Southwest Airlines Co. plans to challenge Hawaiian Airlines for control of Hawaii’s inter-island market shortly after beginning flights to the state from the mainland, a top executive with the Dallas-based carrier says.
The short, high-demand, inter-island flights are squarely within Southwest’s wheelhouse, Southwest revenue chief Andrew Watterson said in an interview with Bloomberg News today.
“We see that big market with higher price points and it’s short haul, which is what we’re known for,” said Watterson, who was at Hawaiian Holdings Inc. before joining Southwest in 2013. “The size of the market and the prices led us to see that we can do it profitably.”
The Dallas-based discounter will enter a market littered with the ghosts of other airlines that took on Hawaiian and failed. Island Air ceased flying after filing for bankruptcy in 2017, a fate shared by Aloha Air in 2008. Mesa Air ended operations of its Go! discount unit in 2014. Southwest hasn’t disclosed when it will start flying to or within Hawaii, having received regulatory approval just this week.
The carrier will fly the 175-seat Boeing Co. 737-800, shifting later to the 737 Max carrying the same number of passengers. Hawaiian operates Boeing 717s with 128 seats between the islands, while its Ohana commuter unit uses 48-seat turboprops.
“If you look at the history of inter-island flying, it works with one,” said Andrew Harrison, chief commercial officer of Alaska Air Group Inc., which flies to Hawaii but not between islands. “It’s never worked with two. There’s a reason that Hawaiian flies the airplane that they do.”
Watterson is undeterred. Southwest can operate the larger planes more efficiently than the 717s, which it found were more costly than 737s. A limited number of frequencies at peak travel times means “I’m not worried about filling them up,” he said.
“What people miss is that intra-Hawaii is a big market,” he said. “It’s larger than intra-Texas. We built our airline on intra-Texas using the 737.” The inter-island market averaged 6,515 people a day traveling each way in the year through Sept. 30, Watterson said, citing U.S. Transportation Department data that don’t include connecting passengers. Texas had 6,212.
In response, Hawaiian Airlines issued a statement today that promoted its experience in the inter-island market and its competitiveness.
“We successfully compete every day against the biggest airlines in the world with award-winning service, leading punctuality and unmatched value,” the company’s statement said. Hawaiian touted its 202 inter-island flights a day, and its 12 direct flights to mainland cities, “soon to be 13 with Boston – more than any other carrier”
Southwest and rivals once priced one-way tickets within Texas below $50 but increased the fares over time, boosting profits. Today, the cheapest one-way fare available from Houston to Dallas was $109.30, according to a Google Flights search. Three major carriers now fly throughout the state.
Hawaiian Airlines’ lowest one-way inter-island fares priced today for off-peak travel ran from about $70 to $95.
Hawaiian’s statement noted, “Our average one-way Neighbor Island base fare (excluding taxes and fees) was $71 for the last four quarters” ending in the second quarter of 2018.
Southwest received U.S. Federal Aviation Administration approval on Wednesday for Hawaii service and said it would lay out details for its service “in the coming days.”
The airline initially will fly from the California cities of San Jose, San Diego, Sacramento and Oakland. Its destinations will be Honolulu, Maui, Kauai and the Big Island.
Star-Advertiser staff contributed to this report.