Domestic giant Southwest sticks nose into international air
— -- Southwest, which flies more domestic passengers than any other U.S. airline, is going international.
The airline is picking up AirTran's flights to Mexico and the Caribbean after buying its rival last year. It's getting a new reservations system to handle overseas bookings and is seeking to build an international terminal at Houston's Hobby Airport, where it says it could ultimately add 25 flights abroad a day.
Building an international presence is a significant shift for Southwest, which flew to success by focusing on reliable, low-fare service within the U.S. And it's another sign that the one-time niche carrier is increasingly competing on the same turf as the big network airlines, the so-called legacy carriers, such as United, Delta and American.
"Flying into more congested markets, now trying to go overseas … it seems like they're becoming a legacy carrier," says Basili Alukos, an airline analyst at Morningstar. But, he adds, if Southwest can replicate its domestic network and success internationally, "I think there's a lot of opportunity there."
Having a footprint beyond the U.S. was a key reason Southwest decided to buy AirTran, says Bob Jordan, Southwest's executive vice president and chief commercial officer.
"We have always wanted to get to a point where we added international capabilities," said Jordan, adding that AirTran's staff, aircraft, and perch at Atlanta's Hartsfield-Jackson International, the world's busiest airport, also figured into the decision to merge.
Combined with AirTran,. Southwest has roughly 25% of the U.S. market in terms of passenger traffic, Jordan says. While there is still room to grow domestically, he says, "You do get to a point where the next best set of destinations becomes international."
For now, Southwest's international flights are still operated by AirTran, which flies more than 20 a day and plans to add more. Service between San Antonio and Mexico City will start Thursday, while flights from Orange County to Mexico City and Cabo San Lucas, Mexico, will launch on June 3.
Eventually, however, those flights will be under Southwest's banner. And Jordan says passengers heading to foreign destinations will have access to low ticket prices that Southwest is known for domestically.
"We've looked at the fares, and in every single case, using our typical Southwest structure, Southwest will be able to lower fares on the routes we're considering," he says.
Southwest recently announced it was deferring delivery of 30 Boeing 737-800 jets to cut costs roughly $1 billion over two years and strengthen its cash flow amid uncertain economic times and volatile fuel prices. But, it says, the move won't affect its plans to fly internationally.
Jordan says low prices, a strong record for on-time flights, and a good staff have fueled Southwest's popularity, and those hallmarks will stay in place as it stretches abroad.
"None of that changes with international service," he says. "Our service, our frequencies, our low fares, all of that comes with it. And that's what makes us different from the (large network carriers), not whether we do or don't fly internationally. I have no doubt we'll be successful."
New terminal plans
Southwest reached an agreement last month for a new reservations system that can handle international bookings, technology it previously lacked.
