Image via Wikipedia Southwest Wants to Fight
By Ted Reed 10/29/10 - 11:04 AM EDT
Recent consolidation means the number of legacy network carriers has been pared back to four while the number of major low-cost carriers will fall to two.
One might think that a pullback to fewer competitors might make the remaining carriers content to sit back and count their money, but that is not the way the airline industry operates.
Instead, American(AMR_) and United(UAL_) have launched new fights for Los Angeles International Airport, and Southwest is mounting assaults on some markets the legacy carriers have long dominated.
In fact, Southwest plans major growth in two of the industry's biggest, most profitable hubs: Newark and Atlanta. The carrier said Thursday it will begin Newark service in March with six daily flights to Chicago's Midway Airport, as well as two daily flights to St. Louis.
Chicago O'Hare is the number one destination from New York LaGuardia, with 1.1 million passengers in the year ending July 30, according to the Bureau of Transportation Statistics. It is the number two destination from Newark with 648,000 passengers during the same period. These are big markets for American and United, with hubs in Chicago; for Continental from its Newark hub; and for Delta (DAL_), which has regional partner Shuttle America operate more than ten daily round-trip flights.
Obviously, a market with nearly two million annual passengers looks like a gold mine to Southwest, which is offering introductory one-way fares of $72. "Southwest is proud to expand its wings into a very popular market and to provide low fare competition," said CEO Gary Kelly in a prepared statement. The carrier also has three daily Midway flights from LaGuardia.
Meanwhile, Southwest also plans aggressive growth grow in Atlanta, where Delta operates the world's biggest hub with more than 1,000 daily departures.
At Southwest's recent media day, Executive Vice President Bob Jordan said that once a proposed merger with AirTran(AAI_) is complete, Southwest can offer two dozen new destinations out of Atlanta to cities that already have a Southwest presence but do not have AirTran service from Atlanta.
"We have the opportunity on some of those routes to drop fares 40%," Jordan said, according to The Dallas Morning News. "It's almost a no-lose if you can go into a market and not only ... offer a great product, but ... bring fares down 40%, stimulate the market [and] provide a lot of competition."
-- Written by Ted Reed in Charlotte, N.C.
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