As I’m sure you all do on your Sunday nights, I was flipping through Cirium data looking for something fun to analyze when it dawned on me I hadn’t really dug into Long Beach performance post-pandemic, now that Southwest has fully put its imprint in the market. Fares still continue to lag, but there has been significant and notable growth.
When Southwest came into the market in 2016, the rationale was that it had such a strong base in the LA area that it would be able to tap into that in order to outperform the then-800 pound gorilla, JetBlue. It could fly to short-haul markets from Long Beach, and that would help keep people loyal when they picked their airline up at LAX for more distant trips. Plus Southwest could carry more connections. It was a bloodbath for awhile while JetBlue held on, but that airline abandoned the market entirely in October 2020 when it moved the remains up the road to LAX.
So, where are things today? It’s a mixed bag.
Let’s start with a look at T100 data showing load factors for Long Beach departures.
Load Factor By Airline for LGB Departures
From the very beginning, Southwest lagged JetBlue in load factor, and that really isn’t a surprise. Southwest was serving more of the high frequency business travel markets that we’d expect would push load factors down compared to a pure leisure airline like JetBlue. (JetBlue is, at least, pure leisure for its orphaned intra-West flying.)
For the last year, Southwest’s load factor has rebounded nicely, but it still sits well below where it was pre-pandemic, even with JetBlue out of the market. The West Coast has recovered more slowly, and business has also lagged. Thanks to slot utilization rules, Southwest couldn’t just pull back frequencies in recent months, so this is to be expected, if not ideal. But how are fares?
I don’t love the idea of looking at fares more broadly here, because the mix of routes has shifted. So instead, let’s just take a look at three of the short-haul routes to show performance.
Long Beach – Phoenix is a newer market than the rest for Southwest, and the competition in the market has not gone away. So it’s possibly not a surprise to see the Southwest average fare lag as much as it does. But fares in that market have been very depressed since the pandemic began, and they continue to be very low through the first quarter of 2022. Keep in mind, Q2 is when things really started to take off.
In Las Vegas and Oakland, however, Southwest has been there longer, and you can see the continued climb in average fare, even during the pandemic. That’s a promising sign, but it lacks context. A low fare is still a low fare even if it has risen, so how does this compare to other LA Basin markets? This is where you can see significant progress.
Average Fares to Oakland by LA Basin Airport
The gap between Long Beach and the rest has narrowed considerably. Yes, Long Beach fares are still the lowest, but they were hovering around $60 when Southwest started and are now up around $80. Meanwhile, Orange County and Burbank have dropped from closer to $120 down to under $100.
The average fares in Las Vegas tell a very similar story. Southwest has climbed from the $40 range to above $60 in Long Beach, now getting close to or occasionally rising above LAX.
Average Fares to Las Vegas by LA Basin Airport
Those were the two original markets in Long Beach with others coming in over the years. It’s hard to judge those other markets thanks to how recently they were launched and the pandemic noise, but the performance in these two markets is certainly encouraging, if not spectacular.
Of course, we’re only looking at local traffic so far, but for Southwest, it isn’t all about local traffic. That is one place where it was significantly different from JetBlue. I look at the percent of traffic that was local vs connecting in all markets, and a very clear and surprising trend came out of that.
For JetBlue, I went back to Q1 2016, but for Southwest, I used the most recent quarter, Q1 2022. I lumped the flights into three different buckets. There’s West of the Rockies, East of the Rockies, and Hawai’i.
LGB % Traffic Local by Market Type
On the short-haul legs west of the Rockies, JetBlue had almost no connecting traffic. What it did have was garbage like San Jose – Long Beach – Las Vegas or something equally terrible. Southwest has more connecting traffic, but I was surprised to see that it was still mostly local in those markets. Las Vegas can carry a lot of connections, but so far, it’s not doing that. This is all about locals in this area.
For Hawai’i, JetBlue obviously didn’t fly that at all, but for Southwest it really is a tale of two markets. To Honolulu, 92.5 percent was local but in Maui, it was only 67.5 percent. Why the disparity? On the Maui flight, the number one connecting market was… to Honolulu. So it is still a Hawai’i story with little feed from elsewhere. That’s what I’d expect in Long Beach since gateways like Oakland, Las Vegas, and Phoenix will take much more.
Lastly we have the flights East of the Rockies. This is really interesting. For JetBlue, this was only Austin, Boston, and JFK. JFK was more than 90 percent local, but Boston and Austin were at 80 percent. Austin makes some sense, because there were easy connections on to Florida. Boston is a little more surprising, but there are plenty of smaller cities around the Northeast that require a connection from any LA airport. I guess Boston was the place for that.
For Southwest, however, East of the Rockies means Denver and a bunch of midcontinent markets including Austin, Chicago, Dallas, Houston, and St Louis. It’s these markets where Southwest can really juice things by offering connecting opportunities. For that reason, seeing less than two-thirds of this traffic as local isn’t much a surprise. This is how Southwest puts its network to good use.
Those fares help justify flying the thinner, mid-haul routes. Apparently Southwest likes how this is working out since its recently-won new slot will be used to add another… Nashville.
In the end, this suggests that Southwest is making steady progress in improving its performance in Long Beach. Is it good? No. But it’s also not terrible, and that’s a win. Southwest just needs to see other, newer markets from Long Beach follow a similar trajectory, but that won’t be easy. Those don’t have the benefit of another airline pulling out completely, eliminating capacity and helping fares to rise. Still, when the Q2 numbers come out, that will be telling since it’s when travel demand started to really take off.
I’m curious if John Wayne has the same challenges as Long Beach. There’s rarely any news about them.
Cranky doesn’t fly out of SNA, so it’s not something he likes to cover. While it’s an interesting article to read, it would be nice to see other airports get the same love, uh, LUV. Sometimes it feels like this site could be called Cranky LGB Flier.
He has an affection for LGB as Tim has for Delta
I mean he can practically walk to LGB from his house so I think we all would prefer an airport if it was that close to us
Nah, Cranky’s LGB posts don’t have that “North Korean newslady bouncing up and down with reverence” flavour.
I was thinking of the Iraqi information minister “There are no Americans in the Baghdad city limits!”
Angry Bob – In what sense? You mean fare challenges? Orange County has generally been the opposite with higher fares than average, though with ULCCs making their way in during the pandemic, that can have some impact.
Happy to pull some data if you tell what you’d like to see.
In the beginning WN seemed to be losing money per flight in the battle for airport dominance that B6 was all to willingly to give up. The silver lining for WN thankfully LGB has the lowest break even operating costs per flight of all the LA airports which has propelled LGB into the Green for WN.
WN only 2 market battles out of LGB now are PHX and Hawaii.
PHX WN again has lower operating costs than AA so they will likely continue to win in the market.
Hawaii HNL and OGG WN again has lower operating costs than HA. But WN seems to have given HA the win in the LGB-OGG battle seeing more revenue opportunity with an additional LGB-SJC flight at the expense of OGG in September. WN said all the Hawaii mainland withdrawals are seasonal temporary cuts but I’d be surprised if OGG service returns. WN came out swinging for Hawaii capacity from LGB at its peak schedule with 3 daily flights 2 HNL and 1 OGG . But now it’s down to 1 HNL.
Time will tell with the arrival of the MAX7 ETOPS in 2023 if and when they Add SNA-Hawaii Will LGB-HNL service survive.
“PHX WN again has lower operating costs than AA so they will likely continue to win in the market.”
Are you sure about that? I thought AA runs regional flights out of LGB. Wouldn’t labor costs for AA be much lower?
Southwest has historically been patient in its market development. They have exited very few cities over the years. And never closed a “hub” or “focus city.” Even though their “low fare carpet bombing” initial strategy has been replaced by more nuanced and better-informed competitive strategies, they remain patient with new cities, often shifting flight destinations to assist in new market development, while further bolstering their network. And they will revisit a focus city after cutting it back. Consider STL: prior to 09/11 STL had over 80 fights a day and was growing and adding existing short-haul frequencies (eg STL-IND 5 times a day). But STL was cut to around 60 flights a day after 09/11, due to the loss of short-haul demand. But over the years, STL has once again ramped up, slowly. The last I checked, SWA had over 110 flights a day in STL, bigger than ever. They are indeed a well-managed company in terms of their Network Planning.
I have a question about how load factors are calculated. Southwest has a very generous Customer of Size Policy where if you’re hips exceed the width of the armrests they will check you in to reserve a second seat free of charge. You pre-board and are given a second boarding pass to put on the seat next to you, making it clear that that seat is taken. All other domestic airlines require you to purchase this second seat (Alaska will refund it if the flight goes out with other empty seats) for passengers of size.
When load factors are calculated is a passenger who has purchased a second seat for comfort, or in the case of southwest is using this very important policy free of charge, does that second seat count as booked or not for calculating load factor? For example if a plane has 200 seats, is sold out but 10 passengers have booked/reserved a second seat does the load factor of this flight count as 100% or 95%.
Subway – I believe load factors are calculated as revenue passengers only.
So if a seat is paid for, that should count. If not, then it shouldn’t.
I agree, the connections will be a key differentiator for WN service compared to LGB.
“For Southwest, however, East of the Rockies means Denver and a bunch of midcontinent markets including Austin, Chicago, Dallas, Houston, and St Louis.”
Are you saying that WN flies to all of these places from LGB now? Or just listing potential mid continent connection airports they could serve from LGB?
I flew Southwest nonstop from LGB to MDW back in October 2021, and would have booked that flight again in a few weeks had it not been so outrageously priced that Spirit from LAX to ORD in a Big Front seat plus a checked bag was less than anything from the LA Basin to Chicago on Southwest.
Southwest flies nonstop to all of the above destinations you listed, plus 10 more = 15 total.
This is according to southwest.com.
Wow, I wasn’t aware they were flying to do many destinations from LGB, thanks!
Oddly enough, this strikes me as an “old school” Southwest strategy, go to the underutilized airport in the region and dominate it. Of course that started back when they weren’t flying from the “big” airports but still persists in several cases (e.g., DAL, HOU, MDW, BWI).
These are the types of articles that CF does that no one else does that provide insight into the industry that most people cannot get.
I am glad CF has updated WN’s progress at LGB.
It would be great to see him do more of these types of articles in highly competitive markets esp. related to the potential SAVE acquisition/merger to help readers see how share and pricing has shifted and who stands to win and lose if consolidation takes place.
Another LGB post? Yawn…for an tiny airport that only has a total of like 50 commercial departures per day, it surely gets alot of attention on this blog, unless this is a socal publication? I know this is your hometown airport Brett…but….yeah…..
It’s not uncommon for the authors of free blogs to have particular aspects of their subject they’re particularly interested in covering in their free blogs, the ones that cost their readers nothing. Because they’re free.
Why not just skip the LGB posts? I skip the “Cranky Talk” posts, because I’m just not into podcasts, but I manage to do that without complaining about it.
Lol what a novel concept, Craig! Same here. Seems like a no brainer to me.
Ignore the haters Cranky, keep up the LGB posts! I’ve been flying HOU-LGB fairly frequently and it’s an easy airport with much lower fares than SNA. On the flip side, I’d kinda prefer the rest of the world not discover it! ;-)
It’s gets a lot of attention because all the JetBlue lovers can’t understand why the world’s most profitable airline in aviation history can make money at poor little old LGB when JetBlue couldn’t.
So everyone assumes it’s a money losing investment in California which is Southwest most profitable marketshare. Everyone forgets the huge Orange County California catchment area is Slot restricted in how much capacity can be added to the market. SNA has Seat/Slot allocation which prohibits and fluctuates growth opportunities.
Grabbing available LGB slots helps Southwest back fill and add additional capacity to the same catchment area. WN once peaked out at 74 daily flights at its Sister airport SNA but because of the Slot/Seat allocations yearly fluctuations beyond WN control it was forced to relinquish slots/seats. LGB thanks to JetBlue abandonment at LGB allowed WN to recapture that capacity/revenue in the Orange County via LGB now. LGB been long viewed as More of an Orange County airport than a LA airport.
JetBlue unsuccessfully tried to market LGB as LAX alternative but most LA people that live in the LA catchment area view LGB as a out of the way beach city airport on the edge LA county boarder with Orange County than anything else.
The LGB catchment area is not a circle that overlaps SNA and LAX; it’s more of a sideways oval extending into Norwalk, Whittier, Fullerton, La Habra, possibly even as far as Azusa. For a lot of the cities to the northeast of LGB (605 corridor), LGB is the closest!
Not true, jetblue was profitable at lgb for a while, when it was the dominant carrier, until there was more competition. Just like wn wasn’t profitable until it’s the sole carrier. WN doesn’t posses a profit magic wand, if they did they wouldn’t of completely pulled out of ewr.
Dartagnan – Though profit by airport isn’t disclosed, the general belief is that JetBlue was only profitable at LGB in the early days when there was no low cost flying from LAX to New York. At one point there were up to 8x daily. As soon as low cost flying moved into LAX, the Long Beach operation tanked. They tried many things, including a short-haul shift and then the ill-fated attempt to get a customs facility. None of it worked. When Southwest arrived, JetBlue was already doing poorly.
Those limits at SNA are SO FRUSTRATING, as it keeps fares way too high. Orange County has to expand the number of gates and slots at John Wayne. I’m convinced it should eventually be as busy as SAN, the 2nd busiest single-runway airport in the world – they have similar catchment sizes! The neighbors will have to get over the noise – they bought next to an airport! ? One time on takeoff, our Southwest flight attendant got on the intercom to tell “Everybody please be quiet – there are rich people below us!” ?
Those ?’s are supposed to be emoticons ;-D
That Southwest flight attendant is wonderfully brutal. I love it.
LGB all the time. Lol.
The real action is at PAE…
Well some action is at PAE.. not sure if it’s interesting enough for over here.
Maybe I’m missing something, but I’m a little bit surprised that Frontier hasn’t tried to get a slot or two at Long Beach since it left LAX.