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.