Gary Kelly quote from Wed's Media Day:
“We don’t stand still at Southwest Airlines,†he said. from the Ft. Worth Star-Telegram, article follows
Southwest slashes fares again
By TREBOR BANSTETTER, Star-Telegram Staff Writer
Wed, Nov. 01, 2006
DALLAS - Southwest Airlines has again turned up the heat in the North Texas fare war by slashing ticket prices from Dallas Love Field to destinations nationwide as cheap as $39 each way.
The fare sale, which runs until Dec. 1, offers its cheapest tickets mostly to nearby cities like Houston and Little Rock. But distant destinations like Philadelphia and Seattle are still discounted at $79 each way.
“We weren’t kidding when we said we’d treat Dallas like a new city in our network,†Gary Kelly, the airline’s chief executive, said at a conference with analysts and reporters Tuesday. “And there’s a lot more still to come.â€
Like most fare sales, the number of seats available at those prices will be limited, and could sell out quickly around the holidays.
“If you’re interested, check them out soon, because they’re going to sell out fast,†Kelly said.
Still, Keith Taylor, the airline’s vice president of revenue management, said the availability of the cheapest tickets “is actually pretty broad,†and said most customers could find them, especially if they have some flexibility in their itinerary.
Although Love is Southwest’s home base, and adjacent to its corporate headquarters, the airline’s service there has long been restricted under the Wright Amendment. That law, which dates to 1979, limits service from Love to Texas and a handful of adjacent states.
In September, Congress revised the amendment to end the restrictions in eight years. It also immediately allowed Southwest to begin selling tickets from Love to distant cities as long as they stopped or connected at an airport within the Wright zone.
Since then, fares have plunged to the 25 new cities Southwest began offering, with prices starting at $99 each way, and even lower on some Internet specials. Rival American Airlines matched most of Southwest’s fares from its hub at Dallas/Fort Worth Airport.
Because it operates mainly from D/FW, American has the advantage of flying passengers nonstop to faraway cities.
American officials said Tuesday they were studying Southwest’s fare sale and considering their options.
“It would not be unusual for American or another airline to match a Southwest fare sale,†said Tim Wagner, an American spokesman.
Also included in the sale are $49 one-way tickets to St. Louis, Kansas City and New Orleans; $59 tickets to El Paso or Harlingen/South Padres Island; and $69 fares to Chicago and Louisville.
All of the 45 cities that Southwest serves from Love are included in the sale, which is for travel between Dec. 1 through March 9.
Kelly said the airline will likely expand its Love service in March, when the airline’s spring schedule is implemented. Some Southwest cities, particularly in the Northeast, don’t yet have service from Love because the connections would be too long or the flight would require more than two segments.
The airline hopes to add cities like Providence, R.I., and Islip, N.Y.
Southwest executives also said they have potential to grow at Love despite restrictions on the airport that were part of the Wright revisions. Under the deal, the airport will be capped at 20 gates, with Southwest holding 16. The airport had previously had 32 gates, with 14 of them operated by Southwest.
Currently, Kelly said, planes departing from Love each day have about 4,000 empty seats, which could be filled with passengers connecting to distant cities. Airplanes at Love fly about 65 percent full, he said, although he added that since the restrictions were loosened, that figure has already risen by a few percentage points.
And the airline could still add frequency, he said, particularly because the shorter flights from Love tend to take less time at the gate between flights.
“The potential for additional passengers, from a capacity perspective, is quite large,†he said.
Taylor said that should keep fares low among rival airlines at D/FW as well.
“We’re the low-fare policemen,†he said.
The local fare war comes amid a general increase in fares on airlines nationwide, including Southwest. The Dallas airline has raised fares several times in the past year, including one increase that lifted a cap on its maximum one-way price from $299 to $309 each way.
Kelly blamed the high cost of jet fuel for the increases, but pointed out that Southwest remains the low-fare leader in most markets.
Executives with the airline said they are trying to keep costs down with a stringent review of its operations nationwide, and some changes in Phoenix and Las Vegas, its two largest airports.
Productivity improvements at those airports have saved Southwest $4.6 million so far this year, said Greg Wells, the airline’s senior vice president for operations.
And a desktop software tool called “Ding,†which alerts customers to intermittent fare sales, has brought in $138 million in revenue this year.
Kelly said the carrier will continue to work to cut costs and boost revenues as it focuses on its goal to increase profits by 15 percent this year — a target they will likely achieve, he said.
“We don’t stand still at Southwest Airlines,†he said.
