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Southwest sizes up isles for new route

The no-frills airline will decide by year's end whether to buy larger planes to fly visitors here

By Dave Segal

POSTED:
LAST UPDATED: 01:38 a.m. HST, Oct 29, 2010



Hawaii's tourism industry welcomed news yesterday that Southwest Airlines, known for its low cost and no-frills service, might add Hawaii to its route map.

Southwest CEO Gary Kelly said the Dallas-based company will make a decision before the end of the year on whether to add larger Boeing 737-800 airplanes to its fleet, which would "bring us the opportunity to consider a destination like Hawaii."

That pleased state tourism liaison Marsha Wienert.

"With their network of flights, especially in the Midwest, it opens up a whole new market that has been virtually untapped for some time," she said.

Keith Vieira, senior vice president for Starwood Hotels & Resorts in Hawaii, echoed the sentiment.

"This opportunity with Southwest will enable us to better reach their customer base in the Southwest area of the United States, which is a very good market to Hawaii. ... It will be a definite boon to travel for us if they're able to connect to us directly," he said.

Bruce Fisher, founder-owner of Hawaii Aloha Travel (Hawaii-Aloha.com), said more airline seats are always a good thing for Hawaii, but more specifically, Southwest's involvement would be a plus for his agency.

HAWAII DREAMING

Southwest Airlines Co. may begin service to Hawaii if it adds Boeing 737-800 aircraft to its fleet:

» Headquarters: Dallas

» Employees: 35,000

» Daily flights: 3,200

» Destinations: 69 cities in 35 states

» Most served city: Las Vegas (224 daily departures)

» Aircraft: 544 Boeing 737 jets as of June 30, including the 300, 500 and 700 series

» Market capitalization: $10.3 billion

» Exchange: New York (ticker: LUV)

» YTD revenue*: $9 billion

» YTD net income*: $328 million ($435 million excluding special items)

» YTD passengers carried*: 65.7 million

» 2009 revenue: $10.4 billion

» 2009 net income: $99 million ($143 million excluding special items)

» 2009 passengers carried: 86 million

* Year to date through Sept. 30

Source: Southwest Airlines Co.

"For us personally it's really great because Texas is the second most popular place (behind the West Coast) that people come to Hawaii from at our agency," Fisher said. "That would be great news. ... The more airlift the better, the more airlines the better."

As to whether Southwest's entrance would lower fares between Hawaii and the mainland, aviation consultant Mike Boyd said it is not likely.

"What people normally think of with Southwest is low fares, but if they fly between the West Coast and Honolulu, there's already low fares up the wazoo, and on a long haul like that, Southwest doesn't have any cost advantage over, say, Hawaiian Airlines," said Boyd, of the Evergreen, Colo.-based Boyd Group.

"What Southwest is seeing here is it wants the traffic that Hawaii can bring them, but there's nothing where you're going to see $59 fares to San Antonio," Boyd said.

Adding Hawaii would provide a plum destination for regular Southwest customers redeeming their frequent-flier credits.

Southwest, which agreed last month to buy AirTran Airways for $1.4 billion in cash and stock, said because Boeing 737-800s -- a stretched version of the 737-700 -- have more seats, costs would be 10 percent to 15 percent less. The company said the 737-800s would have 175 seats compared with 137 seats on its 737-700s.

The 737-800s would still have higher costs than Hawaiian Airlines' fleet, Boyd said. Hawaiian flies Boeing 767-300 ER (264 seats) and the Airbus A330-200 (294 seats) between Hawaii and the mainland.

Southwest CEO Kelly said yesterday that the earliest Southwest could take delivery of the 737-800s would be 2012.

Hawaiian, which is the top-ranked airline for customer service and has posted 10 straight profitable quarters, said it would remain competitive.

"Hawaiian today competes successfully with just about every other airline in the country, and should (Southwest) decide to enter the fray, it would be no different," Hawaiian spokesman Keoni Wagner said.

In addition to low cost, Southwest is known for its "bags-fly-free" policy and customer service.

"With Southwest, their success over the years is the way they've treated customers," Boyd said. "They may only give you a bag of peanuts, but it's the way they treat customers. Southwest is a company that doesn't have passengers. It has groupies that follow them around."






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