hroughout
Southwest
Airlines' three decades in the air, its trademark has been sneaking up
on big-city markets, starting service at lesser-used airports and luring
passengers with tantalizingly low fares.
But now Southwest is shaking up air travel throughout the Northeast
with a direct assault on Philadelphia, the nation's fourth-biggest market
for air travel.
Southwest will not start flying out of Philadelphia until May, but it
has already started running commercials there promising low fares and
friendly service. In response, US Airways, the dominant carrier in
Philadelphia, has cut some fares and vowed not to be undersold.
At the same time, though, it is pursuing a less-confident-sounding Plan
B, by putting its Philadelphia operations up for sale. Saddled with high
operating costs, US Airways is already wobbling financially, having
emerged from Chapter 11 bankruptcy protection just 10 months ago; some
fear that Southwest's assault could topple it right back in.
That's not all. Southwest's designs on Philadelphia also challenge
airlines serving New York, like Continental at Newark Liberty
International Airport and even JetBlue
at Kennedy International, which draws bargain hunters from across the
region.
Southwest's thrust into a major Northeast market also worries airlines
like American and United, which are already battling for passengers to
cities like Los Angeles and Chicago, and are loath to have another big
city invaded by Southwest, the low-cost, low-fare leader. All of this
delights ticket buyers, from individuals just looking for a good deal to
corporate travel managers as far away as northern Virginia.
Kimberly Long, president of the Philadelphia Business Travel
Association, said that many business travelers had "the basic feeling
of being held hostage" to US Airways for years, because it accounts
for more than two-thirds of the flights into and out of Philadelphia
International Airport.
In a previous job as the corporate travel manager for a bridal company,
Ms. Long said, she flew regularly on US Airways to St. Louis, often paying
as much as $1,200 round trip for a full-fare ticket; colleagues paid $800
round trip to fly to Boston. Alternatives were time-consuming and
inconvenient, she said, so "you just had to pay it."
Those days will soon be over. Though Southwest has not announced the
prices on its Philadelphia routes, no ticket on Southwest costs more than
$299 round trip, and the airline regularly offers one-way fares for as low
as $34 if purchased on the Internet.
Southwest's move on Philadelphia is not without risk. The airline has
become the industry's most profitable, and the most highly valued among
investors, by running its operations like clockwork. But the unpredictable
weather, crowded skies and frequent air travel delays in the Northeast
"will make it difficult to operate its schedule smoothly," said
Roland T. Rust, chairman of the marketing department at the University of
Maryland's business school.
And by entering a market heavy with business travelers, a profit
redoubt for traditional carriers, Southwest may invite a showdown with
major carriers that many in the industry have been waiting for.
"Southwest has traditionally engaged in asymmetric warfare,"
said Professor Rust, referring to the approach of using secondary and
suburban airports to serve major cities. Its move into Philadelphia may
signal that it thinks US Airways is weak enough "that it can be taken
on directly," he said.
US Airways is vulnerable, Professor Rust said, adding, "Southwest
will hammer US Airways in Philadelphia."
Before Southwest even starts flying in Philadelphia, not only US
Airways but other competitors there - including low-fare competitors like
ATA Airlines - have vowed to battle back, promising what one aviation
industry consultant predicts will be one of the fiercest contests the
airline industry has seen in years.
The last such battle, said the consultant, Michael Allen, chief
operating officer of Back Aviation, was a decade ago, when Southwest
arrived in Baltimore. At the time, US Airways was the largest airline in
Baltimore. By last year, however, Southwest accounted for 44 percent of
all flights and US Airways only 10 percent.