Can AirTran, Southwest coexist here?

Experts are mixed on whether AirTran Airways and Southwest Airlines could successfully coexist in the Wichita market.

Southwest and Wichita airport officials have been in discussions about bringing the low-cost airline to Wichita Mid-Continent Airport.

The airline is discussing starting direct flights from Wichita to Dallas and Las Vegas. A Chicago flight would first stop in St. Louis. Southwest would operate seven or eight flights a day.

Southwest is in the midst of gathering information and analyzing the market, said City Manager Robert Layton.

Any deal must be completed by the fall, when Southwest must make decisions about 2011 service. With that time frame, service to Wichita would start about June 2011.

AirTran Airways competes vigorously with Southwest in a number of markets, said spokesman Christopher White.

"We're not scared of a little competition," White said.

Unlike Southwest, AirTran offers a business class and assigned seating, and he said AirTran's operating costs are lower.

In fact, he said, sometimes it's good to have Southwest as a competitor in a market.

"Southwest, admittedly, has a huge following," White said.

Southwest raises the profile of a city and gets people thinking about flying out of that city, White said. That can be good for the other airlines.

That happened in Milwaukee when Southwest entered the market six months ago, White said.

"This is really a case of rising tides rising all boats," he said. "We think that's kind of helped us in Milwaukee, and it could be the same situation here (in Wichita)."

Whether there is room for both carriers in the Wichita market is too soon to say, White said.

"The only way to know that is when it happens," he said.

Robert Mann, president of R.W. Mann & Co., an airline analysis and consulting firm, said whether Southwest could successfully co-exist with AirTran will depend on where Southwest would fly, its fares and schedule.

"I don't think they're incompatible or unable to co-exist," Mann said.

AirTran flies from Wichita to its Atlanta hub.

It's not just an AirTran versus Southwest question, Mann said. Southwest would overlap with other airlines serving Wichita.

"There will be some stealing of shares from network carriers, perhaps in the Chicago hub, the Dallas hub," Mann said. "This happens all the time."

Sources have said that discussions with Southwest have included talks about incentives.

Airport officials have said that historically, in other cities it's entered, it takes Southwest up to three years to develop a market to stand on its own.

A study by Wichita State University's Center for Economic Development and Business Research done in September for the Airport Authority looked at the impact of "XYZ airline" on Wichita. XYZ airline is Southwest, a source has said.

According to the study, Southwest's entrance would increase airport activity 33.5 percent in the first year, 37 percent in year two and 39 percent in the third year.

In a worst-case scenario, it would add 7,000 direct and indirect jobs.

A second study not done by WSU said travelers would save $29.5 million a year if Southwest entered the market.

But Boyd Group president Mike Boyd questions whether Southwest would stimulate the market enough for it to make a profit here.

Everyone wants Southwest, Boyd said.

"That's fine. But No. 1... can you support it?" Boyd asked.

He said it's unlikely Southwest and AirTran could co-exist in Wichita without large subsidies.

"AirTran is there because you're paying them to be there," Boyd said.

In the eight years AirTran has served the Wichita market it hasn't generated enough traffic to make a profit, he said.

Incentives help cover its losses. AirTran would leave without them, Boyd said.

It's money well spent, he said. Wichita receives at least $30 million in economic impact a year in return for the $7 million it gets from the state, city and county, he said.

"That's Las Vegas odds," Boyd said. "Steve Wynn doesn't get that at one of his casinos."

Southwest's arrival would also stimulate the market and lower fares, Boyd said.

But it wouldn't stimulate it enough to support the flights without ongoing subsidies, he said.

"I don't think it's possible to put enough people on the airplanes to get out of a subsidy situation," Boyd said.

While AirTran has stimulated the economy, "you can't push that too far," Boyd said. "You're going to get diminishing returns if Southwest goes in with six or seven flights (a day)."

At some point, he said, "you're just paying for pretty airplanes to fly in and out."