Will Southwest Air fly to Anchorage??
(NOTE: This story originally ran in the Alaska Dispatch.)
It’s a fair question in light of Southwest‘s bid for Denver-based Frontier Airlines. Airline financial analysts concede Frontier is Southwest’s for the taking.
For Alaskan travelers, such a takeover could lead to lower airfares and more options — intense airline competition they haven’t seen in years.
Frontier, based in Denver, is in bankruptcy. Until recently, only Republic Airways (a holding company that operates a regional airline, Chautauqua Airlines) had shown an interest in acquiring the carrier. But last week, Southwest made a bid that was several million dollars more than Republic’s.
The answer could fall either way. Currently, Frontier Airlines operates a single, seasonal non-stop flight from Anchorage to Denver. Southwest might decide not to continue it. In its current state, Frontier’s Anchorage-Denver service really doesn’t fit the Southwest model. High-frequency service is part of Southwest’s “secret sauce.”
Then there’s the motivation behind Southwest’s bid for Frontier. It’s certainly not to grow Southwest. The purpose, rather, is to eliminate competition in Denver.
So where would Anchorage fit in the picture?
Simple. Anchorage represents an out-of-the-box opportunity for Southwest. The city has good air service but no low-fare operators. Fares are high, and there is pent-up demand for more affordable air transportation.
The incumbent airline, Alaska Airlines, has built Anchorage into a fortress hub. In addition to the nonstop flights around Alaska (Fairbanks, Nome, Bethel, Kodiak, Juneau, Adak), the Seattle-based carrier offers nonstop service to Seattle, Portland, San Francisco, Denver, Chicago, Vancouver, BC, Honolulu and Maui.
There’s more. Alaska Airlines and Southwest Airlines are fierce competitors in several markets, including Seattle, Portland, Las Vegas, Oakland, Phoenix and Denver. When Southwest proposed to build a terminal at Seattle’s Boeing Field, it was Alaska Airlines that mounted a vigorous challenge that ultimately killed the deal.
But Southwest Airlines has played a big part in the transformation of Alaska Airlines into a low-fare carrier in markets where the two carriers compete. Alaska Airlines is a classy operator — and they do not hesitate to point out the defining points to travelers: award-winning mileage program, pre-assigned seats, first class options and–uh–service to Alaska!
In the super-competitive West Coast corridor, Alaska Airlines also must compete with JetBlue and Virgin America. Both carriers are keeping prices low between Seattle, Portland, San Francisco and Los Angeles.
When the dust settles, if all that’s left of Frontier’s link to Alaska is a single, seasonal red-eye, what’s the incentive for Southwest to alter their business model to exploit that one flight?
However, if Southwest decides it could establish a new destination with at least eight daily flights to established Southwest cities, like Seattle, Portland, Salt Lake City, Denver, Las Vegas and Phoenix, well, you can connect the dots. At that point, Southwest would enjoy enough “economy of scale” for the airline to hire staff and build a team in Anchorage.
Would Southwest Airlines find enough passengers in Anchorage? Would travelers abandon their Alaska Airlines mileage plan, even when Alaska matched Southwest’s fares?
These, too, are fair questions, and the crystal ball isn’t exactly clear in the murky world of bankruptcies, fuel hedges and the cost of new aircraft.
Southwest’s analysts, in preparation for a binding offer of Frontier Airlines in bankruptcy court (due on Aug. 10), certainly are reviewing the Anchorage element of Frontier’s operations, as well as Frontier’s Mexico routes.
Accordingly, Anchorage is enjoying some extra scrutiny from one of the world’s most successful airlines.
Anchorage, once known as the air crossroads of the world, has a world-class airport, superb infrastructure and a population that loves to travel three to five times as much as folks in the Lower 48. Could Anchorage play a key role in the growth and profitability of Southwest?
Right now, the key to unlock low fares for thousands of Alaska travelers — and the key to the city — are the same. And that key is Southwest’s for the taking.
Online resources:
Southwest Airlines: Check out their routes and fares. www.southwest.com
Frontier Airlines: Frontier offers nonstop service to Denver from Anchorage through Sept. 22. www.frontierairlines.com
Analysis: Here’s a write-up by a Southwest insider of the bid and how he interprets it. http://tr.im/vNz2
experience
The referenced article basically concludes Anchorage does not fit the SW business model unless they decide to hub flights to SEA. PDX, SLC, and DEN from here. They need to be able to staff full time and service a multitude of flights rather than rent employees for one daily flight in summer. I personally believe it could happen if they decide to compete with AS to SEA (the MarkAir style) and have a price advantage (which AS quickly matches) on daytime flights.
Personally doubt it can happen.
haha…Southwest doesn’t need the anlaysis of one seasonal flight. They have all the traffic numbers from when they purchased Morris Air.
This market is ripe for a low fare competitior that can feed the entire lower 48.
If someone at SW has a bit of analytical talent, and spends the time to look at the yield AS pulls off each of us on this crucial trunk/hub/corridor route – THEY will believe it can happen! SW also can’t quite forget being shoo’d off Boeing Field by AS a few years back. Bad karma at work here for AS when you combine our tremendous loyalty, challenged constantly by the ridiculous fares ANC/SEA. Fares for same day travel on similar route length SEA / San Diego less than half. Can’t wait to see what happens next!!!
SW may as well run in Juneau a couple times a day and pick that cherry too.
RJS
Gary Kelly announced in January in a letter to the employees, that acquiring the 737 800 in 2012 will open up markets such as:”the carribean, hawaii, and alaska”
Southwest airlines was in the anchorage airport leasing office a few years ago asking the port questions.
I’ll bet sooner rather than later, my bet is on 2012.
Alaska will match of course, but prices will all of a sudden be easier to stomach. I watched in the seattle airport helpless one day as my anchorage flight got cancelled, why?
because the san diego flight had a mechanical. Since alaska has competition to san diego, they stole the plane originally bound for anchorage, and spread all of us over the next three flights. They will be unable to do that once southwest starts providing reliable service. Yes, I am a fan of southwest fares, not necessarily the seating, but the fares.
eagle-riverite, swfan.
The fares out of anchorage are insane period. Jet blu came in and gave everyone a good reality check last year. They don’t need a whole base up here. Coa/united runs year round with contract employees and I rarely see them delay. I work contract MX for American, delta/NW, jet blu, coa/united, air Canada, condor. I would be honored to work for SWA here in AK as an employee or contractor. We would be more than happy to see lower fares out of ANC. Most of us want the cheapest ticket out of ANC period. I really hope it pans out with the new-800′s I would LUV to work and fly SWA here in Alaska. The employees love layovers here as well!!!!