Talking to Southwest’s CEO About Why He’s Bullish on Long Beach

Across the Aisle Interviews, LGB - Long Beach, Southwest

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.

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35 comments on “Talking to Southwest’s CEO About Why He’s Bullish on Long Beach

    1. Rob – Yes, and it was recently re-timed to allow for a northbound day trip. Before that wasn’t possible. So now they’ll sit on top of each other (though the Southwest schedule isn’t out yet, I think).

  1. Fresno. Why not Fresno? Even when Southwest was still the “original” Southwest (aka clone of PSA), Fresno should have been on WN’s radar. Indeed they inherited that city when they bought out Morris Air, but immediately abandoned the city before a single red belly touched down. If there ever was a city long overdue for some good service, that would be it. Yet for whatever reason, the Central Valley remains so stigmatized and so marginalized that it continues to be ignored. If you can find some vintage timetables from the 70’s and 80’s, Fresno once had plenty of decent service. But by the start of the 1990’s, almost all of it was gone. And little ever returned. Yet the city and surrounding area has doubled in size and population. Even better would be Allegiant coming to Visalia.

    1. You can drive from Fresno to LA in about 3 hours. There is no reason to fly there unless you are connecting to go somewhere else.

        1. It’s pretty difficult to take a train to LA because there aren’t any tracks up and over the Grapevine. It’s an Amtrak bus

          1. Well there are tracks but they are used only for freight trains. I’ve taken the Amtrak bus/train combo. The connection in Bakersfield is pretty seamless.

    2. That would’ve been a good question to put to Gary Kelly (albeit off-topic). But indeed, Fresno is the fifth-largest city in CA, and the county population is probably nudging a million now. FAT – LAS seems like a natural first step for SWA service there.

    3. I don’t think the city is big enough to justify 737 service on Southwest. Southwest likes to fly a full schedule. They don’t usually do just one or two daily flights like other airlines do for small cities.

      1. I’m with Jim. I think Fresno has a profile similar to a lot of the old AirTran markets that Southwest has ditched almost every time.

  2. Yeah, thats my question as well. With The upcoming Alaska war, what about Fresno and Palm Springs?

    What about flights from STS to SoCal?

  3. I wonder why they didn’t choose … Phoenix. Right now they connect east through Vegas (and Denver on weekends), but the schedule is very limited and the slots are temporary. Phoenix is a natural connecting point for Southwest, and with reduced local service by American, it looks like an opportunity.

    Also, isn’t there also a story about American here? Back when they merged with US Airways I was hoping they might use some of the slots for DFW service, but I guess that’s never going to happen.

    1. when the goal is to hurt JetBlue more than help WN (though with AS – VX that may change), then it is logical to go to LAS vs. PHX. Make JetBlue fight and bleed. I think this is mostly fighting JetBlue, forcing them to focus on LGB vs. trying to take on more at LAX. JetBlue can’t profitably grow both simultaneously and still meet its financial targets and other non-california opportunities.

    2. The problem with Phoenix is that it’s just not a big local market. That’s why neither JetBlue nor Southwest have gone in there. That being said, I would assume that a fully unconstrained LGB operation would include Phoenix. It just won’t be high on the list. Vegas and Denver will be higher.

  4. That was an interesting point about WN’s presence in different Southern California airports giving them some kind of economies of scale in appealing to passengers.

    Cranky (or anyone who lives in that region), how much overlap do the different LA area airports realistically have in terms of catchment?

    1. I live in N Calif, don’t own a car, and don’t like to deal with LA traffic (even though I was born & raised there). Also, I like low fares! Last year I flew LGB – SFO even though I’d been staying in the Tujunga neighborhood of LA… obviously BUR should’ve been the airport of choice for that part of LA, but there were no low fares to be had. It was quite an odyssey getting to LGB on public transit (MTA bus – Blue Line – LB Transit bus), but not bothersome.. a substantial wait for the LB Transit bus was the only irritation. All this because it’s easier to get a low fare on B6 w/o a long advance purchase than it is on SWA. My example is probably unusual, but I wouldn’t be surprised if LGB is drawing pax from well beyond its immediate area… in my case, that was because of the carrier rather than the airport per se… but LGB is also a pleasure to use: it’s not crowded, the TSA staff are congenial, and because the aircraft pull right up to the terminal windows, we airline geeks get close-up views of the ground crews at work.

    2. Itami – Long Beach has the most overlap since it’s really wedged in 20 minutes (without traffic) southeast of LAX and 20 minutes northwest of John Wayne. John Wayne has a big catchment area throughout Orange County. Burbank is ideal for the San Fernando and San Gabriel Valleys. Ontario is good for the Inland Empire and northern Orange County. It’s a lot of people but it’s not as desirable of a demographic out there. And of course, everyone drives to LAX because of the service options.

      1. Well, you can’t just simply draw a circle around LGB. A large area to the north east of LGB is often forgotten about. From Anaheim and Fullerton/La Habra to Whittier and Pico Rivera/El Monte (the 605 corridor) it’s more convenient to LGB than the other airports.

        I think the carriers like JetBlue and Southwest know that…they know the local area. Perhaps others will realize this area to market.

  5. Living in the Bay Area I can tell you it’s a big deal to say you fly from SFO/OAK/SJO even if it’s to the same places. It puts in people’s mind that they can use one carrier from any of the airports. It’s all about loyalty and always thinking of that carrier for all your travel needs.

    WN just wants to do that in Southern California.

    1. because why would we measure noise based on engine decibels when we can measure it by seat count! All that talking at 10,000 ft over the house you bought knowing there was an airport nearby…

  6. I’ve flown SMF to LGB on B6 a couple of times, but mostly fly SMF to SNA on WN. However, the B6 flights to LGB are much cheaper than WN to SNA. Their deals are as low as $44 each way, and WN hasn’t matched that for years. And last minute flights are much cheaper in B6. So when WN says they will bring their low fares, I can’t see how they get lower than B6 on that route. They must be relying on loyal passengers more than a better fare.

    And while the B6 flights are generally full, I can’t imagine they will stay as full with all the additional seats in the market. I think WN puts real pressure on B6 in this market.

    How have the B6 OAK flights fared since WN entered that market?

  7. Also, is there any incentive for Southwest to fly the MAX at LGB due to the noise restrictions? If each flight creates less noise, can they get more flight slots?

    1. Bob – Sort of. What happens is that once a year they do a full noise evaluation and see how much room there is in the noise bucket for commercial slots. At that point, the airport determines how many flights to add. So yes, if they fly the MAX and it is a lot quieter, that could open up slots. But there wouldn’t be a guarantee Southwest would get them.

      1. While there is no gaurentee they will get the slots, it seems like they are the only ones right now eager to get them, seeing as other airlines are giving their slots up. And if they truely want to grow at LGB per Kelly’s interview, it seems like the better option to get more slots compared to just waiting.

  8. I’m curious when the last time is that an airline exec lied to your face to such a degree? This is about one thing and that’s stomping on JetBlue as shown by their choice to only fly routes that overlap what B6 is doing and as you have previously noted Long Beach has not been a bastion of hi fares to begin with. Not to mention that Southwest is hardly a low fare carrier anymore. If there is such a demand for their service in SoCal then why have they cut back ONT? Why hasn’t JetBlue been making a killing on the same routes from LGB? Why have all those other airlines pulled out?

    As for the esteemed Mayor if he is so eager to partner with SWA to boost tourism then where has he been all these years as JetBlue had been worki to do just that? Where was he when they wanted to use those slots to make international destinations available to the citizens of his city and the area?

    Your the industry Cranky is excellent and often unrivaled. I get that an interview is what it is. But when your being lied to I think you have an obligation to call them on it.

    1. 121Pilot – I let these interviews speak for themselves and let readers like you decide what you think. There have been plenty of other posts I’ve written that give my opinions.

      But I do know that Southwest believes it will be different for the airline in LGB compared to JetBlue because of its presence elsewhere. I’ve had in-depth discussions with people who actually do the work. There is a strategy here and the airlines does see opportunity. Whether that’s the right strategy or not is the issue at hand.

      1. That last paragraph should have read “Your insight into the industry….”.

        If the people behind the curtain really think this will work for SWA because of the connection opportunities then so be it. OAK and LAS certainly fit into that mold. But SMF (unless I’m mistaken) isn’t a SWA hub and is unlikely to offer them much in the way of connecting traffic. Had they opened routes (like PHX or DAL) that JetBlue doesn’t fly and that connect into major hubs I’d be more inclined to believe them. But when they take new slots and announce a city like SMF I go back to thinking that the real focus is on hitting JetBlue.

        Time will tell.

        1. 121 – No, they don’t think they’re different because of connections. They think they’re different because they have so much other service around the LA area. I’ve written about this before, but people fly Southwest all the time today from other airports. Southwest thinks that by being in Long Beach, it can attract new travelers away from the other airlines it has to compete with at surrounding airports. So maybe a United loyalist who lives in Long Beach will now see the convenience for trips up north and switch other travel to be on Southwest as well, even if it’s from the other places. It’s a complex argument, and I’m not sure if it works. But it is different than what JetBlue has where it provides limited utility to the LA Basin.

  9. Something else occurs to me as well. If your the Mayor of Long Beach looking to build tourist traffic to your city those tourists are not likely to be flying in from Vegas and NorCal unless they are connecting traffic. A lot of tourism from those places is simply going to drive in given the cost of airfare for a family and a rental car. Which means Southwest’s flights to LGB as they are presently (OAK, LAS, and now SMF) are not likely to drive a lot of additional tourist traffic into the city. Consider too that people connecting into the Southwest network from places farther away are unlikely to be aware of LGB as an airport option and therefore unlikely to consider it when they are searching for their flights. That lack of awareness is I think one of the things that has hurt JetBlue in building the airport as an alternative hub in the area.

  10. I’m retired from WN, and 121pilot is correct. Mr Kelly is not being forthright. It’s all about trying to run B6 out(hopefully doesn’t happen). WN has this holier than thou attitude and they actually are intimidated by B6(Better product all around). They like to try to bully their way around. They pushed Metrojet out of BWI and were smug about it, then tried and failed to be a competitor in PHL with(then US). It’s funny to see them trying to play catch up(Res & IT to name a few lol). WN never wanted LGB in the past, now all of a sudden they do. I wish B6 continued success. Sorry for going off topic a bit.

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