Southwest eyes 4 isle airports and expects to ramp up service

Southwest Airlines plans to start service to Hawaii from one mainland city, then ramp up “very, very quickly” based on having the lowest fares to the islands.

Chairman and CEO Gary Kelly said on an earnings conference call Thursday that the Dallas-based carrier is on track to sell tickets this year to Hawaii, and the airline intends to begin service to Daniel K. Inouye International, Lihue, Kona International and Kahului airports.

Southwest President Tom Nealon said on the call that the airline has laid out its Hawaii schedule but is not ready to announce it. On its first day of Hawaii service, Southwest probably will start with one city pair, he said.

“It’s always been our intention to start modestly, like with probably one city pair and focus that way, and then we would ultimately fly to those four airports that we announced today.”

From the modest start, Southwest expects to grow fast, given its low prices and large presence on the West Coast, Hawaii’s No. 1 market for tourists.

“I think that we’re going to see a really nice ramp-up very quickly because the customers all know us in the West Coast,” Nealon said. “We have the largest customer base of any airline on the West Coast. I think you’re going to see it ramp up very, very quickly, and I think we’re going to lead on pricing. I think that we’re going to generate a lot of traffic very, very quickly.”

Hawaiian Airlines, the state’s largest carrier, whose primary domestic market is on the West Coast, said it is ready for the challenge from Southwest.

“Hawaiian Airlines has been flying to Hawaii from the West Coast for many years, offering unparalleled hospitality, service and value,” Hawaiian spokeswoman Ann Botticelli said in an email. “We are no stranger to competition from the West Coast.”

Nealon said Southwest plans to begin service once it receives the green light from the Federal Aviation Administration. Southwest said it will service Hawaii with a 175-seat Boeing 737 aircraft. The Boeing 737 is the only type of aircraft that Southwest uses.

“Once we get the (FAA) certification, we will begin service,” he said. “So I think the question is, When will we get the certification? We’re hoping to get it sometime later this year.”

Southwest executives didn’t talk about offering interisland service during the call, but have said in the past they are considering it.

Also Thursday, Southwest said bookings have dropped since the April 17 emergency landing of one of its aircraft, which resulted in the first fatality in Southwest’s 47-year history. In that accident a Southwest plane en route from New York to Dallas with 149 people aboard made an emergency landing in Philadelphia after an engine blew apart, knocked out a window and killed Jennifer Riordan, a bank executive and mother of two from Albuquerque, N.M.

“It was a dark day,” Kelly said at the beginning of the conference call.

Southwest said the drop in bookings from their pre-accident run rate will cost the airline between $50 million and $100 million.

The airline said its first-quarter earnings rose 22 percent to $463 million after benefiting from a 28 percent decrease — a savings of $54 million — in income taxes compared with a year ago. Revenue rose 2 percent to a company-record $4.94 billion from the year-earlier period.