Southwest Goes Old School, Heads to Milwaukee

You would think that adding service to Minneapolis/St Paul, Boston, and New York/La Guardia would be enough for Southwest this year, but you’d be wrong. At the airline’s annual meeting yesterday, CEO Gary Kelly announced that this fall. This is an old school, traditional move for Southwest, though there is a lot of competition awaiting their arrival.

Back before Southwest started flying into the heart of big congested airports, they used to like bracketing cities. Boston, for example, was served by Providence in the south and Manchester in the north. When they first went to Chicago’s Midway airport on the south side of town many years ago, it was just assumed that they would bracket the city by going into Milwaukee on the north some day. It took them long enough, but it’s finally happened.

For Southwest, this gives them access to many of the rich, northern Chicago suburbs that shudder at the thought of heading down traffic-choked roads to Midway. They prefer O’Hare, but Milwaukee isn’t too bad for some of them. North Chicago, for example, is 30 miles from O’Hare but only 45 miles from Milwaukee.

Of course, it’s not just about the northern suburbs of Chicago. There are the lovable cheeseheads in Wisconsin as well, and they must be jumping up and down at this bounty of new air service they’ve been receiving lately. It looked pretty bleak for Milwaukee when Midwest started its death spiral, but AirTran quickly came in and started building it up. Now to have Southwest too? It’s time for a polka party for the locals, but maybe not so much for the airlines. This could be like a mini-Denver situation where you have one legacy and two low cost carriers fighting it out. Only there’s a lot less demand here than in Denver.

I lump Delta, Northwest, and Midwest all into the legacy role held by United in Denver. Midwest is basically irrelevant. It’s a brand name with a couple of airplanes that basically exists as an arm of Delta. So let’s just say that Delta needs to decide what it wants to do in Milwaukee. Is it worth fighting? We’ll see.

But the real action is on the LCC-side of the house. Southwest started stepping on AirTran’s toes in Boston recently, and now this is a full frontal assault. It’s time for war. AirTran already serves most of the likely suspects for Southwest’s first routes (Phoenix, Vegas, Baltimore, Florida, etc). In fact, the only place where AirTran has a real hole that Southwest might like to fill is Texas. Of course, AirTran has limited frequency to most of these places (Phoenix is only seasonal), so Southwest would probably come in with a lot more firepower.

This also doesn’t look like it’s going to be a slow rollout. According to the press release, they will serve “multiple destinations from the airport of choice for business and leisure travelers who work and live across the vibrant and growing region.”

AirTran has to be pissed. They’ve been trying to secure Milwaukee as a good Midwestern base for some time. After their failed attempt to buy Midwest (Midwest’s loss, AirTran’s gain), they’ve been slowly building up their own operation as Midwest shrinks. Do they really plan to fight? Just after Southwest’s announcement, they thought it would be a good idea to at the airport. And then this morning, they put out ANOTHER release about some . It’s on like Donkey Kong.

Meanwhile, this has to be the happiest group of airport folks on earth right now. Getting Southwest is a big win for Milwaukee which has tried to for the airline for many, many years. To have both Southwest and AirTran fighting for supremacy is music to their ears. I imagine they’ve cracked open the champagne (of beers, naturally) to celebrate this one.

It’s good to see Southwest return to their roots a little bit here, but it’s not going to be easy. They’re trying to use some old-fashioned market stimulation in a mid-size city with a large metro catchment area to spark some growth. Only problem is that AirTran is there waiting for them, and they’ve got a lower cost structure.

I must admit I was initially really surprised to see Southwest open four cities this year alone, but I understand why they’ve done it. By adding cities, they can cut capacity elsewhere in the system without having to lay people off. In the past, Southwest could always grow themselves out of a jam, but now it takes a little more creativity. We’ll see how this fight goes.


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