Southwest to test $99 fare to coast No-frills airline threatens to capture cross-country routes

'Scaring the big guys'

Yet jets are geared for jaunt with peanuts, not a 5-hour trip, plus meal


October 25, 1998|By Robert Little | Robert Little,SUN STAFF

About 3:15 in the afternoon on Thanksgiving Day, one extra airplane will land at Baltimore-Washington International Airport -- just an ordinary Boeing 737, inbound from Oakland, Calif.

But all over the country, airline executives will be watching.

When Southwest Airlines Flight 735 touches down, it will be the first time in the scrappy Dallas carrier's 26-year history that it has flown an airplane full of people from one side of the country to the other without stopping.

While company officials call it just a "test flight," industry observers figure Southwest isn't testing for nothing.

The one-way fare for the flight is $99 -- the lowest transcontinental fare in the business. And if the airline with a reputation for driving fares downward starts scheduling regular nonstop, transcontinental flights, the passenger airline business could be in for a ride of its own.

"I'm sure it's scaring the dickens out of the big guys," said Tom Parsons, publisher of Best Fares magazine in Arlington, Texas.

"They can call it just a test, but this sounds like Southwest is telling the other airlines: 'You messed with our turf, now I'm messing with yours.' "

Southwest's turf has always been short flights between secondary airports. With its strategy of sacrificing frills in favor of cheaper fares, the airline has routinely beaten down the costs of commercial flights on every route it chooses to fly.

According to a study of domestic airline fares by the U.S. Department of Transportation, passengers flying from any city that Southwest serves pay an average of 31.2 percent less for each mile they fly -- translating to tickets that are $56 cheaper on average.

Besides being among the most-heralded success stories in commercial aviation, Southwest's philosophy is also among the most copied. United Airlines, Delta Air Lines and US Airways all have created frill-free, short-haul shuttle services in recent years designed to recapture the economy-class business that is Southwest's specialty

And Southwest's response has been to pursue more of the larger airlines' core service -- long flights.

In several instances it has scheduled nonstop flights to replace routes it flew in two or more steps. It will add nonstop flights between Baltimore and Phoenix later this year, for instance, and has added service between Nashville and Oakland, and Kansas City and Los Angeles. It's average passenger flew 619 miles during the quarter ended Sept. 30, more than 100 miles farther than the average four years ago.

Southwest began 26 years ago as a Texas commuter line and now serves 53 cities across the country. But it always left the nonstop, transcontinental business to the bigger airlines.

Airline officials say the company is staying true to its short-haul roots, the Thanksgiving schedule notwithstanding.

'One-time-only thing'

"This is a one-time-only thing, to find out what people think about the longer flight," said Kristie Kerr, a company spokeswoman. After Thanksgiving, Southwest "has no plans at this time" to fly coast-to-coast again, she said.

But to many industry observers, the Thanksgiving Day flights suggest Southwest has designs on that service, too.

"Their great skill has always been sort of running between the legs of the giants," said David Stempler, president of the Air Travelers Association in Washington. "But this looks like they're going straight at them."

The airline already offers promotional fares for round-trip, one-stop service to Oakland costing less than $300. Analysts have little problem predicting what will happen to the nonstop, transcontinental market if Southwest starts flying it regularly.

"I can answer that: It will mean lower fares," said Bob Zuskin, research director for GRA Aviation Specialists Inc., an airline consultant in Northern Virginia

Another motivator that could be pushing Southwest toward more lengthy nonstop flights: a federal tax passed last year that will eventually add $3 to passenger fares at each takeoff and landing.

Southwest fought the new tax, saying it gouged short-haul airlines. A company analysis shows that each $1 increase in fares leads to a 1 percent decrease in passengers, an airline spokeswoman said.

Until recently, Southwest Airlines was locked out of the nonstop transcontinental market by technology. It flies nothing but 737s -- a workhorse of the passenger airline business, but an airplane that typically lacks the fuel efficiency to fly coast-to-coast.

US Airways flies from BWI to the West Coast with 737s reconfigured for longer flights, and United Airlines flies the similarly modest Airbus 320, but such flights push the limits of the planes' capabilities.

With Southwest's fleet now complemented by the first of Boeing's 700-series 737s -- a slightly larger aircraft with increased range -- the airline has a more comfortable capacity to fly from ocean to ocean. Southwest has firm orders for 129 of the planes by 2006.

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