Southwest Airlines in US to enter market for international flights
By David Koenig, AP
July 3, 2014, 12:05 am TWN
DALLAS--After four decades of expanding to all corners of the lower 48 states, Southwest Airlines flew into new territory on Tuesday — Jamaica, the Bahamas and Aruba.
Southwest is taking over routes flown by AirTran Airways, which it bought in 2011. The company plans to eliminate the AirTran brand by year end.
Southwest Flight 1804 left Baltimore-Washington International Airport on Tuesday morning on the airline's first overseas flight — to Oranjestad, Aruba. After the first three international destinations, it will add service next month to Cancun and Los Cabos in Mexico, and will start flying to Mexico City and Punta Cana in the Dominican Republic in November.
By the end of this year, Southwest plans to operate the flights from nine U.S. cities. Still, its foreign footprint will be tiny compared with rivals American, United and Delta, which fly to Europe, Asia and South America. They also serve the Caribbean, where recent competition from JetBlue Airways and Spirit Airlines has helped reduce fares, said George Hobica, founder of AirfareWatchdog.com.
The entrance of Southwest, with fewer fees, will help temper fares, “but I don't know that we'll see a huge reduction,” Hobica said.
Southwest Airlines Co. carries more passengers within the U.S. than any other airline, but only about 1 percent of its passenger-carrying capacity is on international routes. That might not change much. CEO Gary Kelly said recently that international will be “a relatively modest component” of the airline's route system for the next several years.
Still, international flying and expansion in New York, Washington and Dallas are important as Southwest tries to regain momentum. In recent years, it has dealt with high fuel prices, a tepid U.S. economy, and tougher competition from both old rivals and newcomers such as JetBlue and Spirit.
Dallas-based Southwest's traffic — the number of miles that passengers fly — grew by double-digit percentages from 2004 through 2006. It hasn't approached that kind of growth since, however, except in the year that it added AirTran. Last year, traffic grew just 1.4 percent, the second-smallest gain in this century.
Its shares rose 87 cents, or 3.2 percent, to close at US$27.73 after hitting an all-time high of US$27.83 earlier in the session. They have gained 47 percent in 2014.