DALLAS - Southwest Airlines Chief Executive Gary Kelly was batting cleanup at the company's Media Day last week, the last speaker of the day, summarizing key points made by his executive team, when he dropped the big one.
In March, he said, Southwest would launch service to Minneapolis-St. Paul International Airport.
The bloggers attending the event in Southwest Corporate Headquarters' Freedom Hall began heating up the Internet with the latest volley fired by a profitable low-cost carrier against a legacy airline on its home turf.
It was appropriate that Southwest used a musical theme for Media Day since it has always been the airline that has marched to the beat of a different drummer.
Every executive presentation was introduced with a song title related to the topic, and there were some musical double-entendres built into every script. ("At Media Day, we have great 'speakers,' " the handouts said next to a picture of a woofer and tweeter.)
Before Kelly explained how Southwest would meet Northwest, the Southwest PR staff showed a video of Kelly in his Halloween costume as Kiss front man Gene Simmons, riffing on "Wild Thing" with his guitar.
Kelly really is the wild thing, redirecting the previous Southwest policy of avoiding direct confrontation with the big boys.
Check the record. The Southwest of old flew to Manchester, N.H., and Providence, R.I., as alternatives to Boston; Fort Lauderdale, Fla., as an alternative to Miami; and Oakland and San Jose, Calif., as alternatives to San Francisco. Many customers were OK with that, since the price of flying out of the alternative airports was far less than the fares offered on airlines going to Boston, Miami and San Francisco.
In Dallas, Southwest stuck with its base at Love Field near downtown rather than fly to Dallas-Fort Worth International where the big guys such as American and Delta were going.
One of the only exceptions to the rule was Los Angeles International Airport. Still, Southwest offered alternatives by going to Burbank, Ontario and Orange County as well as LAX.
The reason Southwest did this was always the same: It was less expensive to use the other airports and the airline could pass that savings on to customers with lower fares.
But as Southwest grew and determined the business traveler was an important market it could not ignore, flying into the big cities became a more desirable option.
Under Kelly's leadership, Southwest picked its opportunities, usually observing some type of vulnerability to the competition. Southwest never stated it was taking advantage of the competitive shortcomings of their rivals, but it was clear they were making some moves because they had the strength to pull it off and lay the foundation for future profits.
The first big city: Philadelphia, a stronghold of US Airways. Before its merger with America West Airlines, US Airways was in upheaval. It had just filed for bankruptcy for the second time. Philadelphia was the center of the unrest, and Southwest entered that market in May 2004.
During the Christmas and New Year travel season in 2004, employee morale at US Airways was at an all-time low. Hundreds of bags were lost or misplaced, and the airline got a black eye. By the middle of the next year, America West and US Airways hammered out a deal, but by then the damage had been done, and loyal US Airways customers were going over to Southwest, making the entrance a huge success.
Subsequently, Southwest has been able to take advantage there because the new US Airways under America West leadership de-emphasized its Pittsburgh operation to try to beef up Philly. Southwest responded by entering the Pittsburgh market in 2005. Some say a similar scenario is playing out in Las Vegas with US Airways de-emphasizing McCarran International Airport, but that's a story for another day.
Next, Southwest took on Denver, a stronghold for United and Frontier airlines. Southwest had been in Denver before and left the market when airport fees got too high for the company to sustain profitability.
But the circumstances changed when Denver International Airport was built and United began to struggle. Frontier was making tremendous gains on United when Southwest entered the market in early 2006.
Today, United continues to struggle systemwide and Frontier has filed for bankruptcy protection. Southwest, meanwhile, has more than 100 flights to Denver. It is one of the few cities that will get additional service in early 2009 when Southwest makes seasonal capacity cuts at a number of airports, including McCarran.
Next came Washington's Dulles International Airport later in 2006. Dulles is another United hub, but the key opportunity for Southwest was the death of Independence Air in January 2006. Independence had tried to build a low-cost model but failed, making for easy pickings by Southwest when it arrived.
Finally, in 2007 Southwest returned to San Francisco International, bolstering its Bay Area strategy by keeping its Oakland and San Jose presence. United was well-established in San Francisco, and the head-to-head competition was a new battleground.
But many viewed Southwest's move into San Francisco as a preemptive strike against a new up-and-comer - Virgin America, which is based in suburban San Francisco. Some analysts theorized that Virgin would someday become a major competitor for Southwest with the financial resources of Richard Branson and the quality Virgin brand recognition. Taking on Virgin in its home territory sent the message Southwest wasn't going to let Virgin steal market share without a fight.
The whole Southwest-Virgin-United fray in San Francisco really played out well for consumers, especially in markets where all three flew - and one of those is Las Vegas. More than a year later, flying between Las Vegas and San Francisco is a bargain with three excellent choices, a variety of flight times and many options for travelers.
Now comes Minneapolis-St. Paul. Many may ask what airline executive in his right mind would be willing to take on the major expense of adding a new destination in an economy as tough as the one we're experiencing today? The answer is Kelly and his team.
Keeping in mind that adding a city is an expensive proposition, Southwest's entry to Minneapolis is conservative at best. The company won't announce a schedule or fares for several weeks, but the airline already has said it would only have one destination at first - Chicago's Midway Airport.
In fact, it's pretty unusual Las Vegas isn't on the list of the first cities to be served to the new market. Many carriers, including Southwest, look at Las Vegas as a good bet to jump-start leisure travel on their routes. Nonstops began immediately when Southwest announced Philadelphia, Denver and San Francisco, although it didn't and still doesn't have a nonstop to Dulles, probably to avoid a direct competitive confrontation with JetBlue Airways.
In Minneapolis, Southwest will set foot in the heart of territory that has been owned for years by Northwest Airlines, which has been headquartered there. But by the end of the year - right before Southwest makes its first appearance at the Hubert Humphrey Terminal - Northwest is expected to be absorbed by Delta Air Lines in a merger that just last month was approved by shareholders of both companies and awaits a final OK from regulators.
Delta has said the merged carrier would fly as Delta and that the corporate headquarters would be Atlanta. So by the time Southwest arrives, the Northwest brand will be gone even though Delta has promised to keep Minneapolis as a major presence. Analysts have suggested that it would be difficult for Delta to maintain all the hubs operated in the current Northwest and Delta systems. They include Minneapolis, Detroit and Memphis, Tenn., on the Northwest side and Atlanta, New York and Salt Lake City on the Delta side.
Where Southwest flies next out of Minneapolis may depend on what Delta does. If Delta scales back its Minneapolis operation, watch for Southwest to take advantage of the opportunity. That could someday include nonstops on Southwest between Las Vegas and Minneapolis.
From Las Vegas' perspective, the more interesting thing to watch for is whether Southwest's new business partner, Calgary, Alberta-based WestJet Airlines, considers flying to Minneapolis.
Right now, Las Vegas is WestJet's biggest operation in the United States, and it would make sense for Southwest and WestJet to connect their passengers at McCarran. But if WestJet goes to Minneapolis, it would be much smarter for that to be the connecting point. If that would happen, watch for Southwest and WestJet to add many more flights to Minneapolis.
Who knows, maybe all that brand loyalty Northwest has built in Minneapolis would shift to Southwest and the sting of losing all those jobs to Atlanta wouldn't hurt as much.
WestJet, incidentally, has moved its presence from Terminal 2 at McCarran to Terminal 1.
When flights from WestJet's Canadian destinations - Vancouver, British Columbia; Edmonton and Calgary, Alberta; and Toronto; with seasonal service from Victoria and Kelowna, British Columbia; and Saskatoon and Regina, Saskatchewan - arrive at McCarran, they'll drop passengers off at Terminal 2 to go through the U.S. Customs facility. The plane would then be moved to Terminal 1 to load passengers returning to Canada.
McCarran officials said the switch is being made because Terminal 1 has more retail amenities for WestJet passengers.
Watch for additional terminal and gate musical chairs at our airport as US Airways, in the A and B gates of Terminal 1, reduces capacity at McCarran, leaving room for other operators and easier connections.
In other tourism news:
- The Las Vegas franchise of Pink Jeep Tours, the company founded in the red-rock country of Sedona, Ariz., is boosting Breast Cancer Awareness Month by donating $4.80 from the sales of all Red Rock tours the company operates to the Nevada Cancer Institute. Red Rock tours take customers into Red Rock Canyon National Conservation Area, just west of Summerlin, the home of the Nevada Cancer Institute.
The first-ever "Trek for the Cure" program benefits the institute by paying a percentage of the profit from Pink Jeep's most popular tour.
The dollar amount corresponds to the 48 years Pink Jeep Tours has offered backcountry trips in the Southwest.
When Alix Reed, general manager of Pink Jeep Tours, announced the company's donation, she also unveiled the 12-unit "Tour Trekker" four-wheel-drive tour vehicles.
- Aviation analyst and consultant Mike Boyd is often quoted in stories about the airline industry. Earlier this week, Boyd's company, the Boyd Group, based in Evergreen, Colo., announced a name change more reflective of the company's mission.
"Our new identity, Boyd Group International, better expresses the range of work we do and the services we offer," Boyd said in a release announcing the switch.
Watch for some dispatches next week from Boyd's Aviation Forecast Summit in Aspen, Colo., where many aspects of the tough times for airlines and airports will be discussed.
Richard N. Velotta covers tourism for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 259–4061 or by e–mail at velotta@lasvegassun.com.