Back at the Southwest Halloween contest last month, the planning group had us try to guess what the next Southwest city would be. Holly Hegeman of PlaneBusiness put down three letters – LGA. It appears that she was right. Southwest is trying to put together a deal that would secure slots at New York’s 
LaGuardia airport. Meanwhile, Virgin America is saying that it can’t get gates at O’Hare even though the airline already said it would be flying there. Sounds like one airline is far more determined to grow than the other.
Let’s start with Southwest. The airline has put a bid in to pay $7.5 million for ATA’s operating certificate. The only reason they appear to want this is for the LaGuardia slots to fill the giant hole in their route map. (I believe they lost their Washington/National slots long ago, so that shouldn’t be part of the package.) Now don’t freak out, Southwest employees. This isn’t yet another codeshare announcement. ATA is toast, and this is just an effort to buy the slots to be flown by Southwest airplanes.
Clearly this is a big deal, but this doesn’t mean Southwest will get in immediately. It’s always possible that someone else will put a bigger bid down for the assets, and then we could see a bidding war. (Grab some popcorn!) But even if they don’t win this round, they’re clearly stating that they plan on finally entering New York City. It’s going to happen at some point, and I’d put my bet down that Chicago/Midway will be one of the first markets. (Yep, those Delta flights on the same route would be gone in two minutes.)
They’re not going to take over New York with this initial move, but they will certainly cause a big headache for the other carriers. It’s bold, and it’s a smart move. Southwest needs to be in New York, especially if it wants to be a bigger player in the business world.
On the other side of the coin, we find Virgin America. The airline had announced plans to start flying to Chicago/O’Hare this fall, but then that was pushed back. Now a Chicago Tribune article says that Virgin America can’t find gates so it may decide soon not to go into the airport after all.
Something here doesn’t smell right. I have no doubt that they can get gates if they want them. They could always fly out of the mostly (but not entirely) international Terminal 5 since those gates are controlled by the city. Or I imagine some airline would be willing to sell them a gate or at least partial use of one. It says they’ve only spoken with United, American, and Delta. What about US Airways? I’m pretty sure those guys would sell their mothers if they could make enough money on the deal. Or what about one of the many other carriers that fly to the airport?
It sounds to me like they may want gates, but they don’t want them THAT much. Unless the Tribune article is inaccurate, it just doesn’t sound like they’re really exhausting all options here. Definitely an interesting contrast between two airlines’ efforts to get into crowded airports. One is willing to go a lot further to make it happen.
17 comments on “Southwest Wants to Fly to LaGuardia, Virgin America Not As Interested in O’Hare”
CF: You are correct that the DCA slots were re-distributed because the type ATA had were non-transferrable (not even for a $200 change fee). If Southwest is accomplishing this by purchasing ATA’s operating certificate, what would the path/options be for using that to allow Southwest to fly internationally with their own fleet? Also, are the slots AA abandoned available and do you think they’ll go after those to add flights?
I’m guessing the negotiations for VX at ORD are going something like this:
“Sure we’ll sell you a gate, Virgin. How about (pinkie to face) ONE HUNDRED BILLION DOLLARS?”
Expect to see MIA or FLL be their next city.
GREAT move on the part of WN. It seems almost natural that they would purchase ATA’s slots, and your point about LGA service fitting their new model of attracting business pax is an excellent one. Islip just isn’t going to cut it when you want to be on the 6 a.m. flight in and the 4 p.m. flight out, same-day. There is a serious need for shuttle-like service between Chicago and New York, and that DL flight to the marine terminal at LGA just doesn’t cut it. Midway is far more convenient than ORD for this sort of thing, and I would imagine that Southwest could probably achieve high load factors on 6 or 8 roundtrips per day between MDW-LGA alone if, although I’m sure there’s no gate capacity at LGA for that. Still, I often wax nostalgic about ATA’s reliable, affordable, frequent service between Midway and LGA, and I feel as though this would restore that option.
The Virgin America piece is disappointing, but this isn’t surprising. This is going to sound absurd, but it almost seems as if Chicago doesn’t quite fit the image they’re trying to sell, so they’re not nearly as eager to get in the game here as they are to get into somewhere like the Miami area, as Eponymous asserted. Am I wrong in tagging VX’s marketing model as more of a high-end shuttle between “chic” coastal cities (NYC, LA, San Francisco, Miami, etc.) than a true business carrier?
I think you’re being entirely unfair to Virgin here. The problem is that gates at ORD are controlled by the airlines under long term leases. UA doesnt want to give them up because then Virgin would fly to SFO or IAD. AA doesnt want to give them up because of LAX and JFK. DL/NW doesnt want to give them up because of JFK or SEA. And US doesnt want to give them up because of LAS. It’s quite simple when you think about it.
Why would any company give access to their market to a competitor, even at any price? No matter how cash-strapped an airline is today, they’re not going to give up their market share to a competitor. Its just not good business.
This is amazing news!!! I can’t wait to see this service. I was a little excited about MSP, but not really since I don’t see myself travelling there for any reason. But to LGA! Now we’re talking!!! I hope Southwest wins the bid and starts service ASAP… I miss ATA’s service there.
As for Virgin America…tough cookies. If they really want it, they’d get it. Not much sympathy there.
Southwest into LGA.. who would’ve thought? I wonder given LGA’s delays how this’ll affect the system? Or will they try to keep planes routed through LGA on lines that go there multiple times?
Shane – I think they’re really just doing this for the slots and nothing else.
eponymous – Virgin has always said that it wants to fly to main airports, so I would imagine we’ll see Miami and not Ft Lauderdale. It’s funny though – Miami is one of the most expensive airports around and they’ll probably be willing to pay for that. . .
Kevin – Not all gates are controlled by airlines. They could fly out of Terminal 5 by dealing with the city, but it will likely be more expensive. I’m sure some airlines would also be willing to deal. US Airways doesn’t care about Vegas if they can make some money selling the space. The point is that if Virgin really wanted to be in Chicago, they could make it happen. If they’re more tentative about it, they shouldn’t have bothered publicly announcing their intentions.
FLL IS the nicer airport than MIA- though yeah, MIA is my first bet, because they could link up with VS there(one thing is nobody is doing LAX-FLL these days, so they would have that route to themselves).
My guess is (as I implied) that the amount of money they found out they’d be paying for gates doesn’t make ORD a good enough target unless/until their network is further along- and that it was more than they figured originally.
I kind of wonder about why they couldn’t use the common use gates at T5 (at least to get off the ground at ORD) myself- yeah, it’s the International Terminal and a pain if you need to fly another domestic carrier, but who’s going to be flying VX and connecting to another airline at ORD (people avoid connecting at ORD on basic pinciple anyway, let alone switch carriers)? Besides, that’s what they are doing at their SFO hub, anyway- flying out of common use gates in the International Terminal…
-shrug-
Hey Crankster– What do you think about the possibility and rumors about SW + AirTran as a way they could break into LGA?
seems as if Chicago doesn’t quite fit the image they’re trying to sell
Chicago is more of a frat party, beer swilling type of town than California types like. I too get the impression Virgin is more image than anything else, but would say ORD is more like a good ol’ boys club…similar to Chicago politics.
Now if Virgin wants to set down in Detroit or Cleveland, then I’d let them shake that image thing.
AirTran leases its slots in LaGuardia currently from ATA so I don’t think that purchasing AirTran would get Southwest into LGA any faster.
Chris – I don’t think it would be worth the pain that would be involved with the merger. But I’ve long ago learned never to say never in this industry.
I’ve taken Delta’s MDW-LGA service myself and found it to be _spectacular_ on both ends. Curious about your rationale for why that service would end with a SW entry into that market? I would gladly pay more for an assigned comfy pleather seat on a Delta regional jet, where I can accrue OnePass miles, vs. cattle class on a SW 737.
How much more I don’t know. But to me, that Delta service on the exclusive regional jet with the exclusive seats, into the exclusive and gorgeous Marine Air Terminal, with the exclusive free newspapers, must be the top of the end in terms of coach flying experience. SW is the bottom. My opinion only.
Side note from Chicago, regardomg “IF” the Tribune is inaccurate…. it’s “when”, not if…
Anon – I agree that the Marine Air Terminal is a huge advantage in New York, but I’d think you’d be surprised to see that few people consider Southwest to be the bottom of the barrel anymore. Southwest has more legroom, leather seats, free drinks and snacks, no fees for checked bags, etc.
But my guess is that the DL flights are marginally successful at best. Yes, New Yorkers would probably fly Delta long before Southwest because Delta can get them a lot more places, but Southwest will put tremendous price pressure on the route and that may be enough to push them out.
The Virgin America situation sounds like the same thing JetBlue went through a couple of years back. They had their hearts set on entering the Chicago market through ORD but could not find an airline that would lease them a gate for the 8 daily flights they wanted to operate. Terminal 5 was considered but was deemed less than optimal due to the higher costs associated with using that facility (the same reason Spirit ended up moving to T3 after a year of operating at T5). Once the America West/US Airways merger went through, HP moved out of the lone domestic common use gate in T2 and JetBlue was finally able to move in.
None of the other airlines currently at ORD (the hub carriers in particular) are going to willingly lease their gate space to a high profile competitor like Virign. As for US, they might be willing to lease to Virgin for the right price, but their gates have a good size utilization rate which would most likely limit Virgin’s scheduling options. So right now its try to negotiate a gate arrangement within a limited amount of available gate space, move in to T5 or consider serving MDW instead.
Virgin is strating non stop service from LAX and SFO to BOS satrting Feb. 12