I spent the beginning of this week at the Boyd Conference (aka International Aviation Forecast Summit), and while I was there, war broke out. Fortunately, this one didn’t involve North Korea. Instead it came from a place of, ahem, LUV. Southwest has decided that it’s time to declare itself the victor in a battle for California that has really just begun. Unlike a North Korean war where we all die, this one results in Californians getting a ton of flights and cheap fares.
We all know about the fights at the two giant California airports. Down in Los Angeles, the 5 biggest US airlines are all posturing for a piece of the pie. It looked like United was going to back off before, but with Scott Kirby at the helm, the trend has been reversed. Now United is fighting with American, Delta, Southwest and Alaska in a battle that will never be won by anyone.
Then, up in San Francisco, the fight between United and Virgin America escalated when Alaska took over and became more of a threat.
But these battles don’t seem to be what’s pushed Southwest over the edge. Nay, it’s the battle outside of those airports. Ever since Southwest took the place of PSA, it has been the de facto preferred airline for travel at mid-size California airports. Sure plenty of airlines can get travelers between LAX and SFO, but how many can fly you Ontario to Oakland or Sacramento to Orange County 6 times a day? There just hasn’t been a challenger in years. Now, however, Alaska is changing that, and Southwest is throwing down the gauntlet.
I had a one-on-one interview with Andrew Watterson, Chief Revenue Officer at Southwest, and I’m hoping to put that into a podcast soon. But Andrew’s speech to the conference was very interesting its own right. See, on Monday Southwest rolled out its latest schedule extension for travel through the Spring. In that release, Southwest rolled out a bunch of frequency increases in California markets as well as a whole slew of new routes, and Andrew crafted a presentation around this growth talking about just how important Southwest is to California, and vice versa. Here’s a rundown of those new routes.
| CA Origin | Destination | Flights |
|---|---|---|
| San Jose | Los Cabos | 1 weekly |
| San Jose | Boise | Daily |
| San Jose | Spokane | Daily |
| San Jose | St Louis | Daily |
| San Jose | Houston/Hobby | Daily |
| San Jose | Orlando | Daily |
| San Jose | New Orleans | 1 weekly |
| San Jose | Albuquerque | 1 weekly |
| Sacramento | Los Cabos | 1 weekly |
| Sacramento | Austin | Daily |
| Sacramento | St Louis | Daily |
| Sacramento | Orlando | Daily |
| Sacramento | New Orleans | 1 weekly |
| San Diego | Puerto Vallarta | 2 weekly |
| San Diego | El Paso | 1 weekly |
| San Diego | Newark | Daily |
| Oakland | Newark | Daily |
| Oakland | Orlando | 1 weekly |
| San Francisco | Austin | Daily |
This doesn’t even take into account the frequency increases, but you get the point. You don’t see Southwest expanding in its stronghold in Oakland. (That Newark flight was seasonal and is now year-round while the Orlando flight is just once a week.) And you don’t see it in the two biggest markets either. Instead, you see it in the markets where Southwest is finally seeing a real competitive threat for the first time in years.
Alaska has made it clear that it wants to do for California what it’s done in the Pacific Northwest. Part of that is serving all the airports, not just the biggest. There has been a lot of growth lately with, I think, San Jose-Burbank as the most recent route Alaska has put out there. There’s a lot more coming.
Seeing this, Southwest has started making a lot of noise. Some of it is bluster, but there is a point to it. It helps remind Californians just how much service Southwest has in the state, in case they forgot. Adding these new flights just makes Southwest more useful in those cities. And that means it’s harder for Alaska.
Now if you ask Southwest, the airline will say that this is all about defending its turf in California regardless of the invader. When United launched Shuttle by United back in the 1990s, then-Southwest CEO Herb Kelleher likened it to a war. And now with so many airlines fighting for parts of California, you could pretend this isn’t just about Alaska, but it sure doesn’t look that way.
Alaska is the first airline to provide a threat of real competition in mid-sized California airports in some time, and Southwest isn’t messing around. This new competitive threat has awakened the airline, and now it’s not only beating its chest but it’s making moves, adding capacity. There’s obviously some fear here that’s making Southwest react so aggressively. That may, in a way, be a back-handed compliment toward Alaska. Southwest thinks the airline is worth taking seriously. And unlike a North Korean war, this is one where the common folks stand to benefit as long as it continues.
65 comments on “Southwest Declares War Against Alaska and Anyone Else Who Wants a Piece of California”
I worked with Andrew Watterson years back when he was a consultant, and have the utmost respect for him. Very intelligent, shrewd, and even mischievous (when appropriate, and when he could get away with it) gentleman, and definitely not a person I’d bet against. Really looking forward to your interview with him.
This is hardly the kind of war that Southwest was capable of back in the days when it truly was a Southwest airline. The instance I’m most familiar with was quite awhile back when Southwest had 1 flight a day to ABQ-MCI, and USAir dared to try to get into the market. Southwest responded by upping to 3 flights per day until USAir gave up, and then Southwest returned to 1 flight per day. I realize ABQ isn’t the entire picture, but consider that Alaska is in the process of adding service from Albuquerque (according to Wikipedia) to: Orange County, Portland (OR), San Diego (begins October 18, 2017),[13] San Francisco (begins September 18, 2017),[second frequency ]Seattle/Tacoma (begins October 18, 2017). Southwest’s response (according to the list above): 1 weekly flight to San Jose. War? Sure… “Irk me again and I’ll slap you with my teddybear, Buddy!”
Seems to me like Southwest decided not to fight over ABQ as much. Their adds seem to be mostly vacation spots, with a few big players strewn in
Soutwest is at a disadvantage at SFO, there is no room for them at the Inn, while Alaska just bought terminal 2
Until we see WN flying to destinations like PSP, BFL, and FAT this war is very much up in the air. Alaska flies to all thoes destinations as well as STS, MRY,MMH.
I am not sure where the front is in this fight.
And that gives Alaska an edge. They can duke it out with Southwest at the mid-size airports, but Alaska can send in Q400s and E175s to serve the smaller airports economically in ways that Southwest’s all-737 fleet can’t.
First they need more pilots for those Q400 ;)
This is all simply the result of Alaska deciding to branch out from its sheltered but high revenue hubs in the Pacific Northwest. It was a given that they would have to battle other carriers to set up shop in much more competitive markets.
You are right that the two carriers that are most competitively challenged are AS and UA. Some of that is the result of their own decisions and some is the result of other carriers wanting to get a piece of their pie. Competition is good for consumers but not necessarily good for airlines that have to fight multiple battles at the same time.
This AS-WN shootout is about using every available bit of airport capacity in the Bay Area while there is some to be had. S. California airports are reaching saturation. Unlike the LA basin, the Bay Area supports large operations outside of SFO. When the space is taken, carriers will likely have what they have either because of airspace constraints whether there are slot controls or not or the excessive cost of building terminals. WN has a large presence at 2 of the 3 Bay Area airports which is a good position to be in competitively. Given the interlocking nature of Bay Area airspace, WN’s growth at SJC is likely to make operations at SFO even more challenging.
I don’t think the three Bay Area airports have to deal with crossing into each other’s space. Landing at SFO and OAK are in parallel (on normal days) and the take off pattern for SFO (from the 1’s) goes right over OAK. SJC’s normal takeoff pattern goes up toward Alviso and then turns right toward Milpitas, then back over eastern San Jose, and then for northbound departures back over SJC at about 10k feet and then northward. Landing at SJC is routed along northbound highway 101 and then 87 closer to town.
This link has diagrams of the flight tracks over the Bay Area… bad weather increases spacing. SJC does operate “more independently” than SFO and OAK but it is all a giant 3D system for ATC – just like in NYC.
http://flyquietoak.com/pages/aircraft-noise/faq.html
SJC does have better on-time performance than SFO which will allow some passengers flying on routes with a choice between SJC and SFO to choose SJC.
“There’s obviously some fear here that’s making Southwest react so aggressively.”
Southwest should be scared. It’s hard to compete with a worse onboard product for the same fare.
Alaska has lower costs than Southwest at this point as well, not to mention the flexibility of having 76-seat RJs in its fleet mix.
In terms of product, I’ll take an E jet over a 737. It’s just a more comfortable plane.
Great point, much easier to get good load factors with 76 seats flying SMF-SAN and what not than with 130.
I just booked a one-way from SAN-SMF for the last Friday of Sept at 5:30pm on Alaska. It was $100 cheaper than the same WN flight at the same time. WN maybe trying to counter AS, but it’s only with schedule and destinations, not price. And, I will not fly to Orlando or Austin non-stop on WN from SMF. Their planes are so uncomfortable they’ve become garbage IMO.
“Southwest should be scared. It’s hard to compete with a worse onboard product for the same fare.”
You have to look at specific circumstances. I’ll pay a slight premium to avoid all the nickle-and-diming at AS. The days of Lasagna dinners with free wine are long gone.
Hi Bill,
What nickel & diming are you speaking of? There are some variations for non-MVP elites at Alaska vs Southwest where both products tend to cancel eachother out.
People love to point/brag about Southwest’s no change fees. Yeah, that one. I’ve been bit in the butt a few times at Southwest, where its been cheaper to just buy a ticket on AA/DL because the fare difference at Southwest would have paid their fuel bill. And I wasn’t on a super low budget fare.
As a very frequent flyer and Alaska Gold 75K, we don’t pay change fees and can move to *any* Alaska/Virgin flight, as long as there is at least 1 seat for sale in “Y”, for free at 10PM day before travel.
We also get miles based on length of travel and can now use them on 19 partner airlines.
And of course premium economy & upgrades.
Even when I do same day changes at Alaska & lose my initial upgrades, I’m at about a 70% success rate of getting upgraded on my new flights, or at least ending up in premium economy/exit row.
Southwest and Alaska have 2 different models, and Alaska is about to take a chunk of Southwest’s corporate contract and GDS business. So they have to react.
Except Southwest can’t offer you Emirates First Class, trips to Easter Island on LAN, or access to American Airlines Admirals Clubs/lounges.
So Southwest *is* going to lose traffic to Alaska, even with their puny EMB 175s. Because people still want their miles. They want good/decent service. They want their upgrades. Those are 3 things that Southwest can’t offer.
The food on AS in coach is reasonably priced ($6-8) and it’s excellent. I’ll take that over literal peanuts any day. You can have the full soda if you ask, and the little cookies are good too.
I’d also like to point out I just flew Anchorage to Orlando and will earn almost 11,000 miles. Had this been a Southwest flight, I’d be at only 1,200 points; so as an MVP Gold 75k – MY $275ish dollar fare just earned me almost a free ticket on Alaska (or American domestic, for now); had I credited WN, even as an elite, I’d be at maybe 3,000 points – which might get me halfway between Houston & Dallas.
Instead, I’m sitting pretty on being able to almost fly Florida – Alaska for 12,500 miles one way, which can be worth up to a $700 ticket at times.
So yes, I think Alaska entering some core WN markets will cause deflection. And Southwest has reason for concern.
“Unlike a North Korean war where we all die, this one results in Californians getting a ton of flights and cheap fares.”
The spoils of war.
Doesn’t Southwest fly SJC – AUS already?
Southbay – Whoops, you’re right. That was supposed to be SFO, but I didn’t see it when I went back to double check and so added that again. I’ve deleted San Jose Austin.
Wow, that LUV guy in the photo must be mad by the language he’s using.
OAK didn’t get a big boost this round but Southwest has been steadily growing there:
2015: Dallas-Love, Nashville, New Orleans, Columbus, Atlanta
2016: Long Beach, Reno-Tahoe, Saint Louis
2017: Puerto Vallarta, San Jose del Cabo, and seasonal service to New York/Newark
Alaska on the other hand, has thus far completely ignored OAK in their CA expansion. They seemingly want to go after Southwest everywhere except OAK and they want to be the preferred carrier for the Bay Area, but only at two of the three airports.
Agreed, and even a little surprised we haven’t seen OAK-LAX, OAK-SNA, and/or OAK-BUR on OO E-175s. I know it’s a WN fortress, but I have to imagine that for Bay Area O&D passengers and even VX loyalists like myself the option would be higher on the list due to the issues with weather at SFO, especially for short haul. OAK and SFO are interchangeable for travel to the East Bay, North Bay, and San Francisco. SFO is only superior for the Peninsula. The AS Hawaii flights, however, live on at OAK.
Part of a good California strategy would be to have several transcon routes from multiple California airports. I would venture to say that jetBlue still has more transcon routes from California than Southwest does, or the combined Alaska/Virigin America routes.
The problem with B6 is that their transcons out of California only go to BOS, JFK, or FLL (with the exception of LAX – BUF). B6 is really not of much use to a lot of California since their footprint is very limited.
OTOH, WN might be the last airline I would want to do a transcon. While, the open seating policy is fine for short haul flights, I’m not a fan of not knowing where I will be sitting for a 4+ hour flight. WN also doesn’t have the ability for one to buy more legroom unlike the major carriers or even NK and F9.
And no wi-fi or at-your-seat power. Those things are standard on AS, and they matter on the longer flights.
Wait, WN does have Wifi, don’t they?
https://www.southwest.com/html/air/products/wifi-access.html?clk=GFOOTER-PRODUCTS-WIFI
So what happens someday when high speed rail becomes a legitimate competitor in the California war?
> So what happens someday when high speed rail becomes a legitimate competitor in the California war?
Hell freezes over.
AW – Well, then Southwest and Alaska’s diffuse airport strategy will probably work even better. If you have to drive to LAX and fly to SFO, then high speed rail might be more competitive. But if you can walk into LGB and fly to OAK (or wherever) then it stacks up better vs high speed rail.
This is great news for California travelers. Let the price wars begin. On these short flights the extra fees on AS are less likely to make a huge difference as the most profitable passengers are business travelers on day trips or short stays purchased at the last moment. They are usually willing to pay slight premium to get/maintain ststus if their corporate travel policy alllows.
I usually check WN first and then competitors. They are my preferred airline on my regular OAK -PHX trips but if they are not price competitive I will jump jump ship as I don’t fly enough to get A-List status.
And don’t forget that if you are MVP Gold/75K, some of those last minute fares mean instant upgrade into F (as long as “U” is open).
Make SWA great again! (i.e. low fares)
Bravo on today’s graphic, Cranky. Cutting out the eyeholes really adds a nice touch.
It’ll be interesting to see how AS approaches this situation. They’ll need to juggle this while simultaneously undergoing the VX merger. As much as they tout VX making them more relevant to California customers, this intra-Cali growth will largely have to happen organically given the nature of VX’s network.
What podcast are you referring to?
UnclePinkeye – I have an occasional podcast, but don’t worry. I post on the blog when a new post goes up.
There’s room for both in California. When I want to travel from SAN to Monterey, Santa Rosa or Fresno it’s going to be on AS. Also, I don’t see an operation like Southwest flying out of Carlsbad whereas perhaps one day AS might (I know it’s probably not feasible today due to runway limitations, but who knows – they seem to understand the potential of serving an airport alternate to Sea-Tac).
I hope they do figure it out. I live in Seattle now but my parents still live there. When I was in college at UC Davis in the early 2000s, I used to fly Carlsbad to Sacramento via LAX when it was a viable option on United, including the aforementioned Shuttled flights. I wasn’t the only one making that route and the region has only grown. Seems like a quite similar situation to Everett – avoiding traffic is worth a connection. And San Diego has far fewer direct destinations than Seattle any way.
As a Seattle-based AS MVP Gold, I’m delighted. :-) I can’t fly Southwest because of the peanuts anyway, but if they cause Alaska to up their game again, that’s still good for me. And a little price war never hurts the passengers either.
If you advise Southwest of peanut issues, there will be no peanuts in the cabin.
One suggestion for each carrier:
–Alaska: copy Southwest and get rid of change fees. If I have to cancel a trip, save those dollars for me to use on a future flight.
–Southwest: copy every other airline and let me select my seat. It makes for more civilized boarding.
Or Alaska could adopt VX’s change fee policy. For $25, the “Plans Change Pass” (or something similarly-named) lets you make changes or refund without a fee (less $25). Granted Southwest’s policy may be better, but they could pen this one as adopting a customer-friendly VX policy.
And FWIW, AS already has no change fees if you change it more than 60 days in advance..
Gee! I heard the airline industry wasn’t going to be competitive after all of the consolidation that’s occurred. (Meant to be facetious)
It seems like this is a return to WN’s original charter. It feels very DAL-HOU-SAT like to me. Isn’t OAK-ONT just a taylor made WN route? Mutliple, short-haul frequencies. That being said, it only really hearkens back to the golden days of WN if the fares are <$100 each way, which is very likely, given the competition.
SJO is incredibly close to OAK, how much business are they expecting with the SJO-GEG flights?
Oakland is in Costa Rica now?
Does this mean that after how many decades, Fresno could finally be on Southwests radar? I never understood why they never came there in the first place. Under the original Southwest formula, Fresno would’ve been a perfect. Indeed they inherited the city from Morris Air and then immediately axed it. I don’t think a single red belly ever actually touched down at FAT. Furthermore, FAT seems to be one of those classic chicken-or-egg cities: no one flies there because the load factors are so low. But the reason the factors are so low is because no one flies there and the fares are extortionately high. The Fresno area (which encompasses the broader area of Merced, Hanford/Lemmore, Tulare/Visalia, and Porterville) could easily support at least a dozen flights a day. Instead, rather than get robbed flying out of FAT, most of those travelers opt for LAX, SFO, or SMF.
I’m not a huge fan of Southwest (to say the least), but as a former Fresnan I’d love to see WN enter the market, and it would seem to make sense – I think Fresno is now the largest city in the US not served by WN.
I think part of it is the fixation on the PDEW figures, which don’t capture the “drive-off” market, and Fresno’s been trying to fight this since I lived there in the 70s and 80s, if not even longer. I think part of it is also that Fresno is a relatively poor city, at least by Californian standards, with lower than average income and an unemployment rate well over the national average. And efforts to market the airport as the “gateway to Yosemite” don’t seem to have stimulated tourist traffic that much. The three network carriers were content for years to just offer small-plane connections to hubs, with business traffic that didn’t want to drive to SFO or LAX paying the price and taking AA to DFW.
But there are some good signs: UA has upgraded some flights to SFO to mainline, as AA has (seasonally) for service to PHX. The services to GDL seem to have solid traffic. Alaska has ramped up service, and supposedly Frontier is going to go for “third time’s a charm” and offer service to DEN in the spring, although it’s not bookable yet.
So if WN wants to give the Big Raisin a try, now would seem to be the right time, maybe start with DEN to head Frontier off and take another shot at UA, add a couple a day to LAS (if Wikipedia’s right, Allegiant’s 1x/day is the only direct service now), and see how it goes.
SAN-EWR??? Really? First, I thought ‘come on..’ No way are they going to offer a non-stop transcon of SAN-EWR. Multiple stop flights don’t really mean anything; But now, Flight #642! Aimed straight at UA! It seems almost absurd that they would offer these kinds of transcons – BWI is the only other from SAN. Very different business model here!
I think the EWR service is aimed at Alaska just as much, if not more, than United – UA has so many FF programme members flying out of EWR that they have a pretty much guaranteed market. I don’t think it’ll work, Alaska is already firmly entrenched in San Diego.
Looked at OAK-EWR and its still seasonal. Another question…where is WN getting the gate space for these flights at EWR? They have 3 VERY cramped, high utilization gates…doesnt leave much room for error in delay prone Newark
Good question about WN EWR gate space. Terminal A there is over crowded. Plus you can’t purchase leg room. I think I’ll stick with AS at LAX.
Matthew – I don’t know, but certainly there could be other drops from Newark to allow this. I haven’t analyzed it.
OAK-EWR is year round when it restarts in April
Do you think LGB could become another front if JetBlue loses any slots at Long Beach with the mor aggressive slot use enforcement? I’d expect Southwest to swoop on them and launch even more service, unless Alaska retaliates and try to muscle into Long Beach as well? Could they enter using the commuter slots (I don’t know offhand if a Q400 is eligible for those.)
Ideally, JetBlue would move most of its service to LAX so they could launch Latin American service as well, but AFAIK there’s no space for them, at least not for several years.
I think it may be time for JetBlue to consider a codeshare with Alaska, drop the north-south service on the West Coast, and concentrate on transcon service.
cblock2 – Yes, Alaska could fly Q400s if it wanted in the commuter slots, but I wouldn’t expect that. It can’t find enough pilots to run the schedule it has. If JetBlue were to leave LGB, there is a process for allocation that would give Alaska preference as a new entrant. But I don’t see that happening. I think Alaska (rightfully) believes that being in LAX and Orange County is enough to cater to the people in Long Beach. It probably doesn’t need to open up another front in a market where fares are just really low.
I think that’s a smart move on AS’ part about LGB. If you are west of the 710 best to go to LAX. If east of 710, easier to reach SNA. Plus both of those airports have their customs facilities built in whereas LGB would have to probably build a facility.
Will – I’d put the barrier at the Long Beach Airport itself, not the 710.
I live just east of the 710 and LAX is nearly always a better proposition in terms of drive time.
CF, people have a tendency to draw a circle around LGB and say the catchment area overlaps too much with LAX and SNA. However, everyone forgets that much of the traffic for LGB comes from east of Downtown LA, the 605 corridor…Downey, Whittier, Industry, Fullerton, Yorba Linda, even Anaheim. That’s a huge area where LGB is the most convenient airport. You can’t use a traditional radius, more like a wedge to the northeast.
And some of us would rather avoid LAX (almost) regardless of distance! When I fly into So Cal, my destination is Tujunga. But if I can’t find an affordable fare into BUR, I look next at LGB.
It appears that the commuter slots are not as restrictive as SNA since the Q400’s with 76 seats as QX has them configured fall outside the 70 seat commuter. There is some talk of lifting the 70 to 76 seats at SNA
Alaska / Horizon will steal some WN thunder if / when AS decides to start flying Q400s to CCR (4th Bay Area airport) to SoCal & PNW.
A number of posts question Alaska’s ability to expand in California and compete effectively against Southwest. They do a pretty good job to/from California to the Pacific Northwest, similar or lower fares than WN. Another post refers to the high fare PNW. This has changed significantly with the entry of Delta at AS’ Seattle hub (fares generally have dropped 30%). AS’ product is different (better) than WN’s at usually a lower price. Leaving OAK alone for the moment and focusing first on SJC is good strategy – a market able to support somewhat higher fares (Business & Premium Economy) with its proximity to the high tech companies. And remember, this is just the beginning of Alaska’s building up California. Wait until there is a full integration of Virgin America into the AS system. Southwest has good reason to be concerned.