Southwest Apt to Ignite O.C. Air Fare War

Southwest Airlines, which is expected to gain approval today for 17 daily flights at John Wayne Airport, will probably ignite a price war this summer that could cut fares for Orange County travelers by more than 50%.

The nation’s leading low-cost carrier will be allowed four daily flights after April 1 and 13 more in June if the Orange County Board of Supervisors approves Southwest’s request at a meeting today.

The carrier already operates two of those flights--a pair of Orange County-to-Salt Lake City routes run by Morris Air. It purchased Morris Air in December and continues to operate it as a subsidiary.

Stephen Blanchard, an aide to county Supervisor Thomas F. Riley, said Monday that he knew of no opposition to Southwest’s proposed entry.

“I think most people are excited about it,” Blanchard said. “This could mean lower fares and increased service. I’m sure the competition is watching.”

Indeed, say industry experts and Southwest itself, the Dallas-based carrier usually offers fares that are 50% to 75% lower than the rates available before it comes to town. Airlines that fly similar routes typically start offering their own specials and deep discounts--or they abandon those routes.

Southwest hasn’t said yet where possible Orange County flights might go, but industry sources have said it will probably compete with both low-fare carriers like America West Airlines and leading airlines like Delta Air Lines on flights to major cities in the Southwest and the Bay Area.

America West, based in Phoenix, is bracing for the competition, even as it prepares a plan to bring itself out of bankruptcy after more than a year of profits.

“We’re well aware of the possibilities and we’re looking at a variety of options,” said spokesman Dick Dikshimizu. “Southwest is a very tough competitor, but we’ve been competing with them since we started up in 1983.”

As it has in other markets it has entered, Southwest also is expected to be a boon to related airport businesses as it attracts many more customers.

The carrier, for instance, started a Chicago-Louisville, Ky., flight and, within a month, quadrupled the number of travelers for that route. That translated into more parking fees and more purchases from food vendors and other stores in the terminals.

Orange County would benefit if the same holds true here because the county government takes a cut from nearly all services at the airport.

“This is very good for Orange County,” said Thomas Nulty, president of Associated Travel Management in Santa Ana.

But he and other travel agents warn prospective customers not to expect big changes in the prices of long-distance travel. Southwest is strictly a short-haul carrier, providing no-frills service mainly to regional airports that are typically no more than 500 to 600 miles away.

“Southwest does go to Baltimore (-Washington International Airport) but it takes 9 1/2 hours to get there,” Nulty said. “You have to change planes twice and make two additional stops. And even doing that, the prices are not that much cheaper than major airlines that offer super-saver fares that you buy 14 days in advance.”

Even so, Southwest’s alluring prices typically bring out the leisure travelers as well as the thrifty business flyer looking for less expensive flights.

“When they went into Baltimore three months ago, they advertised $39 tickets (one way) to Cleveland,” said Cleo Manuel, a spokeswoman for the National Consumers League in Washington. “With prices like that, one of my colleagues couldn’t pass it up and went for a day to see the Rock ‘n Roll Hall of Fame.”

Actually, that was a special price for traveling in off-peak hours, said Southwest spokesman Ed Stewart. The normal Baltimore-Cleveland fare is $49 one way. “Before we came in, the price for an unrestricted ticket was $300 one way,” he said.

Last June, Southwest started serving San Jose with flights to Burbank at $69 one way and to Las Vegas at $79 one way. Other carriers had been charging $220 and $260, respectively.

Southwest previously had sought a large number of flights from John Wayne Airport under the county’s complicated formula for allocating departure slots. It was put on a waiting list for new carriers in November.

But things began to move quickly after it announced in mid-December that it would acquire Morris Air in Salt Lake City, another low-fare carrier. Among Morris’ routes were two Orange County-Salt Lake City flights. With the acquisition completed at the end of December, Southwest became an incumbent carrier at John Wayne entitled to be among the first bidders for open slots.

Besides assuming Morris Air’s slots on April 1, Southwest is expected to get two more slots at the same time. They will have those departures through 2005. The remaining flights would be available after June 1 for year-to-year renewals.

“The airport is pleased that we have a low-cost carrier that wants to serve with some frequency and with one of the quietest airplanes available,” said Courtney Wiercioch, the airport’s special projects director.

Southwest excels in smaller markets mainly because there is so little competition there and carriers that do serve those areas charge premium fares.

Studies have shown that airlines in non-competitive markets typically charge 20% more for tickets than they would at competitive airports, said Geraldine Frankoski of Aviation Consumer Action Project, a Ralph Nader organization in Washington.

Since its start in 1971, Southwest has targeted smaller markets with a plan that has brought it 21 consecutive years of profits in a volatile industry often racked with losses and financial collapses.

It keeps costs low by using only one type of aircraft, a Boeing 737, to fly only short trips mainly to secondary airports, like Chicago’s Midway, though it also serves Los Angeles International Airport.

Its planes are in the air longer than any others, refueling and taking on new passengers quickly. And passengers take seats on a first-come, first-served basis.

It also has refused to join airline consortiums that handle reservations and that transfer baggage to other airlines, thus saving sizable fees while trying the patience of travel agencies and customers.

“And what Southwest has over everyone is their labor agreements--they have none,” said Thomas A. Jackson, president of World Travel Bureau Inc. in Santa Ana. “Their success shows that people are willing to accept a lower level of service.”

Times staff writer Kevin Johnson contributed to this report.

Southwest Airlines at a Glance

* Founded: 1971

* Headquarters: Dallas

* President/Chairman: Herbert Kelleher

* Employees: 14,000

* Divisions: Morris Air

* Routes: 37 domestic cities in 17 states

* 1993 net income: $154.3 million, up 63.3% from 1992

SERVICE REPORT CARD

Southwest Airlines received solid marks in an independent monthly consumer satisfaction report. Here is an overview of its performance in November, 1993, the most recent month for which information is available:

* Passenger volume: Flew 3.2 million people, making it the fifth most frequently traveled airline. Delta, United, USAir and American are the leaders.

* Baggage handling: Ranked first among 10 competitors, with the lowest percentage of mishandled bags.

* Bumped passengers: Ranked last; fully refundable tickets allow greater number of cancellations.

* Complaints: Received just seven passenger complaints, fewest in the industry. USAir was second, with 21.

Source: Southwest Airlines, Aviation Consumer Action Project

Researched by JANICE L. JONES / Los Angeles Times