Southwest on the prowl after ATA bankruptcy

Monday, Nov. 1, 2004 | 11:22 a.m.

DALLAS -- Growth by Southwest Airlines at McCarran International Airport isn't likely to slow down, even though the airline has big plans in other markets.

Chief Executive Gary Kelly said at the company's annual Media Day here last week that Southwest is focusing its growth at Chicago's Midway Airport, the airline's fourth-largest market, because of opportunities jump-started by last week's bankruptcy filing by ATA Airlines.

Southwest, McCarran's largest commercial passenger carrier with 194 flights on its busiest days, is experiencing double-digit percentage increases in the number of passengers it serves in Las Vegas this year, and the airline has said it plans to continue to grow by adding additional flights to existing markets and new nonstops to other cities the airline already services.

But last week's Chapter 11 bankruptcy filing by ATA threw a few curves in Southwest's immediate plans and set the stage for some possible detours on the road to growth at McCarran.

"We have no desire to stand still in Chicago if we have access to more gates," Kelly said.

He indicated that new opportunities would enable Southwest to step up growth in Chicago. Southwest already has a strong nonstop schedule between Las Vegas and Chicago Midway with nine daily flights.

Kelly said although Las Vegas is the biggest station in the Southwest system, there's still opportunity for expansion.

"We'll continue to add destinations and frequencies to existing destinations," Kelly said in an interview at Media Day. "Las Vegas is the largest departure point on our system because it's a popular place to go. We feel like we've contributed to the successful growth of the city."

ATA announced shortly after the bankruptcy filing that it plans to offer its gates at Midway to low-cost rival AirTran Airways. But Kelly said he believes the decision to offer the gates rests with the City of Chicago, not ATA.

Currently, Southwest has access to 19 gates at Midway and has about 140 flights a day there. Based on Southwest's own formula of being able to perform about 10 operations a day from each gate, the airline has the capacity to grow by about 40 flights.

ATA has 14 Midway gates. Kelly said Southwest doesn't plan to bid for all of them.

Southwest's aggressive growth plan is based on the airline receiving a net of 29 more planes next year -- 35 new Boeing 737s and the retirement of six older jets.

The airline will net another 29 new planes in 2006. All of that growth won't occur just in Chicago, and Kelly says as long as there is opportunity in Las Vegas, there would be expansion.

But there are more wild cards that could alter Southwest's plans in the months ahead:

Southwest made a major splash earlier this year when it announced service to Philadelphia. With only four gates there, Southwest is limited to about 40 daily flights.

But Philadelphia is a major stronghold for US Airways, so if the company is unsuccessful in its recovery efforts, Kelly sees Philadelphia as another growth opportunity.

Southwest, based in Dallas, has its base of operations at Love Field, an airport closer to downtown Dallas than DFW. But the airline is restricted from offering flights to many destinations because of provisions of the Wright Amendment, a measure enacted to stimulate growth at DFW when it first opened.

From Love Field, Southwest can fly to or from only airports within Texas and adjoining states. So, DFW could offer some new options for Southwest, although Kelly said it's not something the airline is exploring at present.

Kelly, however, said a couple of cities has been identified by the company as possible new destinations. He said it would take about six months to ramp up service once a city is announced.

Kelly said Las Vegas' popularity in the Southwest system always puts it on the inside track for nonstop service whenever a new city is announced.

In addition to gates being available with the ATA bankruptcy is the prospect of additional aircraft.

Southwest isn't interested in anything but 737 jets, but the models in ATA's fleet inventory are the 800 series of the jet. Those aircraft have a capacity of about 175 passengers -- considerably more than the 137 existing Southwest 737s carry.

Kelly said the airline is evaluating the pros and cons of putting 800-series jets into the Southwest fleet. The pros: The airline could mix in higher capacity aircraft on routes that are heavily traveled. The cons: It wouldn't be as easy to substitute a similarly sized aircraft if a mechanical problem developed on an 800-series plane.

Another potential source for 737 jets for Southwest would be planes in the US Airways inventory. If US Airways were forced to liquidate, its 737 jets are more compatible with Southwest's existing fleet.

While Southwest explores its options and waits to see what happens to some of its competitors, Kelly said there are some decisions that won't occur in 2005 -- those involving in-flight amenities.

While Southwest President Colleen Barrett said during the Media Day presentation that the airline is looking into providing assigned seating -- a major departure for Southwest, which offers open seating on its flights -- the executives said nothing would happen on that front next year.

"I wouldn't be surprised to see us going to assigned seating," Barrett said. "While we don't want to do anything to increase our turn times, we do try to be flexible."

Barrett was referring to the amount of time it takes to unload a jet, service it and load it for the next departure. Quick "turn times" are a hallmark of the airline that helps the company stay profitable, executives have said.

Technological advancements, however, are making the feasibility of assigning seats in the future a possibility.

Likewise, there are no plans to offer in-flight entertainment systems or enhanced meal options, amenities being offered by low-fare rivals that have been slowly encroaching on Southwest's competitive turf.

It's not the first time Southwest has mentioned investigating assigning seats. Two years ago, an airline executive said at an aviation conference that the company was exploring assigned-seating options.

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