LUV- Southwest Air going coast to coast:
LUV is a long time holding of mine and, based on this article, will continue to be:
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U.S. BUSINESS NEWS
Southwest Airlines Is Set to Begin
Nonstop Transcontinental Flights
By ELLIOT SPAGAT
Staff Reporter of THE WALL STREET JOURNAL
Southwest Airlines, whose no-frills, low-fare flights have reshaped the U.S.
airline industry, is finally moving into nonstop coast-to-coast trips.
By launching flights on Sept. 15 between Baltimore-Washington International
Airport and Los Angeles International Airport for an introductory one-way $99
fare, Southwest moves directly into territory long dominated by bigger airlines
such as AMR Corp.'s American and UAL Corp.'s United that often charge
upward of $1,000 each way for transcontinental service.
The long flights carry some risk for Southwest because they remove one key
cost-cutting weapon the airline has on short hops: a quick turnaround time. On
transcontinental routes, "you can turn the plane around as fast you can, [but]
you're still only getting one round trip in a day," said Brian Harris, an analyst at
Salomon Smith Barney.
Kevin Murphy, an analyst at Morgan Stanley, calls the long routes the "last
refuge" for the full-service carriers, and Southwest's entry reflects a growing
threat to full-service airlines from low-fare competitors.
"It's more of the same," said James Higgins, an analyst at Credit Suisse First
Boston. "Low-cost, lower-fare competitors going into long-haul markets
certainly doesn't help the industry with its recovery."
When it enters new markets, Southwest typically drives fares down at
incumbent carriers. Southwest's current unrestricted price for one of its
longest routes, Baltimore to Los Angeles, is $644 round-trip, making one stop.
By comparison, United Airlines currently charges $2,163 round-trip for
nonstop service between Baltimore and Los Angeles.
Dallas-based Southwest, the nation's seventh-largest airline, said it hopes to lure
cost-conscious business travelers to its transcontinental flights. Through the
economic downturn, business travelers have shunned high-fare, unrestricted
tickets and opted increasingly for low-fare carriers.
Indeed, Southwest was the only major airline to report a profit in the first
quarter this year, squeaking out net income of $21.4 million, while the other
eight major carriers had a combined net loss of $2.27 billion.
Though 80% of its trips are 750 miles or shorter, Southwest already flies long
nonstop routes such as Providence, R.I., to Phoenix, which is only 50 miles
shorter than the Baltimore to Los Angeles run, and offers one-stop and
connecting service on coast-to-coast itineraries. But the airline has cautiously
waited before starting nonstop transcontinental service.
Over Thanksgiving weekend in 1998, Southwest ran some nonstop test flights
from Baltimore to Oakland, Calif., and discovered that crews struggled to find
room on planes for garbage, which ended up jammed in bins and cubbyholes.
Now, instead of plastic snack trays, the airline uses cardboard trays that can be
folded to save space.
The timing appears right for many reasons beyond travelers' lust for low fares
and resolution of the garbage issue. US Airways Group has reduced service
sharply in Baltimore, which is Southwest's largest city on the East Coast.
What's more, low-fare upstart JetBlue Airways has staked its claim to long-haul
nonstop routes, flying from Washington's Dulles International Airport to Long
Beach, Calif., and to Oakland with one-way fares ranging from $129 to $299.
After Sept. 11, Southwest kept flying a full schedule and avoided layoffs while
rivals scaled back. Southwest expects to increase capacity 8% in the third
quarter and 5% for the entire year, Chief Executive James Parker told a
conference of airline analysts Tuesday.
Southwest's introductory $99 one-way fare is good for travel through Oct. 25.
The airline hasn't yet announced regular prices for the nonstop Baltimore to Los
Angeles flights, but the airline charges $322 one-way for an unrestricted ticket
on its one-stop or connecting service on that route.
To offer the new service, Southwest will take delivery of four aircraft that it
deferred, bringing its total fleet to 370 Boeing 737s. It has accepted 18 of the
19 jets that it postponed last fall. |
