No-frills carrier Southwest Airlines launches twice-daily flights from Baltimore to Los Angeles today, marking the first time the Dallas-based company has challenged major hub airlines in the transcontinental market.
Best known for its short flights and Spartan service, Southwest says the first of its twice-daily nonstop transcontinental flights are booked, suggesting passengers are willing to forgo assigned seats, hot meals, inflight movies and the relative comfort of a bigger jet if it means paying $99 to fly coast-to-coast. Southwest exclusively flies Boeing 737s and serves only peanuts and snacks.
"I think they will continue with this, and I think they see that some of their competitors are charging outrageous amounts of money," said Washington-based aviation consultant Adam Pilarski, referring to last-minute transcontinental air fares that can easily exceed $1,000 on major hub airlines. "They will take advantage of the misfortune of other carriers to establish themselves in this market."
Though Southwest stresses that it is not abandoning its niche as a short-haul airline, industry analysts say the carrier's limited move into the transcontinental market underscores the difficulties facing the biggest names in aviation. With the exception of Southwest, the nation's top 10 airlines are hemorrhaging money and cutting costs by eliminating employees and shrinking flight schedules.
Southwest, which remains profitable, is adding pressure to its struggling rivals by capping its most expensive walk-up fares at $299 each way - a step that enhances its appeal to business travelers who have significantly cut back on travel in the past year. The move has forced other airlines to match Southwest's fares at a time when none can afford to lose revenue.
As other airlines cut back, Southwest has tried to fill the gaps by extending its low-cost business model into new markets. Among other areas, the airline has increased its presence in Chicago and several East Coast cities. In Baltimore, Southwest added flights to take advantage of Arlington, Va.-based US Airways' decision to pull more than half its service out of Baltimore-Washington International Airport, including its transcontinental flights to Los Angeles, Seattle and San Francisco.
With US Airways out of the market, United Airlines is the only other carrier with nonstop service between BWI and Los Angeles. The nation's second-largest airline charges more than $1,000 each way for a last-minute fare on that route, but the price dips to $218 roundtrip when booking two weeks in advance. The carrier uses a Boeing 757, a narrow-body plane that is slightly larger than the 737 used by Southwest.
Since late 1997, Southwest has exclusively invested in Boeing's 737-700, a newer model that has a longer range than its predecessors. With four more planes coming, the 737-700 will account for 124 of the airline's 370 planes.
That has made it easier for the airline to add longer flights to its schedule, such as Chicago to Seattle and Baltimore to Phoenix, Las Vegas and, now, Los Angeles. Long-haul flying - defined as more than 750 miles - makes up about 20 percent of its schedule, an increase of 5 percent from five years ago, said Gary Kelly, the airline's chief financial officer.
"We haven't really set a strategy to become either more or less of a long-haul carrier, but certainly through the last year we've seen more opportunities to add long-haul flights, and we've tried to take advantage of that," Kelly said.
Analysts expect Southwest to expand its transcontinental flying from BWI if the flights to Los Angeles prove popular, though Kelly dismisses such talk as "premature." Oakland, Calif., San Francisco and Seattle are all possible destinations, some suggest.
"Even though they claim they aren't operating a hub in Baltimore, clearly they are operating a hub in every sense of the word," said Henry H. Harteveldt, a travel analyst for Forrester Research Inc. "They are going to cause a lot of financial pain to carriers like JetBlue, who flies from Dulles to the West Coast, and United [Airlines]."
Southwest's new flights also will test whether passengers will warm to the idea of flying long distances on a relatively small plane with only a snack to tide them over. Travel experts note that passengers are already accustomed to flying coast-to-coast on narrow-body jets like the Boeing 757 or Airbus 320. That wasn't the case 10 years ago, when wide-body jets were commonly used on transcontinental flights.
"Once you come to grips with the fact that you're on a narrow-body plane, the length of the plane probably doesn't matter much," said David Stempler, president of the Air Travelers Association.
Since Sept. 11, passengers are becoming accustomed to the absence of meals on flights, a trend that could work in Southwest's favor. Major airlines have significantly cut back on meal service to cut costs in the face of shrinking revenue.
"Basically, every day you pick up a newspaper airlines are considering taking more things away from passengers and the more they cut back on services ... the more they begin to look like Southwest, except for the [price]," said Kevin P. Mitchell, chairman of the Business Travel Coalition, a group that represents business travelers.
Mitchell said the addition of long-haul flights should help Southwest pick up more business travelers, who have historically been willing to pay extra for first-class amenities on long flights.
Southwest has made inroads at Black & Decker Corp. in Towson, which has been trying to cut travel costs as a result of the sluggish economy. Black & Decker officials flew Southwest 2,800 times in the first eight months of this year, up 22 percent from last year, said Peter Buchheit, the toolmaker's director of travel and marketing services. That makes it the company's fourth-most popular airline behind US Airways, American Airlines and United Airlines.
Black & Decker officials flew from Baltimore to Los Angeles 225 times in the first eight months of this year, spending an average of about $352 each way, thanks to volume discounts with several major airlines.
Buchheit said company officials would not hesitate to grab a brown-bag lunch before departure and save a buck by using Southwest on future transcontinental flights.
"There's a lot of pressure on people to reduce expenses," he said.
But some Maryland companies aren't likely to switch, mainly because they have long-term contracts with major carriers that give them access to deep discounts. Southwest doesn't offer corporate discounts, arguing that its everyday fares are already low.
"I would say Southwest and other [discount carriers] are less than 1 percent of our total," said Richard Wooten, director of corporate travel for Lockheed Martin Corp.
The company does more than 90 percent of its business with five major carriers, which negotiate low fares that are comparable with Southwest's fares.