ANALYSIS: Southwest's evolving network

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Dallas-based Southwest Airlines is months away from locking in place the final piece of its network evolution – a process that started more than three years ago when it closed on its acquisition of AirTran Airways.

The last AirTran flight will operate on 28 December, with a scheduled departure from Atlanta to Tampa – a route that was AirTran’s inaugural flight back on 26 October 1993. The AirTran brand will then be phased out, completing the final step of the integration between the two carriers since the acquisition was first announced in September 2010.

Bolstered by the AirTran purchase and regulatory developments at key airports in recent years, Southwest’s network has benefited as it gained access to strategic flight slots and high-yield markets. In January 2015, it will serve 91 cities in its network, up from 64 in January 2009, Flightmaps Analytics shows.

Southwest network, January 2009

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Southwest network, January 2015

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Source: Flightmaps Analytics

The acquisition of AirTran added international flights to Southwest’s previously domestic-only portfolio and gave it highly sought-after access to slot controlled airports such as Washington National and New York LaGuardia.

On 1 July, Southwest operated the first of AirTran’s international flights and is in the process of converting AirTran’s international flights to Southwest operations. AirTran had served seven international destinations, all in Mexico and the Caribbean: Los Cabos, Mexico City, Cancun, Nassau, Montego Bay, Punta Cana and Aruba.

International flights now make up less than 1% of Southwest’s total available seat miles, but the airline’s executives have indicated this is set to grow as it adds more international destinations. The carrier sees as many as 50 new destinations outside of the continental USA.

“There is a great number of options on where we can fly,” Southwest’s vice president of network planning and performance Andrew Watterson tells Flightglobal, adding that the airline is limited by only the range of its Boeing 737s. Watterson was speaking on the sidelines of the Boyd Group International Aviation Forecast Summit in Las Vegas.

While currently focused on converting AirTran’s international flights to Southwest, the airline believes that new international opportunities will open up in 2015, particularly as the carrier’s investment in Houston Hobby is completed, points out Watterson.

Southwest is funding a new terminal at Houston Hobby, to be completed in the fourth quarter of 2015, to enable the airport to handle international flights. The airline has not said where it will fly to from Houston Hobby, but has indicated strongly that it is eyeing cities in Latin America and the Caribbean.

“Given that we already have dots south of Houston, it would make sense,” says Watterson.

Further down the road, Southwest is also managing a makeover of Fort Lauderdale airport’s terminal one to allow the facility to handle international flights. This is expected to be ready in 2017. The Caribbean is a likely region to receive new international flights from Fort Lauderdale, says Watterson.

In the continental USA, Southwest’s network will be boosted on 13 October when the Wright Amendment is repealed at its Dallas Love Field base. In place since the 1970s, the Wright Amendment currently limits where airlines can serve from Love Field. Carriers can operate non-stop to only airports in Texas, Alabama, Arkansas, Kansas, Louisiana, Mississippi, Missouri, New Mexico and Oklahoma. Non-stop flights to other US states are allowed only if operated on aircraft with 56 or fewer seats.

Southwest’s 737s, therefore, have been operating one-stop service to these other states on routes originating in Love Field.

Ahead of the Wright Amendment’s repeal on 13 October, Southwest has so far announced 17 additional destinations from Love Field on top of the 16 it currently serves. Beginning 13 October and through January 2015, Southwest will launch service from Love Field to Baltimore/Washington, Chicago Midway, Denver, Las Vegas, Los Angeles, Orlando, Washington National, Atlanta, Fort Lauderdale, Nashville, New York LaGuardia, Phoenix, San Diego, Orange County, Tampa, San Francisco and Oakland.

By 6 January 2015, Southwest will serve 33 destinations non-stop out of Love Field.

Love Field is not the only airport where Southwest is growing. The carrier emerged as the biggest winner of slots divested by American Airlines earlier this year as a condition for getting regulatory approval for its merger with US Airways. Southwest gained 27 slot pairs at Washington National and 11 at New York LaGuardia, both high-yielding airports that are popular with the corporate traveller segment.

The additional slots at Washington National will allow Southwest to launch service to seven new destinations by 2 November: Akron-Canton, Chicago Midway, Dallas Love Field, Indianapolis, Nashville, New Orleans and Tampa. Southwest will also use some slots to add additional flights on existing routes to Houston Hobby and St Louis.

At LaGuardia, Southwest’s 11 slot pairs include five pairs it had already leased from American. The six new slot pairs were used to add flights on existing routes from LaGuardia to Nashville, Akron-Canton, Houston Hobby and Chicago Midway

The new international and domestic flights will boost the percentage of long-haul flights in Southwest’s network to over 20% in 2015, says Watterson. This compares with the 17% share that long-haul flights held in Southwest’s network in 2009.

In the meantime, short-haul flying has gone down in Southwest’s network, shrinking to 43% in 2013 from 53% in 2009, says Watterson. Medium-haul flights took up a 37% share in 2013, up from 29%.

Since 2009, Southwest has cut 123 routes from its network, says Watterson. But it has also added 162 routes since then, he notes.

Since the merger, 18 AirTran destinations - mostly smaller cities - have been eliminated from Southwest and AirTran’s combined network: Knoxville (Tennessee), Allentown (Pennsylvania), Lexington (Kentucky), Dallas-Fort Worth (Texas), Atlantic City (New Jersey), Huntsville (Alabama), Charleston (West Virginia), Bermuda, Harrisburg (Pennsylvania), Miami (Florida), Key West (Florida), Newport News (Virginia), Moline (Illinois), White Plains (New York), Branson (Missouri), Sarasota (Florida), Asheville (North Carolina) and Bloomington (Illinois).

While Southwest enters 2015 with a stronger network now that the integration of AirTran is almost complete, work continues in the background to prepare the airline for future expansion, particularly on the international front. The carrier is in the process of harmonising its domestic and international reservations systems, both supplied by Amadeus, to enable capabilities like interlining and codesharing with international carriers.

Watterson reckons this will take about two to three years to complete, and will open up possibilities for international airlines to feed into Southwest’s network. “Once we have the capabilities, we will definitely be open to it,” he says.