Yep, it’s time for another Long Beach post. But this time, I’m only writing about it because Southwest CEO Gary Kelly was in town, and he sat for a Q&A session with me and some local reporters. Long Beach Mayor Robert Garcia was also there. Gary came in to announce that the two slots Southwest picked up recently (when American reduced service to Phoenix) would be used to fly to Sacramento. My questions, of course, went well beyond Sacramento and more about the viability of Long Beach overall.
Gary was practically gushing about Long Beach, undoubtedly for the benefit of the mayor and the local press. He stated multiple times that Southwest respects the noise ordinance, but he was also clear in saying that Southwest wants more flying in Long Beach. Some of my questions may seem obvious, but I wanted to hear the rationale from Gary’s mouth. Here’s what he had to say.
Brett Snyder, Cranky Flier: Gary, Southwest has backed away from some secondary markets lately… pulled out of Dayton in favor of Cincinnati, pulled out of Akron and built up Cleveland. Can you explain why this is different for you?
Gary Kelly, CEO Southwest Airlines: Well, you know how we operate. I think if you look at Ohio, the market is not sufficiently large to serve both Canton/Akron and Cleveland. And the same applies to Cincinnati and Dayton. The situation is very different here. We are the largest airline in Southern California. Long Beach is a way for us to serve not only current customers that we have but also presents an opportunity to win more. We are constrained in terms of adding capacity in Orange County, LAX, even Burbank to some degree. If anything, I think the air service coming into California is less than the demand. It works for all of us. It works for the airline. But most importantly I think it works for the community. And it’s all predicated on what the mayor said. We need to bring great service and our famous low fares without bag fees, without change fees, and just, you know, bring some meaningful competition to the market. Ohio’s a very different situation.
Cranky: Can you talk about why you feel confident about success in Long Beach? Thinking about what some other airlines have seen. Alaska has pulled out in the last few years, American has reduced, obviously, because you got their 2 slots. And even JetBlue, before the last couple of years, they had scaled back their operation due to profitability concerns. So why do you think this is going to be different for Southwest and it’s going to be a successful market?
Gary: Well, Brett, we are different so I do think we approach the market differently. I think our fares are such that we will generate more traffic, certainly over a longer period of time. The main thing is that we already have a significant presence in Southern California. So while we may not have a lot of depth and breadth of service here at Long Beach, we do within the 5 county area. So we can usually have customers flying out of one airport and returning to another depending upon where they work, where they live, where they might want to end up. There’s just a variety of combinations that make sense. What is also different than Ohio as an example, we find this in the Washington metro area, people in Northern Virginia are not going to drive to BWI. It’s just not practical. And I think you have the same thing that applies here. A lot of people live in Southern California. There is traffic congestion. Providing another source of departure or arrival for our customers is going to work extremely well. And we’re off to a really good start. We have a modest operation right now but initial results are encouraging.
Robert Garcia, Mayor, Long Beach: And I’ll just add also, and we’ll be happy to get you some of these numbers, tourism is at record highs in the city. Hotel density as far as night stays is also at a record high. I think what you’re seeing also is the tourism and visitor market’s pretty strong in Long Beach. Downtown has developed in the last ten years, and the communities around. The airport is well-positioned to partner with Southwest and ensure their success.
Gary: I’m sure you know all this, but we’ve got most of the time 60 daily departures in Orange County, 120 at LAX, we’ve got 30 and have had as many as 50 in Ontario. And I think today we’ve got 57 to 60 in Burbank. We generate a lot of flights, a lot of seats, a lot of customers, and this will be a wonderful way to serve our current customers we think but also win some new ones. We’re delighted at the opportunity.
Cranky: So do you want all 50 slots if everyone else walked away?
**laughter in the room**
Gary: You know, that would be a high quality problem to contemplate. Since it’s not realistic, I won’t answer it literally. However, what we’ve talked about is we believe we have demand to add a significant number of departures if the slots will allow for that. As I said, I don’t want anybody to misinterpret. We’re living within the agreed upon constraints and in no way challenging that, but yeah if there’s a way to better utilize the current slots or think about how the slots might be reallocated or simply become available like they could, then absolutely. We’re committed that we will add flights and I think potentially a significant number of flights.
Yes indeed, Gary is bullish on Long Beach. I found it interesting that the airline opted to use its its new slots for another north-south route. This is about dominating intra-California. And oh yeah, the politicians who have to go to Sacramento are going to be really happy. Not a bad thing if you’re Southwest. But if there’s room, Southwest apparently wants to build Long Beach out to look like some of the other regional airports. I can’t say I ever saw that coming.
Now it’s up to JetBlue if it wants to allow Southwest to expand further or if it’s going to keep flying its schedule in Long Beach.
