San Antonio Express-News (Sunday)
Southwest pushes into the hubs of competitors
Southwest Airlines plans to go through the front doors of Houston, Chicago and Miami in a direct challenge to its competitors American Airlines and United Airlines.
Southwest has stuck to the secondary airports in those cities for years. It has flown out of William P. Hobby Airport in Houston, Midway Field in Chicago and Fort Lauderdale/Hollywood International Airport.
The main airports — George Bush Intercontinental Airport in Houston, Chicago O’Hare International Airport and Miami International Airport — are where travelers can primarily catch flights on United Airlines, American Airlines or foreign carriers.
And that’s where the Dallasbased carrier is going, though it will maintain its strength in the secondary airports.
Southwest, United and American are all losing millions of dollars a day, with fewer travelers willing to get on a plane in the middle of the pandemic.
But the brunt of COVID-19 will be over someday, and Southwest is aiming to put itself in a better position when more people are flying.
In a conference call with stock analysts last month, Southwest CEO Gary Kelly said it’s time for the airline to build its presence at the primary airports in Houston, Chicago and Miami.
Even with its losses, Southwest is the financially strongest U.S. airline, meaning it can go on the offensive without United or American putting up much of a fight — that is, offering more flights or cutting fares.
The bottom line for travelers: This will be good news, especially when international flights resume.
Instead of flying on Southwest into Houston Hobby and having to figure out how to get to George Bush Intercontinental, travelers can fly straight to Bush and catch their international flights to Europe and
Asia.
The carrier, however, hasn’t said when it plans to push into Bush Intercontinental.
Southwest’s move will cut into American’s and United’s near-monopoly at their hubs, meaning potentially lower fares.
Having Southwest as an option also will be more convenient for many travelers who live in Houston, Chicago and Miami.
Hobby is only 7 miles from downtown Houston. But much of the explosive population growth in recent years is near Bush Intercontinental.
Hobby is 40 minutes away from Bush Intercontinental — but that’s without traffic.
Ironically, COVID-19 has allowed Southwest to add service
to the main airports in the three cities. The airline has cut flights because of a lack of passenger demand. This means it has plenty of spare planes to put on new routes.
The Southwest strategy can’t sit well with top executives at American and United. It didn’t matter before COVID-19 what the two airlines’ service was like — if you wanted to fly nonstop, they were the only choice.
George Bush Intercontinental is United’s most significant hub. Before the pandemic, the airport saw around 500 United flights per day.
Both United and American have sizable hubs at Chicago O’Hare, and American is the dominant carrier at Miami International.
Kelly detailed Southwest’s plan in last week’s conference call with analysts.
“Houston is sort of a sprawling
metroplex, and Hobby serves Houston well, but it doesn’t serve the north part of Houston, which is where the (population) growth has been over a long period of time,” he said.
Southwest had served George Bush Intercontinental before; its schedule was down to just six flights a day when it pulled out in 2005.
“We had other priorities at the time, and we debated at the time whether or not we were going to be giving up access to a growth region,” he said. “So companies come a long way in 15 years. We’ve had a lot of opportunities, done a lot of good things. But I just felt like, at some point, we wanted to get back into (Bush Intercontinental).”
Miami service begins Nov. 15, and Chicago O’Hare International flights starts on Valentine’s Day.
No-frills Southwest is also counting on the new airports to increase the number of business travelers that fly the airline. With few business travelers flying, however, Kelly said the focus is on leisure travelers for
now.
“If it’s a leisure-oriented world for a while, there’ll be plenty of leisure customers that we’ll be able to take to and from and through Houston Intercontinental,” he said.
In Chicago, Kelly said, Southwest had almost 300 flights a day out of Midway before the pandemic. Once the pandemic is over, the carrier won’t have room to expand at the airport.
“So I just can’t fathom that it’s a good strategy for our company to sit here and say for the next generation we cannot grow in Chicago,” he said. “So you can kind of go through the middle list of what the options are, and I can assure you that trying to expand Midway is not an option. It is just literally not a feasible option.”
Kelly said the pandemic flight cuts at O’Hare opened gates for Southwest.
“O’Hare was real estate-restricted, and now it’s not,” Kelly said. “If we don’t move now, we risk never getting in there. So we’re moving now.”
We’re making it easy for you to keep tabs on San Antonio’s ever-changing economy and business climate. ENdex is ourweekly roundup of leading indicators. The San Antonio Six tracks the stockmovements of some of our city’s largest public companies. On The Barrel
tracks the ups and downs of the cost ofWest Texas Intermediate, theU.S. crude oil benchmark. On The Block brings you the most up-to-date home sales numbers for the San Antonio area. And theUnemployment Line follows area unemployment claimsweek toweek.