August 11, 2014

Fliers see mixed bag on fares since Southwest’s arrival

Wichita Airport officials tout benefits of Southwest Airlines service to city. They say fares to some of the more population destinations have fallen, while passenger traffic has increased.

Southwest Airlines’ entrance into Wichita has lowered fares and increased passenger traffic to five of the city’s top 10 destinations, Wichita airport representatives said.

Average fares have decreased to Las Vegas, Chicago, Dallas, Houston and Minneapolis since Southwest entered the market in June 2013.

On the flip side, fares to Atlanta and Denver have risen dramatically with the exit of service from Frontier and AirTran Airways.

“This is why Southwest is important,” said Mike Lopez, vice president of Seabury APG, and a consultant to Wichita Mid-Continent Airport. “This is what Southwest brings to the market.”

Lopez and Valerie Wise, Wichita Airport Authority air service and business development manager, were the keynote speakers at Monday’s Wichita Downtown Rotary Club meeting.

Fares for flights to Dallas experienced the biggest drop, they said, saying the average cost declined 55 percent.

One-way fares fell from $262 in the first quarter of 2012 to $118 in the same period in 2014, they said.

Chicago fares for the same period fell 31 percent, while the average fare to Houston fell 21 percent, and there was a 6 percent decline in fares to Las Vegas. The average fare to Minneapolis for the first-quarter comparison dropped 4 percent.

Along with lower fares, passenger traffic to those destinations increased.

Traffic is up 175 percent to Las Vegas, 136 percent to Dallas and 70 percent to Houston. Traffic to Los Angeles is also up because of new nonstop service from United.

On the other hand, fares to Atlanta rose 66 percent, from $148 to $245, in the time frames that were compared. And fares to Denver skyrocketed 84 percent, rising from $118 to $217.

Fares to a number of other popular destinations – such as Los Angeles, Orlando and Phoenix – also increased.

Lopez also touted the end of the Wright Amendment, a federal law that restricted Southwest Airlines routes. When the law expires in October, Southwest has indicated it will expand routes out of Texas to popular destinations.

“Dallas-Love Field is being set free,” Lopez said.

Southwest is adding direct flights to 16 airports around the country from Dallas, including Orlando, Denver, Atlanta, San Francisco and Fort Lauderdale.

Wichita worked for years to recruit Southwest to Wichita, Wise noted.

Southwest began service in Wichita in June 2013 following its merger with AirTran Airways.

It was a difficult process to get Southwest here. Now, the goal is to keep the service.

“It’s a challenging environment,” Wise said.

Wise said Southwest’s costs are on the rise, and that is keeping fares from being lower than they would be.

A 1 cent increase in fuel equates to a $75 million a year increase for the airlines, Lopez said.

Last month, Southwest Airlines said it posted record profits for the second quarter. It had net income of $465 million, easily surpassing its previous record of $333 million, which Southwest earned in the second quarter of 2006.

Another challenge for building Wichita traffic on Southwest is loyalty some passengers have with other carriers’ frequent flier programs, Wise said.

“We have a market that is used to programs on the other carriers,” she said. “Getting people to move some of that loyalty to the other airlines is a challenge. Southwest has an outstanding Rapid Rewards program. I think people just need to give it a try.”

Businesses already have contracts with existing carriers, which keeps them from booking with Southwest.

Things move slowly, but “I think our market is responding to Southwest,” Wise said. “They’re improving. It just takes time.”

Also, other carriers, such as American and United, offer more flights to Dallas and Chicago than Southwest.

And Southwest passengers can book only through the airline, rather than through sites such as Orbitz and Expedia, Wise said.

Still, Southwest is committed to the Wichita market.

“They don’t enter a market lightly,” Wise said. “They enter a market with the intention of staying.”

Recruiting airlines to Wichita or expanding service is a challenge, she said.

With mergers and consolidation of the industry, there are fewer airline planners to talk to.

Wichita is served by five airlines: United Airlines, Delta Air Lines, American Airlines, Southwest Airlines and Allegiant Air.

Seaport Airlines also began essential air service between Great Bend and Wichita in June.

“We’re fortunate to have them,” Wise said.

Airlines are more focused on financial returns than expansion.

“Getting a new flight (in the market) is very difficult,” Wise said. “We consider it a win to get a bigger airplane or a higher frequency.”

Reach Molly McMillin at 316-269-6708 or mmcmillin@wichitaeagle.com. Follow her on Twitter: @mmcmillin.

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