Thursday, October 12, 2017

Southwest Is Finally Going to Start Flying to Hawaii

Southwest Airlines Co. is finally going to start flying to Hawaii, and a top executive says ticket prices will get cheaper.

Flights to the state will begin next year or in 2019, the discount carrier said. The initial service will be from California, said Chief Revenue Officer Andrew Watterson, without elaborating on specific routes.

“We see prices higher than they need to be and we anticipate lowering fares,” Watterson said in an interview.

Southwest is adding Hawaii to its network -- after years of requests from travelers and employees -- with help from Boeing Co.’s upgraded 737. The latest version of the planemaker’s best-selling jet, the 737 Max, can fly farther and is more fuel efficient than older models. Southwest this month became the first North American airline to fly the new model.

“For us, it’s the perfect fit for Hawaii,” Watterson said. “The Max has got 14 percent better range and 14 percent better fuel burn” than the airline’s 737-800 planes.

A new reservation system that allows for more complicated itineraries and overnight trips is also allowing Southwest to add Hawaii flights. The Dallas-based airline in the coming weeks will begin seeking federal approval to operate its planes on extended over-water routes. That process typically takes about a year to 18 months and flights to Hawaii can’t begin until it’s completed.

Ticket Sales

Tickets will go on sale next year, Southwest said in a statement late Wednesday. Even if Hawaii flights start in 2018, they won’t alter fleet or capacity plans for the year, the company said.

Honolulu’s Daniel K. Inouye International is dominated by Hawaiian Holdings Inc., carrying 56 percent of passengers at the state’s busiest airport, according to the U.S. Transportation Department. United Continental Holdings Inc. follows with 16 percent. Hawaiian also dominates Kahului, the second-busiest, with 51 percent.

Hawaiian fell 2.3 percent to $39.10 at 10:31 a.m. in New York, after tumbling 6 percent, the most intraday since Sept. 19. Southwest and United were little changed.

Hawaiian didn’t respond to a request for comment before normal business hours in Hawaii. United didn’t immediately comment.

‘Crowded Marketplace’

The new service will test whether Southwest, long known for short routes, can compete against larger carriers on flights that take more than five hours from the U.S.’s West Coast. While some rivals offer premium cabins with roomier seats, full meals and more legroom, Southwest’s no-frills service is all coach class. The carrier serves only snacks.

Starting in December, United plans to boost service on 11 routes between the U.S. mainland and Hawaii. The carrier is adding flights to the islands from its hubs in Chicago, Denver, Los Angeles and San Francisco.

“We don’t see Southwest having success in Hawaii due to an inferior product and an already crowded marketplace,” Hunter Keay, a Wolfe Research analyst, said in a note to clients this week, in which he speculated on potential service. “We expect Southwest will bleed margins here for a couple years before scaling back or exiting outright.”

Watterson said Southwest will be ready to compete for passengers flying in coach. The airline already adjusts snack offerings based on flight duration, such as its service from Oakland, California, to Baltimore/Washington International Thurgood Marshall Airport. That route is longer than Oakland to Maui, Hawaii, said Watterson.

On other carriers, “most people won’t have lie-flat seats, most people won’t get a hot meal,” he said. “Most people are flying economy and our economy product is spot on.”

(Mary Schlangenstein - Bloomberg News)

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