At least one piece of “the Southwest effect” is still going strong: the hype machine.
Last week, Southwest Airlines called a news conference to tout its plans for the end of the Wright amendment, which restricts flights at Love Field. The story led local newspapers and TV news, even though Southwest held back key details, such as fares and the number of flights to new destinations. Trips don’t even start for eight months.
Such is the halo atop the little airline that could.
But Southwest is no longer a sassy upstart or low-cost carrier. And rivals have steadily chipped away at its advantages. As a result, the Southwest moves at Love aren’t likely to be a game-changer — not for consumers, Southwest, American Airlines or Dallas/Fort Worth International Airport.
Last week’s scripted event was a sign of things to come: a lot more happy talk than market revolution.
Don’t get me wrong. Travelers and Southwest will benefit from being free to fly anywhere from Love. For consumers, more choice is always a good thing, especially without bag fees. Southwest will also wring more revenue out of long-haul flights from its fortress hub.
But it’s been 21 years since the Transportation Department documented a fundamental change in air travel and dubbed it “the Southwest effect.” Remember Southwest’s $19 one-way tickets?
From its tiny start at Love in 1971, Southwest spread its business model across the country, upending the industry. One California example in the government’s 1993 report: After Southwest launched service between Oakland and Burbank, fares dropped 55 percent and traffic increased sixfold. In its defense, United tripled its capacity.
Southwest still touts the Southwest effect, and the company said nonstop competition from Love has already lowered some D/FW fares by 20 percent.
But Southwest acknowledges that it no longer has the power of old. In many cities, it essentially competes against itself on pricing, so officials are reframing the discussion.
“We’re still the low-fare policeman in the industry,” said Ron Ricks, an executive vice president who was a key player in repealing Wright. “The question is not how much we lower fares and stimulate traffic. Ask what fares would be if we were not in the market.”
That’s difficult to quantify, of course. But it’s revealing that Southwest would publicly tout the end of Wright and then Ricks would tamp down expectations a few days later.
“Southwest will get through it, but it won’t be the bonanza people expect,” said analyst Mike Boyd, who’s long questioned conventional wisdom on Wright.