Sr. Barco

Southwest's presence abroad could take flight

By Richard N. Velotta / Staff Writer


Southwest Airlines, a company that has focused on offering travelers low fares to U.S. destinations in its nearly 35 years of operation, is studying taking its low-fare model to Mexico and Canada.

In a response to a question at a recent session with students at UNLV last week, Gary Kelly, chief executive of the Dallas-based airline, said the airline—the busiest at McCarran International Airport—has begun the preliminary work of developing computer software to handle some of the transactions that would occur with flights to international destinations.

Kelly cautioned that the preliminary work doesn't mean Southwest has committed to flights and that the process of developing the software could take two to three years.

Kelly also said Southwest is in the initial stages of seeking certification to fly its twin-engine aircraft over water. That, he said, could open the door to flights to Hawaii or to the Caribbean.

Southwest has backed away from international flights in the past, citing numerous lucrative domestic markets that are much easier to serve. But the low-cost airline market has gotten more competitive in recent years with carriers such as JetBlue and AirTran gaining market share and US Airways revising its business model to attract more customers.

Kelly said that preparing for international flights gives the airline more options when aircraft is delivered from Boeing, which manufactures the twin-engine 737 that Southwest uses exclusively.

To serve destinations in Mexico and Canada, Southwest would have to seek U.S. Department of Transportation approval as well as permission from regulators in those respective countries. But in the early stages, Kelly said the company has to do its own internal preparations in order to sell tickets in international markets.

"We're talking about things like other countries' taxes and fees, currency conversion issues and working in other languages," Kelly said.

As for Hawaii and Caribbean service, Southwest must get special certification and employees receive special training for over-water flights. Southwest's Boeing 737-700 jets have the range to fly from the West Coast to Hawaii, but planes that make the run would have to have special safety equipment, including life rafts and employees who have received special training.

Southwest recently announced plans to offer Hawaii as a destination through its code-sharing agreement with ATA, which offers nonstop flights between Las Vegas and Honolulu.

Kelly was a guest of UNLV's Business Forum speaker series, sponsored by Wells Fargo Bank. Kelly addressed students in a morning gathering and local business representatives in a lunch at the Renaissance Hotel.

Other highlights in Kelly's appearances:

• Southwest will continue to grow at McCarran International Airport with at least 10 new round-trip flights planned at the airport this year. The airline flies about 215 flights a day, mostly from the airport's C gates. A construction project to build a bridge linking the B and C gates will enable Southwest to offer more flights from vacant B gates. The new connector also will enable US Airways to offer additional night flights from the C gates in the late hours.

• Kelly affirmed that the company has no plans to move its corporate headquarters from Dallas, despite efforts by several cities, including Phoenix and Albuquerque, to offer the airline a new home. Speculation was raised when Kelly commented that restrictions of the Wright Amendment made it difficult to conduct corporate business from Dallas. The Wright Amendment restricts long-haul flights by Southwest from its headquarters at Dallas' Love Field.

• Kelly remains optimistic that the Wright Amendment will someday be repealed. He said he is grateful for support from Sen. John Ensign, R-Nev., who introduced legislation in the Senate to repeal the Wright Amendment, and from Reps. Jim Gibbons and Shelley Berkley for their support.

• He explained that the airline's fuel-hedging program has been responsible for keeping Southwest profitable in the last year. The company is 73 percent hedged this year at $36 a barrel, giving it a cushion in 2006 when fuel is running at more than $60 a barrel. Last year, the company saved $900 million with an 85 percent hedge at $26 a barrel.

• Kelly said it's possible Southwest would add a new destination in 2006. The airline recently added Fort Myers, Fla., and Denver to its route map and Kelly said the Las Vegas-Denver route has been a success so far. Kelly did not hint where Southwest would go next, but analysts have speculated that Charlotte, N.C., and Minneapolis are on the airline's short list of potential destinations.

Richard N. Velotta covers tourism for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 259-4061 or by e-mail at [email protected].
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G-Dog

Southwest will have no problem. They have their crap together.

contrails

I agree. They are going to need to fly internationally soon in order to compete. United, American, etc. are getting their costs down to the point where SWA is no longer THAT much cheaper domestically. Which would a frequent flyer prefer? They could use their miles to go to Europe, or the lower 48.

When SWA starts international it'll probably be a very well run operation just like their current one is.

captjns

With the efficiency that SWA runs their operations... they should have no problem flying international routes other than opting for longer range ETOPS aircraft such as the 737-900ER variant to their fleet. Ther are many smaller secondary international airports that serve major cities such as London, Paris, Madrid, Barcelona to name a few that meets SWA's operational criteria.

cactusmike

Westjet, Canada's version of SWA, already flys YVR to OGG and HNL. The question is will SWA pay for the additional training and equipment? There would have to be a dedicated fleet within a fleet to operate 180 min ETOPs or else you would be carrying a heck of a lot of rafts and vests around the system each day that would never go near water.

Do you guys still wire off all the goodies like A/Ts and VNAV? I remember the rationale was for standardization with the -200s but you guys have mostly NGs now, right? The HUD is way cool.

4th Level

Operating a fleet within a fleet wouldn't be too much of a problem - we ran the -200's that way for a few years. My guess would be that we (if this were to happen) equip the whole fleet to keep things standardized.

Yea, we still have the AT's and the VNAV disabled. The VNAV "info" is there on the PFD, you just have to manually start down at the top of descent. No big deal really, but AT's would be nice on the long hauls.

Do any of you guys know if places like Puerto Rico and the rest of the Caribbean can effectively be run without rafts? We have added the vests, so were good out to 162nm from shore, but I don't know if that's enough.

ryane946

You reminded me of those old United commercials that use to poke fun at Southwest's limited route map. Our miles are better than their miles or something like that. Paris, France or Paris, Texas?
I think legacy carriers should bring back these kind of adds. It may shift some frequent fliers from low cost carriers to full service carriers.

Savannahguy

The thing is, everytime SWA does something like this, they become less and less like the original business model that made the successful, and more like the competition. They are giving up their advantages in order to contiue to grow.

It also signals that the easy pickings that SWA used to enjoy have dried up. If they are even considering a move like this, added to the moves they have made in recent past (such as going into DIA or PHL), that means that they now have no choice but to enter into higher cost markets to continue to grow.

Watch, In the future they will make an announcment about adding additional fleet types.

Bet me.

Daytripper

Agreed. I would imagine the legacies welcome this....getting out of their niche. Customs...longer turn times, additional maintanence, ETOPS, and the need for feed, which means interlining bags. Go ahead, jump in that briar patch.

Imeneo

I would prefer that southwest revise their horrific boarding scheme first before they concentrate on further expansion. From personal experience alone I really don't think the "choose your own seat" philosophy actually gets the plane off the ground faster... especially since everyone boarding the plane does not take the first open seat.... but rather seem to pick and choose preferred seating which holds up the line way up the jetway on a full flight.

The best part about their seating system is the fact that if you board early you can avoid the screaming babies, and hyperactive kicking kids.

I personally would love to see Southwest go someplace outside the U.S., they certainly are due for it after 30+ years of operation.