Competition in the Skies: Is Delta the Problem, or the Solution?

[swamt]

Astrada, 
 
Never have I said the Southwest Effect happens at all cities or communities.  It will happen in some and it may not happen in some, especially where there is already a LCC operating there. They may have already triggered the Southwest Effect previously when they moved in as it can be triggered by "any" airline not just SWA.   Your statement that the Southwest Effect hasn't been around for years is incorrect, it is still around and will continue to occur in the future.  It won't happen at every single new market SWA starts, but it will still happen.   It will also happen over on the international side, we will all be reading in a year plus about the Southwest Effect going international when SWA spans their wings. May not occur where the likes of JB, Spirit and other LCC's already provide services as they may have already triggered the SE previously...  The biggest SE may come right out of good ole Houston Tx when the new terminal is done...

 

[AdAstraPerAspera]

So the southwest effect is still alive and well at tiny airports that were underserved already, wow, good luck with that growth strategy.

 

[swamt]

Yes, as well as other large airports that will be reported in the future.  SWA's growth strategy will greatly increase over the next few years.  Matter fact this will be the fastest SWA has ever grown in the past with all the synergies, international flying, merger complete etc...
 
BTW SWA has always provided service from smaller airports that's part of SWA's dna.

 

[swamt]

As far as your comparison of the Southwest Effect at MSP.  read this article:  The 'Southwest Effect' changes as the airline evolves.
 
In this article it actually shows the Southwest Effect worked there, just not as it use to due to the recession that came at the same time period.  Here's a quote from the article;
"When Southwest started flying to markets such as St. Louis and Kansas City, data shows that impact was immediate at MSP; HIGHER PASSENGER TRAFFIC AND LOWER FARES ON THOSE ROUTES.
 
To still have an impact of the Southwest Effect during the Great Recession speaks for itself.  MSP is a large airport, and it happened there, during a recession, it just didn't happen as big as it usually does, and that, my friend, speaks volumes.  So WT and your assumption that the Southwest Effect is gone is completely false.  And you guys try to tell me to get a clue, C'mon man...

 

[eolesen]

Try to take Mike Boyd with a grain of salt. His client list is airports who want increased service, and Southwest isn't as interested in those anymore.

The effect on WN entering into an under served market is likely still valid. The problem is there really aren't that many viable under served markets left.

If WN started flying to MSN, GRB, or any other small city under 1M people, you'll see the same stimulation in both fares and boardings. The question becomes one of whether it's profitable enough for them. I've said it before -- if a city can't support a dozen or so 24 hour Walmart supercenters, they won't support Southwest's entry level of traffic. So, the effect isn't being shown as much as it was ten years ago. With fewer large markets left to tap into, perhaps they'll go small market again...

 

[WorldTraveler]

and GSP is one of WN's weakest markets and actually quite ripe to being next on the cutting room floor.
 
I may be wrong, but isn't GSP one of the smallest WN cities?
 
and it still doesn't change that WN like any airline can stimulate traffic based on a desire to move traffic but with about a max 5% CASM difference, WN is simply NOT going to be able to operate at a long-term price advantage to other carriers.
WN simply cannot offer fares that are significantly below other carriers on similar service when they have a cost advantage that is less than exists between DL and UA. 
 
Will WN discount aggressively to win business at DCA and DAL?  yes, they will but fares will have to rise fairly quickly closer to their cost level or they will lose money.
 
Only in markets where WN's CASM is significantly lower than the mainline/legacy carriers' costs can WN expect to maintain a fare advantage for an extended period of time.
 
And if there really are markets that are that lucrative for the legacy carriers, other airlines besides WN have found them and likely already serve them.
 
In short, DL is only interested in competition and competition is the consumer's best friend.  Airlines that can successfully compete against other carriers manage to grow their business which is good for employees and still generate higher stockholder returns.  Successful competitors create win-win-win for everyone. 
You can claim credit for MSP, but it was a high fare city to NW"s credit and now there are other carriers that make WN's fares seem high. 

 

[AdAstraPerAspera]

BTW SWA has always provided service from smaller airports that's part of SWA's dna.

 
 

The effect on WN entering into an under served market is likely still valid. The problem is there really aren't that many viable under served markets left.

 
+1

 

[WorldTraveler]

WN provides service to medium sized, not small, airports.  Small airports in the US are the ones that support 3-6 RJ flights/day, far below what WN can viably serve.
 
FL served a number of small cities - but WN proceeded to close them. 
 
WN's model was built around stimulating traffic based on low costs and high fares but there are enough other carriers that can stimulate traffic at lower fares than WN can offer based on its costs for WN to be able to claim that they can do it now  Further, many network carriers are capable of stimulating their own traffic with their own low fares if they believe a market is worth stimulating.

 

[eolesen]

WN provides service to medium sized, not small, airports.  Small airports in the US are the ones that support 3-6 RJ flights/day, far below what WN can viably serve.

Use whatever small-medium-large definition you wish. Your assumption that the WN effect doesn't exist is flat out wrong.

You can focus on splitting hairs over terminology, yet you offer nothing of any substance to argue against your statement on the WN effect.

Until you can back it up, I'll rest on the fact that fares do come down and traffic goes up when they enter into a market where there's inadequate competition.

Go ahead, puff your chest all you wish about what's happened in ATL, but the fact still remains in every "medium" or small market they've entered, fares come down and traffic gets stimulated.

 

[swamt]

I rest my case...

 

[WorldTraveler]

you two can believe what you want.
 
WN has closed 18 cities since the FL merger and nearly all of them were served by mainline aircraft and had not grown in any significant way for years.
 
Would you like to see WN's growth trends for JAN, EYW, CRP, etc?
 
WN added a lot of traffic years ago but their ability to stimulate traffic in small cities has all but ended, driven largely because WN doesn't have costs low enough and markets large enough to stimulate traffic in small and medium sized cities.
 
That is precisely why they are turning to large cities like DCA, DAL, and to Latin America where the markets are much, much larger.
 
WN is walking away from small and medium sized cities by the dozens in order to focus on large cities.
 
It is truly breathtaking if you can't see the trend that is clearly underway at WN. 

 

[swamt]

That's because SWA closes any cities that are not profitable, or non-efficient to continue.  AT was flying a very different model than SWA is.  Also a lot of the closures of cities or flights after the AT purchase and in prep for the W/A going away, are to use A/C to facilitate the W/A going away.  Since Boeing cannot provide A/C fast enough SWA is forced to move them around and use them where they are needed the most, which is much more desirable cities and routes.  And now that the DCA and LGA markets are opening for SWA they have even more areas to focus on.
If you wanna believe that SWA is pulling out of cities due to competition then so be it, but that is obviously not the case at hand...
 
SWA is now focusing on some larger markets and airports directly due to the profitability that can be achieved, as well as the higher fares and once again the Southwest Effect will prevail rather you want to admit it or not...

 

[700UW]

JetBlue is canceling some current city pairs for their DCA buildup.
 
From another website:
 
To make the new DCA flights possible, we must move aircraft from underperforming routes to these new ones. This will be accomplished by ending service in the following markets:
 
PBI – SJU: last flight both directions is June 16
 
SFO – AUS: last flight is June 15 | AUS – SFO: last flight is JUNE 16th

OAK – IAD: last flight is June 15 | IAD – OAK: last flight is JUNE 16th

LGB – IAD: last flight is Sept. 1 | IAD – LGB: last flight is Sept. 2

BUF – RSW: this seasonal market will not resume in November

 

[robbedagain]

swamt  700  just remember  whats good for delta is only good for delta  even if that means closing cities..   I believe WN and B6 are doing what any other LCC would do since Boeing cant produce the planes fast enough    may be down the road when more become avail then the 2 airlines will resume service  who knows

 

[WorldTraveler]

That's because SWA closes any cities that are not profitable, or non-efficient to continue.  AT was flying a very different model than SWA is.  Also a lot of the closures of cities or flights after the AT purchase and in prep for the W/A going away, are to use A/C to facilitate the W/A going away.  Since Boeing cannot provide A/C fast enough SWA is forced to move them around and use them where they are needed the most, which is much more desirable cities and routes.  And now that the DCA and LGA markets are opening for SWA they have even more areas to focus on.
If you wanna believe that SWA is pulling out of cities due to competition then so be it, but that is obviously not the case at hand...
 
SWA is now focusing on some larger markets and airports directly due to the profitability that can be achieved, as well as the higher fares and once again the Southwest Effect will prevail rather you want to admit it or not...

if WN could generate revenues in small cities, then they wouldn't be cancelling them in order to fund larger cities.
Period. End of story.
 
WN can't stimulate the traffic the way it used to and certainly not at the levels that FL did before the merger - because FL had lower costs.
 
The simple fact is that WN has higher costs and so must have much larger markets from which it can use the little bit of market stimulation potential it has in markets which have had high fares.
There is no justification for WN's decision to close 18 cities since the merger except that it cannot generate the revenues from those types of cities it once did.
 
JAN was a city where WN was able to come in and generate good traffic despite it being a small market city (even though there were political factors also involved).  WN's share of JAN has shrunk, it is powerless to generate more traffic, and like many other cities, WN has no choice but to walk away and look for greener pastures elsewhere.  
 
WN is not returning to the cities they close.  Their growth will come south of the border.