Southwest flies into New York
A little Apple-polishing, just to show itself off
07:41 AM CDT on Friday, June 18, 2004
By ERIC TORBENSON / The Dallas Morning News
NEW YORK – Southwest Airlines Co. parked its 400th Boeing 737 under the noses of its competitors Thursday to remind them who's the low-fare boss.
The Dallas-based carrier popped into New York's LaGuardia International Airport to celebrate its 33rd birthday, along with the new jet's delivery, and to kick up some dust with the New York-based national media.
"Despite our size, it's always surprising about who hasn't yet heard our story," explained Gary Kelly, chief financial officer, in an interview aboard the plane.
Though Southwest executives hesitated to say their "airborne press conference" was aimed at stealing some of the spotlight from the Big Apple's darling carrier, JetBlue Airways Corp., observers say it's clear the king of discount flying wanted to let people know it's still the largest and most profitable discounter.
Maybe flight attendant C.J. Deschaine sang it best as the plane taxied toward the runway at LaGuardia, an airport it doesn't normally serve.
"You love us, we love you, we're much better than JetBlue."
Glowing coverage of JetBlue has helped propel its stock price to new heights while Southwest shares have been mired in the mid-teens.
"I wouldn't call it frustration" over JetBlue's positive reviews, Mr. Kelly said. Rather, it's flattering that JetBlue is emulating Southwest's high-frequency, low-cost model.
"We don't expect to be the only airline flying out there," he said.
JetBlue is "just another competitor to us," said Jim Wimberly, executive vice president and chief of operations, who serenaded passengers with old Eagles hits played on his guitar.
Consultants say Southwest's approach to telling its story has to change with the times.
"Southwest has always prided itself at flying below the radar and taking a quiet approach," said airline consultant Mo Garfinkle. "That worked for a long time when there wasn't anybody out there, but JetBlue took the panache view and it's really worked for them. I think Southwest wants to get some of that pride back."
Only 2 percent of Southwest's revenue comes from routes where it competes directly against JetBlue. But many industry experts sense the two low-cost rivals will butt heads in the future.
Southwest's pitch to New York media and Wall Street analysts on the two-hour flight above New York was simple: While other carriers struggle with costs, Southwest has its expense well under control.
And while traditional carriers complain about average airfares dropping, Mr. Kelly said he's happy with how Southwest's revenue and traffic have held up this spring.
"We're very comfortable with our performance," Southwest chief executive Jim Parker said, sipping a Screwdriver at the rear of the plane.
Expansion plans
The carrier announced 18 flights to launch between September and October, its biggest expansion since the September 2001 terrorist attacks. None of the new flights are from Dallas Love Field.
Consultants say they think Southwest will have even more aggressive plans in short order.
"I think Southwest is sensing that the industry is on the cusp of a huge shakeout among the legacy carriers," Mr. Garfinkle said. "Their growth will be even more than they've let on so far."
Southwest's fundamentals remain solid and its status as the model for discount carriers worldwide remains, said Ron Kuhlmann of Unisys R2A Transportation Management Consultants.
"You don't hear as much now about all-night drinking parties and them smoking two cigars at a time over at Southwest these days," he said. "But they're clearly trying to get more noticed, especially by Wall Street, and I don't blame them."
Although Southwest is known for no-frills service, it's contemplating some of the biggest operating changes in its history. The carrier continues to ponder an in-flight entertainment system, a feature that's contributing to the buzz for JetBlue., And it may seek to diversify its jet fleet, now composed of Boeing 737s.
"We're not intellectually opposed to change," Mr. Parker said. "Our people have seen a lot of it recently."
But Mr. Kelly says big changes would probably rock the carrier's culture. "If you want to talk about the future of Southwest Airlines, it's going to be the resistance to change," he said.
In-flight entertainment
A big outlay for entertainment runs against the carrier's cost- saving culture, particularly when it's not clear whether passengers want to watch television and movies in the sky. About 80 percent of Southwest's schedule is for flights under 750 miles, where passengers probably wouldn't want to pay higher ticket prices to support entertainment.
And the 35 percent of Southwest's customers paying full fares mostly business fliers are less likely to want entertainment because they often work while they travel. The fliers who would most want in-flight entertainment are the most price-sensitive.
Officials said they're still thinking about flying smaller Embraer jets, but the carrier remains reluctant to add complexity to its successful formula.
Texas reporters flew roundtrip between Love Field and LaGuardia on a special flight on the new 737 for the event. Even if Southwest wanted to fly passenger flights into LaGuardia, it couldn't serve the airport nonstop from Love Field because the Wright Amendment limits trips from the Dallas airport to nearby states.
As the plane left New York for Dallas, Mr. Parker spied a Diet Coke can sliding down a tray table in the row of seats across from him. He quickly unsnapped his seat belt just as the plane took off, leapt across the aisle as the 737 hits its steepest pitch and saved the can from spilling in one swift motion. "I didn't want to see it get all over that nice leather," he said as the plane roared skyward.
