When Alaska bought Virgin America, it was all about growing its presence in California, and part of that strategy was growth in intra-California flying. The king of intracal, Southwest, has been pretty clear it wasn’t going to give an inch, and Alaska has danced around trying to find the right balance. I thought the airline had reached a happy place, so I was surprised to see that Alaska was going to enter Burbank – San Francisco, a market that Southwest flies along with United. It turns out, Southwest is out, and Alaska is sliding in.
The intra-California market is enormous, and it’s one that Southwest has largely dominated for many years. It’s actually been surprisingly steady for the last 20 years or so. Here’s a look at seat capacity.
Intra-California Seats by Airline
Southwest has been operating between 50 and 60 percent of seats within California for a long time, though post-pandemic as other airlines have failed to recover as quickly, Southwest has surged as high as as the upper-60 percent range. This summer it’s sitting in the low-60s.
As impressive as that may seem, it really doesn’t tell the story of travel within California. This does.
Intra-California Local Passengers by Airline
The above chart looks at the number of passengers actually starting and ending their trips within California, not just the number of seats. Southwest has fairly consistently carried between 60 and 70 percent of those travelers, punching above its weight. United, the airline with the second largest amount of capacity in the state, is actually in third place in terms of passengers with between 10 and 15 percent of local travelers. Why so low? That’s because much of United’s capacity is connecting through its LA and San Francisco hubs to go elsewhere.
What may be surprising here is that Alaska is actually the second largest carrier of local traffic within the state, hovering around the 15 percent range as of late. Much of that is thanks to some of the airline’s flying in places like Santa Rosa and San Diego. But the San Francisco (SFO) story is a different one.
Southwest has never had a very large presence at SFO thanks to its focus on Oakland, but what flying it has done from SFO has largely been to other California destinations. It had been close to a third of the SFO – California market but in the post-pandemic world it has been closer to the low to mid-20 percent range. This is not Southwest’s strongest market, obviously.
United remains the big airline there, but it only controls about a third of the intracal market. In post-pandemic times it has climbed to the mid to high-30 percent range, probably because there has been less Asian traffic connecting through and it has repurposed the capacity it has. I imagine this will change as Asia grows again. That leaves Alaska, which has grown to the mid to high 20 percent range in recent quarters.
Despite that decent share, Alaska doesn’t have as much of a presence in the SFO – California market as you might expect. It only flies to Los Angeles, Orange County, Palm Springs, and San Diego. That’s it… until now.
This past weekend, Alaska filed plans to run 3 daily Embraer 175s from San Francisco to Burbank (2 on Saturday). This is the first new California route from SFO since Orange County was launched in 2017. But why?
United has been running 3 daily regional flights, but just this month it bumped that up to 4. Southwest has been running five to six 737s a day on the route as well (2 to 3 on weekends). The market looks like this:
Burbank – San Francisco Capacity and Fares
What’s that big drop in 2024? Well that’s where things get interesting. It turns out that Southwest will be ending its flying on the Burbank route on January 7. It’s no wonder Alaska was interested in making a move.
The overall story here is that if Alaska is competing in the intra-California market, it is competing against Southwest. United matters, especially from San Francisco, but United tends to be much more concerned with that connecting hub traffic. Alaska figures with Southwest out, it has a chance to make the market work. It’s not a surprise to see this, but it is still a good reminder of just how much Southwest dictates this market.
The question now is whether Southwest decides to reverse course, or if this was just temporary in the first place. Fares weren’t all that bad in the market for Southwest — on par with San Diego and well above LA — but load factors in the winter were pretty awful. This year saw Burbank under 50 percent in January with February at 53 percent and March hitting 64 percent. The other intra-California markets were far better.
Summer tends to do at least somewhat better, so maybe Southwest was just planning on taking a break. We wouldn’t know yet since schedules are only filed into early March at this point.
Either way, what’s clear here is that if Southwest opens the door even a crack, Alaska is watching. And Alaska is ready to pounce when the opportunity arises.