Southwest Boosts Denver and St Louis

I know I just wrote about Southwest yesterday, but the news keeps coming. This time, it’s not a new city but rather, putting a couple of existing cities on steroids. Both St Louis and Denver are growing. One of these, I like a lot. Wanna guess which one?

You’re probably not surprised to know that it’s St Louis that makes the most sense to me. With American’s pull down and the airport’s decision to get aggressive with incentives, it was only a matter of time before someone would come in and start cherry-picking the good routes. It looks like Southwest is the first to stake a decent claim. They’ve already announced flights to Boston and Minneapolis, and now they’re adding a third daily to the latter before it even starts. They’ll also be starting service from St Louis to six new cities in May.

There will be two a day to LA and Nashville alongside one a day to New Orleans, Raleigh/Durham, Seattle, and San Diego. What’s interesting here is that LA and Seattle are two of the nine cities to which American will continue flying from St Louis . . . for now. (Notice that Southwest is also starting service to two former American hubs – Nashville and Raleigh/Durham.) Hmm, looks like Southwest not only wants to fill in what American has ditched but also wants to push American out the rest of the markets. Smart move.

The other airport receiving new service is Denver, and that’s probably not a surprise considering how bullish Southwest has been. I honestly don’t get this one. They must see something that the rest of us don’t, because I don’t see United or Frontier going away any time soon and their results haven’t exactly been stellar there so far.

There will be a single daily nonstop to five new markets in March – Hartford, Boise, Ontario, Detroit, and Washington/Dulles. In May, LaGuardia will get a single Saturday-only flight (they don’t have enough slots to do more frequent flights). In addition, Oklahoma City, Sacramento, Tulsa, New Orleans, Portland (Oregon), Oakland, Baltimore, and Seattle will get one additional daily flight. (All of those start in May except for Oklahoma City in March.)

Of these new markets, only Hartford doesn’t have nonstop service from another carrier at this point. Boise is served by both Frontier and United, Detroit is served by Frontier, and Ontario and Dulles are served by United. They just keep growing this thing, but I’ve yet to see a good justification for why.

I don’t think this is going to require a big expansion – they’re probably just reallocating airplanes from elsewhere again. One, I like. The other, well, not so much.

Brett

17 responses to “Southwest Boosts Denver and St Louis”

matt robb

Oct 23, 2009

nice to see southwest adding another nonstop flight to my home airport of OKC

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Shane

Oct 23, 2009

So glad I don’t have to deal with STL airport anymore. SWA can have that wretched place.

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David SFeastbay

Oct 23, 2009

I can see building up STL as there is room to grow there now that TWA isn’t around and AA is killing the rest of what was TWA service.

DEN doesn’t make sense unless company ‘pride’ is behind it all. WN can’t become the top dog there and it must be hurting their pride so they are increasing service so it makes things look good.

Denver-Hartford? Maybe there is a reason UA doesn’t fly nonstop. If it can’t fill a jet from DEN-BDL with all the western USA feed it brings to DEN, can WN?

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Andrew

Oct 23, 2009

Shane wrote:

So glad I don’t have to deal with STL airport anymore. SWA can have that wretched place.

Seriously. I don’t see the appeal for WN whatsoever. Dollars to doughnuts I bet they pull back on that route commitment within a year.

And Denver? Good luck with that. Frontier has been blanketing local media with advertising — the feel good sort of, “we made it!” style — cute campaign with the animals on the tails animated and singing “Still The One.” Combined with a lot of very positive press (huge narrative feature on their bankruptcy journey in the Denver Post recently, along with frequent local TV coverage) has all helped to re-entrench them as the local discount carrier of choice. WN may just need to become zen with their number 3 position at DIA.

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Nate

Oct 23, 2009

CF, United is also starting service between STL and SFO in February using an A319 – which means the return of Mainline to STL – which is ironic, they just laid ** all ** the Mainline staff off, only to bring them back.

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David Parker Brown

Oct 23, 2009

It seems SWA doesn’t want to back down for their once grand plans in Denver. They might have something else up their sleeves. Could have come up with a good plan when trying to buy Frontier and they are still going for it, even though they didn’t get them.

It will be interesting to see what happens!

David

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eponymous coward

Oct 24, 2009

“Seriously. I don’t see the appeal for WN whatsoever.”

It’s a fairly large urban market that can likely support some point-to-point flights at a lower cost structure than AA’s, which pretty much fits WN’s model to a T. Seems pretty simple to me. This is what WN’s done in SJC, OAK, BDL, BNA, RDU, PIT and any number of places that legacies have abandoned..

The difference with DEN is UA and F9 aren’t going away anytime soon… but I think WN isn’t conceding DEN, for whatever reason, even though maybe they should and look to greener pastures.

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jordan

Oct 24, 2009

Im a little confused, as to why people are so taken back by what WN is up to in DEN. Maybe its a lack of understanding; how airlines “certain” airlines work, and a misunderstanding of DEN!

WN is in an outright fight for DEN. Can they win it. YES!!! They can throw the kitchen sink, and house at DIA if they choose to! Why? Because they CAN! haha! They have never lost a huge battle. Call it Texan pride or whatever. This airline has ALOT of money! …and I mean ALOT!! they can afford to take substantial losses!

Im not a huge fan of WN. But Ive always had nice flights on them, and their planes are always clean

Its fairly clear, that most topics on this site ( a site I enjoy) are mostly domestic in nature of operational politics! If any of you are aware of the battles at LHR and the huge losses all the US carriers took across Europe in the 90s (DL with its PA/FRA hub’s horrendous losses) A clearer understanding would come as to what WN is up to.

(1) Market share! ..at any cost and loss, they want DEN
(2) They can force F9 into huge losses, and this will start to happen..then they will get Republic within 24 months! F9 can bleed Republic down, more than any other area of their operations!.

So many posts on Virgin America and their losses!

Which is so American in nature.. “must make profits only” NO NO NO

Virgin America can afford to sustain losses for a long long time! Cause of the Virgin name! But slowly, there is a game plan coming into place with V and VS. They know what they are doing at Virgin America, and their turnaround will be swift when they are ready. They can sustain $100 million dollar losses for 10 years if need be! WHY? Because Virgin America was a lifelong dream of Bransons… and dear Americans. You cannot put a price on dreams!

A fun fact. Fox News (not really news, but anyway – lol) They lost $110 million per year, for 5 years..before they turned a profit! They kept going…why? See above! :)

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Shane

Oct 24, 2009

It would seem odd for Southwest to throw more into Denver when there are other fairly good sized cities that would be easier pickings with less or diminishing competition similar to Saint Louis (Cincinnati seems to have an abundance of empty gates).

However, is it possible that in their exploration to purchase Frontier they saw something in their books or business plan or load factors that they found encouraging? Perhaps they realized from Frontier that they don’t need to spend the money to purchase Frontier to beat them out of the market. They could sustain $3-4million dollar quarterly operational losses in Denver for 25 years and would still spend less than they were willing to spend in one shot to rub them out. Or perhaps this is too simplistic of a thought.

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CF

Oct 24, 2009

Nate wrote:

CF, United is also starting service between STL and SFO in February using an A319 – which means the return of Mainline to STL – which is ironic, they just laid ** all ** the Mainline staff off, only to bring them back.

Are you sure they’ll bring them back? I bet they’ll just have the express staff handle the mainline flight. I still think their goal is to have no actual employees at United itself.

jordan wrote:

WN is in an outright fight for DEN. Can they win it. YES!!! They can throw the kitchen sink, and house at DIA if they choose to! Why? Because they CAN! haha! They have never lost a huge battle. Call it Texan pride or whatever. This airline has ALOT of money! …and I mean ALOT!! they can afford to take substantial losses!

Please explain how they can win it. United and Frontier are doing just fine there, and Southwest is the laggard in third place by far alongside most metrics. Just adding more flights isn’t going to magically make them profitable. I understood it in the first place – if Frontier goes away, Southwest can move in and make a nice living. But now I don’t see that happening anytime soon, and I don’t see Southwest doing anything to change their situation there. (I don’t even know what they could do.)

If any of you are aware of the battles at LHR and the huge losses all the US carriers took across Europe in the 90s (DL with its PA/FRA hub’s horrendous losses) A clearer understanding would come as to what WN is up to.
(1) Market share! ..at any cost and loss, they want DEN
(2) They can force F9 into huge losses, and this will start to happen..then they will get Republic within 24 months! F9 can bleed Republic down, more than any other area of their operations!.

Whoa, wait a second here. First of all, London is a highly constrained airport so that was something clearly worth holding on to. Delta with Pan Am was probably a smart move to get all those route authorities at the time. It took them forever to make it work. Domestic is much more simple. Southwest can add as many flights as they want to any domestic market from Denver (except for a couple slot-constrained destinations). So what is going to change?

You say they can bleed Frontier, but they haven’t been able to do so yet. Frontier is thriving these days, to my complete surprise. All numbers show that they’re really holding down the fort quite nicely in DEN and Southwest hasn’t made much of a dent. So, again, what’s going to change?

Which is so American in nature.. “must make profits only” NO NO NO
Virgin America can afford to sustain losses for a long long time! Cause of the Virgin name! But slowly, there is a game plan coming into place with V and VS. They know what they are doing at Virgin America, and their turnaround will be swift when they are ready. They can sustain $100 million dollar losses for 10 years if need be! WHY? Because Virgin America was a lifelong dream of Bransons… and dear Americans. You cannot put a price on dreams!

Huh? Branson is not allowed to put any more money into that airline, so the idea that they can keep bleeding forever is just not true. Please explain what this game plan is between Virgin America and the rest? Branson has already failed in Europe (Virgin Express) and in Africa (no longer Virgin Nigeria). Oh, and Virgin Charter shut down today.

He succeeded with Virgin Atlantic thanks to slot constraints in London and the addition of Virgin Atlantic as a designated carrier between Heathrow and the US. Virgin Blue succeeded because Ansett shut down and left a huge hole. But that’s it. I’m not nearly as convinced about Virgin America as you are.

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no stl for me

Oct 24, 2009

Nothing the airlines do at StL will improve boardings UNTIL the fiasco/problems with TSA are fixed.

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Allen

Oct 25, 2009

“They just keep growing this thing, but I’ve yet to see a good justification for why.” –Crank Flyer

Sounds like a couple blog posts or even articles could be spent delving into this one.

To me at least, there’s a big difference between good justification and profitability. I’d be curious if these aren’t enough to constitute good justification :

* DIA is the main airport for the Front Range’s 4+ million residents. Colorado Springs is the only exception for scheduled passenger service. The areas population is projected to grow to over 6+ million over the next two decades
* UAL still controls most of the market and arguably are not in a good position to give a good fight against Frontier and SWA
* Frontier isn’t exactly a given to survive. They were unable to emerge from bankruptcy on their own. Republic is taking on a lot in Frontier let alone Midwest Airlines at the same time.
* DIA’s a good place to operate flights

…and there’s more but it’s a start. Surely SWA seems a lot here in Denver that they keep expanding.

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CF

Oct 25, 2009

Allen wrote:

To me at least, there’s a big difference between good justification and profitability. I’d be curious if these aren’t enough to constitute good justification :

I agree that immediate profitability isn’t the only thing that matters, but that needs to be there in the end. My problem is that I don’t see that happening right now.

* DIA is the main airport for the Front Range’s 4+ million residents. Colorado Springs is the only exception for scheduled passenger service. The areas population is projected to grow to over 6+ million over the next two decades

Sure, but New York is even bigger, so maybe they should focus all their efforts there and buy a bunch of slots. I think it’s GE’s (?) mantra that they have to be first or second in a market or they don’t want to be there. The top guys in a market get the biggest benefit, so just because a market is big doesn’t mean it’s a good place to be.

* UAL still controls most of the market and arguably are not in a good position to give a good fight against Frontier and SWA

I would argue that UA is in a better position to fight now than they have been over the last few years. They also haven’t done much fighting – they’ve just cut back. That should probably change now.

* Frontier isn’t exactly a given to survive. They were unable to emerge from bankruptcy on their own. Republic is taking on a lot in Frontier let alone Midwest Airlines at the same time.

But Southwest has been putting the pressure on for quite awhile, and Frontier has been turning in some excellent results. Nobody can emerge from bankruptcy without exit financing – it just so happens theirs came from another airline. That doesn’t change the fact that they’ve been making good money lately.

* DIA’s a good place to operate flights
…and there’s more but it’s a start. Surely SWA seems a lot here in Denver that they keep expanding.

Strategically, it’s a great market in a great location with an uncrowded airport, but I still don’t see where Southwest wants to go with this.

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muggedinstlbytsa

Oct 26, 2009

Southwest would have to use all their political clout to get the crooks and liars that run and staff that scary,hateful, lazy TSA at STL cleaned out and replaced with some actual security staff, not a bunch of East St. Louis gangsters…for anyone to want to fly out of there with them!

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RobG7aChattTN

Oct 27, 2009

I think Frontier/Midwest/Republic may not be in as great a shape as some folks seem to think. Yeah, Frontier has made money in Denver. Guess what? That’s easy to do with bankruptcy protection especially if you’ve cut all your employee’s wages. That won’t last. Republic will be experimenting with their new operation and that’s pretty risky in the airline industry. I bet that if oil jumps up to $120/barrel or if Republic loses their contracts with the legacy carriers then they will go out of business. They don’t really have much cash on hand and they can’t bleed red ink for long without going under. I’ll bet SWA is just planning on buying up what they want after Republic goes under.

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Allen

Oct 27, 2009

CF –> Thank you for the responses.

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frank

Oct 28, 2009

@ jordan:

hear about they’re CUT BACKS?

http://www.azcentral.com/arizonarepublic/business/articles/2009/10/25/20091025biz-insider1025gilbertson.html?&wired#

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