QA4Jet-A
Veteran
WT, My take on this entire Thread is sort of in the middle. I don't see WN doing carnage damage to DL but I do believe they will be successful in ATL. Once the SOC is completed, I think you'll see WN grow ATL by connecting more 'Dot's' from cities FL doesn't currently serve, but WN does. Also, as CO moves over to the T Gates to pair up with UA and 5 gates now open up on D Concourse, I would not be surprised if WN/FL get at least 4 of them which, could allow WN entry into ATL pre SOC. We all know the 'Southwest Affect' and I think that willl apply in ATL as well. Eric is shooting a tad high with 300 Flights a day, I'd say closer to 270-280 range, depending on the extra possible 4-5 gates. WN also wants to do more coast to coast flying and ATL will help give that possibility. Understand also, this will evolve into WN's largest operation and they do things in a Texas Way. You will not recognize WN 10 years from now as their plans are very interesting. Just my opinion. Cheers, QA!your question is indeed valid and you did ask it ^correctly^ or at least in a way that can yield a "right" answer.
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WN's strategy has long been to stimulate traffic via new routes, discount fares, and the hype of new service and then increase the fares as the service matures. It really is a strategy that isn't much different from other airlines who start routes with introductory fares and then build the business base as the route develops.
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The difference between WN and other carriers is that WN has almost surgical accuracy in maintaining new routes and managing capacity.
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PHL is one of the best examples of a market in which WN started the market with fanfare, has now stabilized their presence, and fares have increased. The increase in average fares in PHL has been one of the highest on WN's network-= well above their system average.
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There is a concept in retailing that you compare the performance of stores that have been open for at least a year to provide some basis for the normalization that happens in the process of starting up any new business.
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In the airline industry, the concept doesn't work quite the same way but there are year over year comparisons - and each airline is expected to manage both its growth and established markets in order to produce acceptable overall results.
WN almost always performs at or above industry average - they do a very good job of managing their existing network and growing only as much as their "established" network will permit... responsible companies do not grow into new markets faster than what the established markets will allow.
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One of the reasons for using WN vs DL in SLC is because they have competed side by side in many of the same markets for years... they are both well-established. In markets like SLC-SEA and SLC-LAX, DL has managed to maintain an average fare premium AS WELL AS an overall market share premium for years... in other words, there are very few markets out of SLC where WN has EITHER a larger share of the market or a higher average fare.
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Specific to ATL, it also says that WN's greatest growth potential comes from increasing average fares and reducing the amount of local traffic comapred to FL (that would be AirTran, Eric) levels.
FL has lower costs than WN which means WN has to raise fares just to maintain the same profit level FL has AND FL's connecting ratio of 75% in ATL is way above what WN carries in any of their "hubs" or large cities - or what any other network airline carries through any of their hubs.
Further, there is NO major market from ATL where FL has a larger market share than DL or where FL has higher average fares.
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So, there are major structural factors that cannot be ignored when deciding whether WN can grow its operation in ATL.
When you couple those ATL market specific factors with DL's overall GROWTH of its domestic system (the only network carrier that has done so) and the fact that DL and WN already compete side by side in more markets than any other network carrier, it is very hard to come to a conclusion that WN will do any harm to DL.
It is also very apparent if you look at market data over years and years that DL and WN have succeeded in pulling alot of domestic market share away from other network carriers. And both continue to do so.
Eric,
have you got those airline codes straightened out?