Walk up fares for today for one way CLE-MKE are $199. Whereas CLE-MDW are $264 and CLE-STL are $312. 2 weeks out CLE-MKE are just $101. Doesn't seem profitable.
The fares you're finding on CLE-MKE are simliar to or better than what LA Basin to the Bay Area have, and many of those city pairs are a bit longer than CLE-MKE. Here's a bunch of baybasin markets including some Southwest monopolies to compare to CLE-MKE being $199 walk up and $101 a couple weeks out.
Today / Tomorow
Late July -- about two weeks out
I don't think Southwest is out to ax these routes -- from all indications California has largely been a huge success over the past 25 years. Some routes do better than others and competitive pressures can always tinge potential profits, but it appears pretty likely Southwest can make money on these fares for a 300-400 mile segment.
So what's the deal with CLE-MKE being a bunch cheaper than CLE-MDW? A couple of points.
1. It's entire possible that CLE-MDW is solidly more profitable than CLE-MKE. But that in no way makes CLE-MKE un
profitable. The city pairs an airline serves have a broad range of financial returns.
2. A key misisng piece of the puzzle which fares don't tell you is traffic composition.
CLE-MDW flights feed scores of connecting flights to dozens of cities so there is a mix of local-fare passengers and connecting passengers
CLE-MKE flights have few if any good connecting feed on either end so they are probably mostly people paying the local fare
It's great that Southwest gets $264 for CLE-MDW today or tomrorow, but here's what the CLE-MDW seat brings in on connecting trips over MIdway if you do a quick & dirty pro-rate based on mileage
$155 of the $370 CLE-MDW-OMA walk up fare
$122 of the $476 CLE-MDW-DEN walk up fare
$159 of the $368 CLE-MDW-MCI walk up fare
$154 of the $295 CLE-MDW-MEM walk up fare
$47 of the $313 CLE-MDW-LAX walk up fare....one of the CLE-LAX routings with this fare is a MDW connection
Those are all a lot less than the $199 walk-up CLE-MKE fare. Some a whole lot less. They are cacluated just on mileage and airlines probably use a more complex way to split revenue on connecting lights, especially when the two segments are of very different lengths.. But they illustrate a point, and even if you monkey with the ratio there's only so much you can do to make CLE-MDW be allocated more. For that $313 CLE-LAX fare it would take incredible mental gymnastics to see how CLE-MDW could be allocated much more than $100, and even that might be far too generous.
It's not that there are zero thru and connecting passengers on any CLE-MKE or MKE-CLE segement, but the opportunities are far fewer and are often superceded by Southwest nonstops. Tomorrow's CLE-MKE at 7:15am is sold out. It continues on to St Louis but there's a CLE-STL nonstop which overlaps in half the time. Same with the one good CLE-MKE-DEN connection tomorrow which is overlapped by a CLE-DEN nonstop. Again it's not that CLE-MKE is 100% local passengers but with so few good connecting options at either end the portion of locals is high.
Now none of this ensures CLE-MKE is
profitable, and in the dead of winter when flights are often half-empty they had better have retained most of the $199 business traffic and are having a harder time finding leisure demand. But guessing performance invoves more than local fare levels and load factor becuase traffic composisition can make total revenue a whole lot different than what one would expect, good or bad.