SFGate: Southwest hopes to lure more business travelers

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Sunday, June 28, 2009 (SF Chronicle)
Southwest hopes to lure more business travelers
David Koenig, Associated Press


   (06-28) 04:00 PDT DALLAS --
   LaGuardia Airport is the smallest of the three major airports in the New
York area, with just two main runways. Planes often sit in long lines on
the tarmac, waiting their turn to take off.
   So why would Southwest Airlines, a carrier that boasts about its on-time
prowess, want to go there? In many ways, because it has to.
   Southwest prospered by offering low fares to leisure travelers whose only
other affordable option was a car trip. It flew primarily to America's
secondary airports, where costs are low and productivity is high because
incoming planes can land, drop off passengers, take on the next group and
get back in the air quickly.
   On Sunday, Southwest starts service at LaGuardia, one of the nation's mo=
st
congested airports. This should bring cheaper ticket prices to New
York-area vacationers flying to Chicago, Baltimore and beyond. But the
move is also part of a risky transition that Southwest knows it has to
make to win the loyalty of business travelers who increasingly will
dictate its future prospects for success.
   Southwest started flying in 1971 with three planes. Herb Kelleher, the
garrulous, chain-smoking co-founder, fought in court and in the air
against bigger airlines that tried to run him out of business.
   Southwest didn't offer the amenities found on other airlines, but it
outlived early rivals such as Braniff by sticking to a core philosophy:
Give people low fares and great service.
   The Dallas-based carrier still sees itself as an underdog today, even as
it serves 65 cities and carries more than 100 million U.S. passengers per
year, more than any other airline.
   There are still no first-class cabins and no assigned seats on Southwest,
giving it the air of a carrier for penny-pinching vacationers.
   "We're very dependent on business travelers, so we're not a leisure
airline like some of our smaller competitors are," CEO Gary Kelly
countered in an interview. He says company surveys show that in normal
times at least 40 percent of his customers are traveling on business.
   Airlines covet business travelers because they make repeat trips and oft=
en
pay higher fares for booking at the last minute.
   Southwest needs that revenue now. The airline has been profitable for 36
straight years but has been in the red since last fall. Traffic is down
and costs are rising.
   While it's cutting flights across its system, Southwest is also entering
New York and three other big cities, including Boston's Logan Airport.
   Robert Crandall, who competed against Kelleher when he ran American
Airlines in the 1980s and '90s, said Southwest has stuck to a well-defined
business model of low fares and low costs at secondary airports.
   "Going into LaGuardia is a change to that model," Crandall says, "but
they've decided they don't have any choice - they need the (passenger)
volume to grow."
   Southwest gained an opening at LaGuardia with the failure of a former
partner airline, ATA. Southwest bought ATA's LaGuardia takeoff and landing
slots out of bankruptcy in December.
   But as it goes after new passengers, Southwest faces its stiffest
challenge since the early days in Texas. Volatile fuel prices and the
recession have hurt Kelly's attempt to raise annual revenue by $1.5
billion.
   "It's just been a very long, difficult decade with one economic challenge
after another." -----------------------------------------------------------=
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Copyright 2009 SF Chronicle

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