SWA Vs. AA: Who's Killing Who?

Tue Jan 25, 2000 10:47 am

This post refers to regional competition between Southwest Airlines and American Airlines, particularly on commuter routes within the state of Texas (both airlines are Dallas based by the way).

Within Texas, SWA has made a lot of money on business routes such as HOU-AUS, HOU-DAL, AUS-DAL, etc. It has been effective for two main reasons: low cost walk up fares and accessibilty to airports which are closer to city centers. Dallas Love Field, for example, is only about 5 miles from downtown Dallas. The concept is similar to the "Shuttle" concept of US and DL on the northeast corridor but without actually calling it that.

In 1998, American Airlines decided to take on SWA by introducing 14 daily nonstops between DAL and AUS and a similar number between DAL and HOU, employing MD-80 and occasionally Fokker F100 aircraft. Only an airline like AA could afford such a ballsy manuever, and it turned out to be one of their biggest flops yet. The higher-ups just couldn't figure out why their MD-80's were leaving with a full complement of about 4-5 passengers while SWA was full time after time, day after day. At one point they tried reducing the fares to as low as $29-$39 round trip but to no avail.

Recently, they have substituted the ERJ-135/145 on these routes which has brought down operating costs significantly but passenger loads remain dismal despite equal pricing with that of Southwest. This is a great example of how image can mean so much to an airline towards reeling in that prized passenger.

My question is this: Why doesn't AA simply give up? I know an ERJ can turn a profit with a small pax load but this service doesn't seem profitable in the long run. The gutsy arrogance which characterized AA's swooping into the market has really been a disaster for the airline but they still continue the service?

But this is just one example. Does anyone know of any other sectors where SWA is killing Regional service of the big boys?
Why do the airlines continue to fight SWA?
Matt D
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Everyone Vs Southwest

Tue Jan 25, 2000 10:52 am

United is feuding with WN in most of the West Coast Shuttle by United routes.
Delta Express and USAirways MetroJet were both set up to combat Southwest.
Why? Can't be anything more lofty than the perpetual pursuit of the almighty dollar.
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RE: SWA Vs. AA: Who's Killing Who?

Tue Jan 25, 2000 10:55 am

Southwest is taking Delta on a run for its money in the Southeast, which is really good since it brings fares down. United, American, and Southwest have all tried it once before and never succeded.

RE: Everyone Vs Southwest

Tue Jan 25, 2000 10:57 am


What I mean is why bother when you're not on a level playing field? In order to accomplish this, you must become DL express or Metrojet.

But what I really want to know is...why did AA just jump in and go from 0 flights a day to 14.

THankfully, they got their arses kicked.
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RE: SWA Vs. AA: Who's Killing Who?

Tue Jan 25, 2000 11:46 am

The other carriers don't get it. You can't just repaint your planes and call it a new product. It's not that easy. Southwest has carved a whole new phenomenon in our flying society.

MetroJet was launched as a single-class, low-frills carrier. However, when they first started, most flights went through their BWI hub. That's just like the United Shuttle flights going through DEN or SFO. Southwest does point-to-point, going to lots of places from lots of places. If one airport gets shut down, Southwest has other options to reroute customers. The others have a harder time.

The other thing is aircraft utilization. An airplane on the ground isn't making money. Southwest keeps their planes on the ground no more than 20-30 minutes. I'd like to see United or US Airways pull that one off for every flight.

Southwest also knows where they SHOULD NOT serve. They avoid congested airports or those that suffer serious delays. Why the heck is MetroJet going into BOS or ATL? That's insane!

A while back, I wrote a post about why I think Southwest is so successful. You'll find it here.

If you really want to get a good grasp on how Southwest came into doing so much of what makes them nuts, check out the book Nuts! : Southwest Airlines' Crazy Recipe for Business and Personal Success. I've set up the search link at Amazon, you'll find it here.
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RE: SWA Vs. AA: Who's Killing Who?

Tue Jan 25, 2000 12:05 pm

Well said. I know that some of you refer to SWA as "KMart" and that's okay.

But, SWA does a great job of moving people from place to place at a decent price with little hassle.

I know that boarding cards suck, but if can take a little time out of your busy schedule to get to the airport early, go get a good seat (as long as there isn't 103 pre-boarders).
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RE: SWA Vs. AA: Who's Killing Who?

Tue Jan 25, 2000 12:20 pm

To set the record straight...

AA began service DAL-AUS with 14 trips using MD80 & F100s. AA did not serve DAL-HOU. When AA couldn't fill the MD80s, they went to all F100s, and subsequently now the ERJs.

AA was (re-)establishing a presence at DAL, in case the airport is opened to longer-haul flying, which will probably happen. That was more important than competing w/ WN on the route. AA wanted facilities at DAL in the event they felt necessary to compete w/ longer-haul flights from there in the future.

RE: SWA Vs. AA: Who's Killing Who?

Tue Jan 25, 2000 12:27 pm are correct there was no DAL-HOU service but I believe there was AUS-HOU service.

While they may be establishing a presence at DAL, aren't they still losing quite a bit of money on the routes in addition to the amount they have lost already? Will the Wright Amendment be repealed allowing long haul into DAL? If so, wouldn't this be a greater boon to SWA than to American?

AA already has extensive ops out of DFW? Why would they care about long haul out of Love Field?

It seems like AA is making a mistake by just jumping into the market in this haphazard way.
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"Southwest Effect"

Tue Jan 25, 2000 12:29 pm

I shall tell you all the tale of what happened at PVD. SW came here is 1996 when the airport has 2.4 million passengers. When AA heard word of SW comming they threatened to pull out but it was all talk. though they did drop 1 flight. As time went on for the major airlines pax skyrocketed but yields dropped. Now for 1999 PVD his 5.15 million growth has slowed alittle as expected but the airport is expected to maintian higher than average growthi belive around 8% was estimated for the next 10 years. Since then We have seen a larget split into which airlines are "good" and wich are "bad" All Airlines show strong growth but only some show good plans towards the future. UAL posted 50% growth for 1999 at PVD CO posted near 30% as did AA. UAL and CO both have intent on expanding. A DEN flight by UAL as well as upgrade to CRJ's is possible this year. CO just upgraded a ERJ to a 737 on CLE and might add a 2nd IAH flight. AA on the other hand has HUGE demands for both DFW and MIA neither fo which they serve. PVD is actually the largets market in the US for DFW that doesnt have n/s service and MIA is in the top 10. The Rhode Island Airport Corp has met with AA twice petitioning for DFW and MIA service yet both tiems they have refused my guess it due to the "Southwest effect" But if AA dont want to do it whe they have HUGE potential hey it is their own loss. SW already serves HOU in TX and SW can serve FLL just N. of MIA if AA wont do it, We arent gonna wait for them, were gonna go right on without em. Delta and USairways also dont add flights due to low yields. Good examples of this are how BOS has had a large Metrojet expansion as well as Delta express to attemp to combat SW but arent winning.
Experience is what you get when what you thought would work out didn't!
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RE: SWA Vs. AA: Who's Killing Who?

Tue Jan 25, 2000 12:44 pm

I guess AA felt the $$ lost on the DAL-AUS flights was worth the potential for getting in at DAL before the floodgates are opened as they feel will happen if the Wright Ammendment is repealed. I think AA is just too protective of its regional traffic from the DFW area that they believe they must compete on long haul service from DAL if that happens.

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Tales From Hartford

Tue Jan 25, 2000 11:51 pm

Metrojet was scared and angry when Southwest came into Hartford (BDL) in October. They dropped several flights and watched as WN went from 0 to 10 percent market share in no time.

To a lesser extent Delta Express has been affected, but have not dropped flights.

Also, Metrojet just dropped flights from Raleigh, another new WN location.

Other than fewer Metrojet flights and Air Tran pulling out before Southwest arrived, traffic is up double digits here in Hartford, with even UA and AA posting 30 percent or more gains.

On the plus side, America West is coming here this spring and AA will be back with BLD-LAX non-stops.
Free-thinking, left-leaning secularist
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RE: SWA Vs. AA: Who's Killing Who?

Wed Jan 26, 2000 6:28 am

It's true. Southwest has a tendency to help other airlines' load factors go up.

They don't steal markets from other carriers, they force the other carriers to lower their prices, which brings more people into the marketplace.

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