feelings on the changes. Although some are excited about the potential of lower fares, others aren’t happy about losing the business-class service. There’s grumbling about the Southwest boarding process, once derided by AirTran in television ads as a cattle call.

Atlanta is expected to become a huge battleground for Southwest, which will be going head to head with market leader Delta Air Lines. Southwest commissioned an analysis of Atlanta and determined that its presence could service more than 2 million passengers a year and save consumers more than $200 million with fares below Delta’s.

Bob Jordan, Southwest’s executive vice president of strategy and planning, said that when the integration is complete, Atlanta could become the airline’s busiest station, a title McCarran is barely hanging on to after growth at Chicago’s Midway Airport.

“There weren’t a lot of surprises about AirTran when we did our due diligence, but most of what we did learn was upside,” Jordan said. “We were impressed with its knowledge of Atlanta and of the Boeing 717.”

A longer version of this story has appeared in In Business Las Vegas, a sister publication of the Sun.

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