DALLAS -- Southwest Airlines will launch service to a new city for the first time since August 2007 next spring when it will begin flying between Minneapolis-St. Paul and Chicago's Midway Airport.
The decision means the USA's leading discount airline — which already carries more domestic passengers than any other carrier — will be moving onto one of Northwest Airlines' bread-and-butter routes just as the Eagan, Minn.-based carrier expects to be merging with Atlanta-based Delta. That merger is expected to receive federal antitrust approval and to be consumated before year's end.
Southwest Chairman Gary Kelly said the decision to move into the Minneapolis-St. Paul market in March has nothing to do with the Northwest-Delta merger. But he did note that the route between the Twin Cities and Chicago served mostly via Chicago's larger O'Hare Airport, is precisely the the kind of route Southwest likes to move into.
"There's very high fares on that route. And there's as many people flying between those two cities as we serve between Dallas and Houston, maybe more," Kelly said.
Dallas-based Southwest got its start 36 years ago flying between Dallas, Houston and San Antonio, and its heavily-traveled Dallas-Houston route has long been a source of significant profits despite the relatively low fares that prevail on that route. Kelly suggested Southwest's low fare formula could stimulate even more demand for air travel between Chicago and Minneapolis-St. Paul, but he said Southwest won't be planning for rapid growth or additional destinations from Minneapolis-St. Paul until executives see how demand develops on the one route to Chicago.
Fares on Southwest's Dallas-Houston route currently range between $74 and $137 one way. Fares between Minneapolis/St. Paul and Chicago currently range between $270 and $436.50 one way for coach, and are $396.28 for first class. Southwest does not offer first class service
Southwest's launch in Minneapolis-St. Paul is unusual in that it rarely operates just one route from any city it serves. Currently only one city, Corpus Christi, Texas, has service to just one city (Houston). Typically Southwest launches service in a new city with flights to 2 to 4 destinations, and then adds several more routes within a year or two.
Kelly said details of Southwest's service plans at Minneapolis-St. Paul will be announced later, but that it likely will begin with "two or three gates." That would imply the ability to operate between between 20 and 30 flights a day, based on Southwest's typical gate utilization rates. He gave no indication of how many flights a day Southwest plans to offer on the Minneapolis-St. Paul — Chicago route, but by comparsion, it currently offers 30 a day each way between Dallas and Houston.
Kelly said Southwest is prepared to stay with the one route from Minneapolis-St. Paul for a longer than usual time period, depending on how much demand there is for its services there, and how much new capacity it will be able to bring to the market. For most of the past 30 years Southwest's capacity has grown at a rate of nearly 10% a year. However rising fuel costs caused the carrier to begin scaling back its growth rate in 2007, with even more drastic reductions this year.
This year the carrier's fleet, which originally was supposed to grow by 29 planes will end up growing by no more than 14 planes, and maybe by as few as 10 if it decides to dispose of 4 of its current planes by year's end. Southwest officials also said Wednesday that they will add no more than 10 planes to the fleet in 2009, and may reduce the growth to zero planes by retiring some planes and returning others to lessors. Originally the plan had been to add 28 planes to the fleet in 2009.
Kelly said Southwest's move into the Minneapolis-St. Paul — Chicago Midway market was not related to the City of Chicago's decision to sell Midway Airport to a private investment group led by units of Citibank and John Hancock Life Insurancy Company for $2.5 billion. But the deal, which the Federal Aviaiton Administration is expected to approve as a test case for privatization of large commercial airports in the USA, will assure that Southwest, by far the largest carrier at Midway, will have lower operating costs than it currently pays at the airport for more than a decade.