Southwest To Phl?

Southwest Airlines Announces Arrival in Philadelphia

Airline Will Announce Flights, Fares Soon

DALLAS, Texas – October 28, 2003 -- The airline known for its “LUV†is teaming up with Philadelphia, the City of Brotherly Love, to let Freedom ring in 2004 when Southwest Airlines (NYSE: LUV) lands at Philadelphia International Airport.

The carrier, making the announcement today in Philadelphia with airport and local officials, will arrive in May 2004 and utilize four gates at the airport to bring Philadelphia area residents up to 14 daily flights initially to a variety of short and longhaul destinations. Southwest will begin service with five new aircraft deliveries from Boeing. Flights and fares will be announced later.

“The Freedom to Fly is a fundamental mission of Southwest,†said Herb Kelleher, Southwest’s Chairman, making the announcement with Philadelphia Mayor Honorable John Street and City of Philadelphia Director of Aviation Charles J. Isdell during a news conference in Philadelphia. “Southwest is well known for stimulating travel demand with its low fares and outstanding Customer Service, and we look forward to introducing the Philadelphia Metropolitan Area to our warm hospitality.â€

Southwest’s breadth of service stretches from coast to coast and border to border with more than 2,800 daily departures serving 58 cities in 30 states. Philadelphia will become Southwest’s 59th city and Pennsylvania its 31st state.

“Southwest’s brand of service will revolutionize air travel in the greater Philadelphia area,†Street said. “It is an exciting day in Pennsylvania when we can announce that Southwest is coming to town.â€

“We’re pleased that our infrastructure and airport operating costs were attractive to Southwest,†Isdell said. “Southwest’s growth has been closely monitored for years, and we know Philadelphia area travelers will respond to the airline’s breadth of service and low fares.â€

When Southwest enters a new city, fares drop dramatically and demand for travel increases. The U.S. Department of Transportation (DOT) in a 1993 study described the phenomena as the “Southwest Effect.†Examples include:

Between Providence, R.I., and Baltimore/Washington: Within one year of the introduction of Southwest’s service on this route, with an average fare reduction of 73 percent, passenger traffic increased by 782 percent (to more than 500,000 passengers per year).

Rhode Island’s T.F. Green Airport: After Southwest started service in 1996, T.F. Green became the fastest growing airport in the nation, as overall airport traffic jumped 88 percent during Southwest’s first year of service.

Albany, N.Y., International Airport: Between the introduction of Southwest’s service on May 20, 2000, and the end of that year, passenger boardings increased 22.5 percent to a record 1.44 million.

Long Island MacArthur Airport (Islip): In the first full year of Southwest’s service, airport passenger traffic rose 133 percent.

Between Hartford, Conn., and Baltimore/Washington: The average one-way fare was reduced from $146 to $55 and after the first eight months of Southwest’s service on this route, passenger traffic increased from 19,000 to 92,000 passengers per quarter (this route went from being the 1063th busiest city pair in the nation to 248th).

Between Baltimore/Washington and Chicago Midway Airport: When Southwest began service on this route in September 1993, only 3,530 passengers per quarter paid an average one-way fare of $121. By the last quarter of 1997, more than 100,000 passengers per quarter were paying an average one-way fare of only $79 (this route went from being the 240th busiest city pair in the nation to 43rd).

Southwest’s unique brand of Customer Service also will be a departure for Philadelphia area air travelers. The carrier, according to the U.S. Department of Transportation’s (DOT) monthly Air Travel Consumer Report, has consistently received the fewest complaints per 100,000 passengers carried of all major U.S. airlines year over year since 1991. The DOT also reports Southwest has maintained the best cumulative baggage handling record and the best cumulative ontime performance of all major U.S. carriers that have been reporting statistics to the DOT since September 1987, which is when the DOT began tracking such performance statistics and publishing its monthly report.

“We have license plate studies from other airports we serve that tell us people will drive from two or more hours away to take advantage of Southwest’s low fares and high level of Customer Service,†Kelleher said. “Our unparalleled track record, financial strength, and consistent growth helps us make a positive difference in the communities we serve.â€

For more than 32 years, Southwest has been in the business of connecting people-whether they are business executives looking to “close the deal†or loved ones gathering for a special occasion. More than 65 million people each year board Southwest’s young fleet of Boeing 737s to fly across the state or across the country at fares so low sometimes it can actually cost more to drive!

In January 2001, Southwest introduced new aircraft with a fresh canyon blue paint scheme and cool, saddle tan leather interiors and seats. The entire fleet is expected to be converted to the new design and interiors by the end of 2005.

Southwest is now in its 32nd year of operation and has reported 30 consecutive years of profitability. Based in Dallas, Southwest operates a fleet of 385 Boeing 737s with an average age of 9.5 years--one of the youngest pure jet fleets in the domestic airline industry. Even in the aftermath of the tragic events of Sept. 11, 2001, Southwest did not reduce service nor furlough a single Employee.
 
Cfm56 said:
"Industry consultant Michael Boyd said the move into Philadelphia likely was aimed at preventing rival JetBlue from gaining a foothold there.

"This was a strike directly to stop expansion by JetBlue," he said. "This was not a strike against US Airways. US Airways was just an innocent bystander." "
I think Boyd is partly right here. LUV had been entering some major markets by using secondary airports (MHT, PVD, ISP) only to see JetBlue move right into primary airports (BOS, JFK). Rather than have this happen again in the Philly area, LUV decided to go right to the primary airport and leave the secondary airports to JetBlue. But I don't think this would have happened if Delta or Northwest or American had a hub in Philly. Since it's US Airways, with its weak financial condition, LUV figures they can get away with it. It's similar to when they moved into STL where financially ailing TWA had a hub. It looks like a good chess move.
 
I think the arrival at PHL may also have an effect on CO's operations at EWR. Those folks in Princeton and Trenton that may have been fans of CO's hub at EWR may be drawn to the fares at PHL instead.

Of course, this might benefit either WN or US.
 
Well, I'm shocked.

Having said that, here is some O&D and fare information for 2002 on selected PHL city - pairs (short haul routes) that I got off the DOT website and my comments.

PHL - ALB 212 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
061 - 071 - 071 - 062 - 066

For Q4 2002 US had a 99% market share at an average fare of $256.83. I wonder how many more people would fly this route if the average fare was somewhere around $70.00? I don't see Southwest starting off with this route, but maybe sometime in the future.

PHL - BOS 280 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
904 - 1122 - 933 - 1116 - 1019

For Q4 2002 US had a 77% market share at an average fare of $214.10. AA was the lowfare carrier on the route with 13% of the market at an average fare of $175.75.

PHL - MHT 290 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
113 - 122 - 112 - 120 - 117

For Q4 2002 US had a 98% market share at an average fare of $261.00

PHL - PVD 238 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
127 - 151 - 132 - 130 - 135

For Q4 2002 US had a 98% market share at an average fare of $307.07

Based on the info in the above 3 city pairs, I could definitely see Southwest offering frequent service between PHL and both MHT and PVD at about a third of the cost of US's average fare and make an absolute killing.

PHL - BUF 279 Miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
112 - 136 - 115 - 121 - 121

For Q4 2002 US had a 98% market share at an average fare of $256.14.

Most likely would get nonstop WN service to PHL before ALB. Again, Southwest could charge 1/3 of what US wants on this route and still make a profit and most likely generate lots of new traffic.

PHL - MDW 678 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
1687 - 2386 - 2368 - 2142 - 2146

For Q4 2002 UA had a 34% market share at an average fare of $189.05. TZ (is that ATA?) was the low-fare carrier on this route with 13% of the market at an average fare of $129.22. I think Southwest might offer or 2 nonstops to MDW initially, but the rest of the frequencies would probably be 1 stops or connections at intermediate cities.

PHL - CLE 363 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
211 - 272 - 251 - 143 - 219

For Q4 2002 CO had a 85% market share at an average fare of $265.12. NW was the low fare carrier on this route with 2% of the market at an average fare of $244.60. Southwest could do well on this route, but I don't think they want to go after CO -- they seem to be focusing more on US. Also, I think they have said they would not add any new service into CLE until their relationship with the airport there improves. However, on the other side of Ohio, we haver a better opportunity:

PHL - CMH 405 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
278 - 383 - 331 - 365 - 339

For Q4 2002 US had a 60% market share at an average fare of $170.56. HP was the low fare carrier with 37%of the market at an average fare of $151.17. But since then, HP has dismantled it's CMH hub. Does HP stilloffer n/s srvice CMH-PHL? If not,this would be another great opportunity for Southwest.

PHL - DTW 453 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
527 - 654 - 602 - 592 - 594

For Q4 2002 NW had a 57% market share at an average fare of $214.53. US was the low fare carrier on this route with 39% of the market at an average fare of $203.10. Southwest could beat both of those fares, but again, I don't think they'll go after NW. I think they are looking for high-priced city pairs dominated by US. I think Southwest will probably let US and NW duke this one out

PHL - BDL 196 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
151 - 179 - 144 - 140 - 153

For Q4 2002 US had a 100% market share at an average fare of $256.83. If that many people wil pay over $1.00 a mile to go for that short distance, imagine how many more would go if the avg. price was cut in third say to about $85.00. I know 196 miles is not a very long flight but if the price is right, people will fly. AUS - DAL, AUS - HOU, ORF - BWI, DAL - OKC and IND - MDW are all under 196 miles and all have multiple frequencies. I think BDL - PHL just screams for WN service.

PHL - BNA 675 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
210 - 232 - 213 - 215 - 217

For Q4 2002 US had a 78% market share at an average fare of $241.33. UA was the low fare carrier with a 2% market share and an average price of $145.13. Southwest could probably match UA's fare and do it nonstop and generate more traffic.

PHL - ORF 212 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
102 - 139 - 128 - 091 - 115

For Q4 2002 US had a 99% market share at an average fare of $242.00. Another wonderful candidate for n/s WN service. A market that is dominated by a financially weak carrier that is charging outrageous prices.

PHL - RDU 336 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
462 - 553 - 469 - 517 - 500

For Q4 2002 US had a 99% market share at an average fare of $163.62. Another good candidate for n/s WN service.

PHL - RIC 198 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
101 - 110 - 092 - 078 - 0095

For Q4 2002 US had a 99% market share at an average fare of $298.19. If and when Southwest ever goes to RIC, I wouldn't be surprised to see some RIC - PHL service.

I think if Southwest initially does well in PHL, we'll eventually see nonstop service from PHL to most of the cities in the Middle Atlantic and Northeast much like BWI enjoys today.

Just my random thoughts.

LoneStarMike
 
How many of these daily passengers are connecting in PHL, not staying over?
These are the average fares that are advertised, what are the actual fares paid?
 
The passenger numbers are for O&D travel in each particular city pair, so none of them are connecting. Using PHL-RDU as an example approximately 250 people fly daily PHL-RDU, and another 250 fly RDU - PHL for an average per day of 500 passengers in that market.

As far as your question about fares, I can only post what' on DOT's website:

"In response to consumer inquiries regarding domestic airline fares the Department has begun issuing quarterly domestic air fare reports. The Consumer Air Fare Report provides information about average prices being paid by consumers in the top 1,000 domestic city pair markets in the continental United States. These markets account for approximately 70% of all domestic air travel.

Airlines tend to offer a wide variety of prices in any given market and it is unlikely that the average fares from this report will be the same as any particular fare currently being offered."

LoneStarMike
 
Very interesting move on LUV's part. As a US employee, I can't understand why you guys would really want to go there. I am based there now and the entire PHL operation is the most inept I've ever seen in the 17 years with US. The day to day ops at PHL makes SFO look like ISP....no kidding. It's just an unfriendly property to hub on.

BTW, I have read alot about how LUV is trying to kill off US. I've been over here for a while and can tell you with the guidance of the worst management known to mankind, US has been in an ongoing suicide race as long as I can remember. Now our CEO says it would be great to link up with a LCC to fed markets such as Europe and the Carribean.

The problem with US Airways is the continued inability to define itself. One day we are told we need to hook up with a large network carrier (full service, so what is US) and the next minute we are to hook up with a LCC. Well, what the hell are we? This kind of battle has been going on forever and the only answer management has is...labor makes too much...cut, cut, cut. This is an insult to those of us who live in the very expensive cities like New York, Boston, and DC. Believe me, after 17 years I make $40,000 and live in NYC. It doesn't go far folks. Thank God I'm single.

You guys have it going on. US retreated and abandoned. Why NOT pick up the pieces? We gave you the west coast, Florida, BWI, and now the northeast at bargain prices..........free. Our company has only it's poor management skills to blame. When the party ends, I will move on into a new area. I'm over this industry and can say at 41, I do NOT want to wheel a beverage cart around for another 26 years....but for anyone to blame LUV for the demise of US would be foolish.

We are a dying carrier that will soon go the way of EAL, PAN AM, Braniff, and TWA....to name a few. I just hope we don't ALL get screwed on the way out.
 
LoneStarMike said:
PHL - BDL 196 miles
Q 1 - Q 2 - Q 3 - Q 4 - Avg. Daily Pax
151 - 179 - 144 - 140 - 153

For Q4 2002 US had a 100% market share at an average fare of $256.83. If that many people wil pay over $1.00 a mile to go for that short distance, imagine how many more would go if the avg. price was cut in third say to about $85.00. I know 196 miles is not a very long flight but if the price is right, people will fly. AUS - DAL, AUS - HOU, ORF - BWI, DAL - OKC and IND - MDW are all under 196 miles and all have multiple frequencies. I think BDL - PHL just screams for WN service.
Ah, but DAL, HOU, BWI and MDW are "hubs". :p
 
firstamendment said:
Very interesting move on LUV's part. As a US employee, I can't understand why you guys would really want to go there. I am based there now and the entire PHL operation is the most inept I've ever seen in the 17 years with US. The day to day ops at PHL makes SFO look like ISP....no kidding. It's just an unfriendly property to hub on.
From what we are hearing the main motivation behind entering PHL was making sure we beat JetBlue into the market.

That is the only explanation that makes sense...and even that one I am not so sure about. Sounds like a spoiled child that does not really want a toy but does not want anyone else to have it either. Believe we have been scratching our heads over this one too. On the surface this decision appears to be complete lunacy. There are literally dozens of cities begging for service that would better fit the traditional SWA model. This just sounds like a huge unneccessary headache. STL can also turn into a complete mess when the weather goes down and it's nothing to sit in a 20 or 25 minute 'conga-line' there even on a good day. Same goes for LAX, LAS, and even PHX at times. The difference is AA/TW basiclly ignores us, I have a feeling the situation will not be the same with US. Sharing a congested airport with a deeply entrenched legacy carry that considers you a threat to it's very survival is not going to be pretty. Attacking a wounded animal can be dangerous.

The only reason I am not completely panicked is because Herb is still in charge of selecting our new cities. His track record speaks for itself. I just hope we don't end up adding PHL to that illustrious list of former SWA stations along with DEN, BPT, SFO, and DET. In the current environment on misstep could be disatrous. Hope there is more to this than a big game of corporate 'keep-away'.
 
Actually, I prefer Holly Hegeman's opinion on this matter. B)

From PlaneBusiness:

As for Southwest itself, I see this as a good move on many fronts. First, this will help the airline to offload some of its traffic from BWI. This is good. Secondly, it will help push the airline closer to the New York market, setting up a bracketing of the area -- and putting it within earshot of Newark passengers.

In addition, let's not forget that this is a major market, and a major competitor's hub -- and an airport that is not known for its on-time performance.

In the old days, you probably would not have seen this combination in a new city selection by the airline, but now -- as Southwest CFO Gary Kelly alluded to in the airline's last earnings call -- the playing field has changed. And, before someone else went in there and grabbed a toehold, Southwest obviously made the decision that these previously perceived negatives were only valid in an old world scenario.

More than anything else, it is this way of thinking that impresses me.

While Southwest stuck to its knitting for years, in terms of just where it would and would not go - the airline just broke a number of its self-imposed limitations with this decision.

But, that's good. Because it means the guys down on Denton Drive are smart enough to figure out that what worked 10 years ago is not necessarily what works today. When the opportunity is there, you need to grab it.

:up:
 
a320av8r said:
How many of these daily passengers are connecting in PHL, not staying over?
These are the average fares that are advertised, what are the actual fares paid?
None of them are connecting, they are all O & D passengers.

And they are the actual average fares paid, one way.
 
I wonder if we will see ALB-PHL (currently an US monopoly for non-stop service)? Sure would be a fare buster.
 
I was fascinated by Lone Star Mike's information and did a calculation of potential demand.


There are now approximately 400,000 airline trips (both ways)annually between Philadelphia and the Boston Area (BOS, PVD, MHT). I assumed an average fare of about $70 each way. Assuming unitary fare elasticity (increase in passengers proportionate to decrease in fare) there would be potential for at least 1,400,000 annual trips (both ways).
 
LoneStarMike said:
I think if Southwest initially does well in PHL, we'll eventually see nonstop service from PHL to most of the cities in the Middle Atlantic and Northeast much like BWI enjoys today.
One major problem with this line of thought, though. PHL does NOT have much available gate space, unless US really really pulls down ops. No new terminal construction is on the horizon, either, nor is there room for it. I wouldn't expect WN to make PHL like BWI anytime soon ... UNLESS US goes under, pulls out, etc.
 
I'm sure that I am just dreaming, but wouldn't it be nice if PHL U people actually recognized the threat to their existence and actually tried to please the customer? I mean with Dave leading the way of course.....
 

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