[font=verdana, arial, helvetica]Thursday March 17, 7:20 PM EST
DALLAS -- Southwest Airlines Co. (LUV), continuing its rapid expansion from Chicago, is adding nonstop flights to seven more cities and boosting frequencies on existing routes, likely putting further downward fare pressure on traditional competitors just as jet-fuel prices are climbing even higher.
The expansion continues the push that discount carriers are making into territories of traditional airlines and underscores the greater heft that low- fare king Southwest, in particular, is gaining. The result has been a drop in overall domestic fares that have also been pushed lower by a glut of seats in the industry. Despite growing demand for travel, operating costs at most airlines are still too high to bring profits amid current fare and fuel-price levels. Southwest has continued to be profitable because of its low operating costs, but profits are still less robust than in the past.
The Dallas low-fare carrier said that between May 4 and July 5, it will add new nonstop service between Chicago's Midway International Airport and Austin, Texas; New Orleans; Tucson, Ariz.; Sacramento, Calif.; and Buffalo and Albany, N.Y.
The service to upstate New York could pressure AMR Corp.'s (AMR) American, UAL Corp.'s (UALAQ) United, and US Airways Group Inc. (UAIRQ), all of which offer nonstop service from Chicago's O'Hare International Airport with much higher last-minute fares than Southwest charges on any of its existing routes. Between O'Hare and Albany, N.Y., for example, those three airlines are charging more than $800 for roundtrip last-minute tickets for weekday travel. Their prices for similar tickets between O'Hare and Buffalo, N.Y., are more than $700 roundtrip. Southwest has a nationwide fare cap of $299 for its one-way fares, so its roundtrip tickets are capped at $598.
Southwest's new nonstop service between Chicago and Sacramento could pressure United, which was recently charging more than $1,500 for a walkup roundtrip ticket on the nonstop O'Hare-Sacramento route it dominates.
In addition to the new service, Southwest is adding greater frequencies on many of its key routes from Chicago including Philadelphia, Houston, and Los Angeles. Part of the airline's appeal to business travelers is its high- frequency flights.
Southwest, which began service from Chicago in 1985, renewed focus there late last year after prevailing in an auction in bankruptcy court for assets of ATA Holdings Corp. (ATAHQ) in Chicago. Southwest gained access to six of ATA's gates at Midway, giving it a greater presence in the Chicago market. The two airlines also entered into a code-share agreement which allows them to expand their route networks by selling certain of each other's flights as if they were their own.
This May, Southwest will start service to Pittsburgh, taking advantage of US Airways' major service cuts there. That follows Southwest's entry last May into the Philadelphia market, another U.S. Airways stronghold, where fares have dropped sharply since Southwest moved in. On the first six routes Southwest began serving from Philadelphia, for example, traffic rose more than 51%, as average fares fell more then 37%, the airline said.
Once Southwest begins its new service announced today, it will operate 192 daily nonstop departures from Chicago Midway to 41 cities. That compares with the 145 nonstop departures it had in late October to 30 cities.
-By Melanie Trottman, The Wall Street Journal; 214-951-7122[/font]
DALLAS -- Southwest Airlines Co. (LUV), continuing its rapid expansion from Chicago, is adding nonstop flights to seven more cities and boosting frequencies on existing routes, likely putting further downward fare pressure on traditional competitors just as jet-fuel prices are climbing even higher.
The expansion continues the push that discount carriers are making into territories of traditional airlines and underscores the greater heft that low- fare king Southwest, in particular, is gaining. The result has been a drop in overall domestic fares that have also been pushed lower by a glut of seats in the industry. Despite growing demand for travel, operating costs at most airlines are still too high to bring profits amid current fare and fuel-price levels. Southwest has continued to be profitable because of its low operating costs, but profits are still less robust than in the past.
The Dallas low-fare carrier said that between May 4 and July 5, it will add new nonstop service between Chicago's Midway International Airport and Austin, Texas; New Orleans; Tucson, Ariz.; Sacramento, Calif.; and Buffalo and Albany, N.Y.
The service to upstate New York could pressure AMR Corp.'s (AMR) American, UAL Corp.'s (UALAQ) United, and US Airways Group Inc. (UAIRQ), all of which offer nonstop service from Chicago's O'Hare International Airport with much higher last-minute fares than Southwest charges on any of its existing routes. Between O'Hare and Albany, N.Y., for example, those three airlines are charging more than $800 for roundtrip last-minute tickets for weekday travel. Their prices for similar tickets between O'Hare and Buffalo, N.Y., are more than $700 roundtrip. Southwest has a nationwide fare cap of $299 for its one-way fares, so its roundtrip tickets are capped at $598.
Southwest's new nonstop service between Chicago and Sacramento could pressure United, which was recently charging more than $1,500 for a walkup roundtrip ticket on the nonstop O'Hare-Sacramento route it dominates.
In addition to the new service, Southwest is adding greater frequencies on many of its key routes from Chicago including Philadelphia, Houston, and Los Angeles. Part of the airline's appeal to business travelers is its high- frequency flights.
Southwest, which began service from Chicago in 1985, renewed focus there late last year after prevailing in an auction in bankruptcy court for assets of ATA Holdings Corp. (ATAHQ) in Chicago. Southwest gained access to six of ATA's gates at Midway, giving it a greater presence in the Chicago market. The two airlines also entered into a code-share agreement which allows them to expand their route networks by selling certain of each other's flights as if they were their own.
This May, Southwest will start service to Pittsburgh, taking advantage of US Airways' major service cuts there. That follows Southwest's entry last May into the Philadelphia market, another U.S. Airways stronghold, where fares have dropped sharply since Southwest moved in. On the first six routes Southwest began serving from Philadelphia, for example, traffic rose more than 51%, as average fares fell more then 37%, the airline said.
Once Southwest begins its new service announced today, it will operate 192 daily nonstop departures from Chicago Midway to 41 cities. That compares with the 145 nonstop departures it had in late October to 30 cities.
-By Melanie Trottman, The Wall Street Journal; 214-951-7122[/font]
