Southwest Airlines Continues to Expand Service

Friday, December 19th, 2008  

The nation’s largest low-cost-carrier (LCC), Southwest Airlines, is making aggressive plans to expand their service despite the poor state of the airline industry.  Southwest avoided the early stages of the crises brought on by high fuel prices.  The airline purchased options that allowed it to fix its fuel price.  Whereas other airlines have had to scale back operations and raise fares significantly, Southwest has only had to do so slightly. 

Southwest recently decided to challenge the Northwest/Delta stranglehold in Minneapolis.  When the LCC announced its fares (which were as low as $69 one way), Northwest immediately announced similar fares.  This is one example of how cheaper carriers affect the competition in a way that is positive from a consumer’s standpoint.  Southwest’s business model has proved successful.  Can the legacy carriers keep their prices in line with this upstart while still maintaining a profitable business?

Southwest announced its newest destination recently.  The airline surprised many by saying that it had purchased 7 take-off and landing slots at New York’s LaGuardia Airport.  This will be the carrier’s first service to the Big Apple.  Currently, they fly to Long Island's tiny MacArthur Airport.   

Southwest usually avoids major airports, instead choosing smaller secondary airports for a majority of their flights.  Chicago Midway, Dallas Love Field and LA Burbank are examples of this strategy.  But in both New York and Minneapolis, the airline has chosen to fly directly into large airports and compete with large carriers.   

Some people question whether LaGuardia is a good option.  To begin with, Southwest will have only 7 flights daily.  They will face stiff competition if they want to expand beyond that.  Also, the busy airport is prone to delays, which could put a wrinkle in Southwest’s service system-wide. 

But the LaGuardia decision shows that this upstart is not afraid to tangle with legacy carriers on their home turf.   

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