Low Air Fares Winging to O.C. on Southwest

A new era of lower air fares lands today at Orange County’s John Wayne Airport as price-cutter Southwest Airlines starts service with 15 round-trip daily flights to the San Francisco Bay Area.

Southwest’s arrival is welcome at John Wayne, dogged for years with the reputation of being a convenient but expensive alternative for air travelers. Southwest, with eight flights to San Jose and seven to Oakland, has a $69 one-way fare to any California destination.

“Orange County typically has higher average fares than Los Angeles . . . and there are signs that now is changing,” said Dave Messing, a spokesman for Continental Airlines, which has a low-cost subsidiary operating in the East and has started discounting some flights from John Wayne.

Major competitors Alaska Airlines and American Airlines will match Southwest’s fares starting today on their flights to Oakland and San Jose.

Passengers say they are delighted by the lower fares.

“I think it’s neat. I have been waiting a long time for Southwest,” said Charles Goldenberg, a management consultant for the accounting firm KMPG Peat Marwick. “I don’t like the commuter flights because they are small and cramped.”

Bill Cary, a vice president of Quantum Health Group in Orange, was booked on a commuter airline flight to Oakland and pulled his ticket from his pocket to show he was paying $121.82 to be bounced around for a 1-hour, 40-minute flight.

“It’s an interminable amount of time in a small plane,” he said.

Restrictions aimed at reducing local noise levels have limited the number of flights and kinds of planes that operate from Orange County, which has reduced competition.

Other Southern California airports, meanwhile, have seen rapid increases in passenger counts and revenues with the entry of Southwest, Reno Air and other short-haul, discount carriers in recent years.

Already, Southwest has sparked a local fare war as rival carriers plan to either match its prices or withdraw flights from its initial two destinations. Within a year, Orange County passengers could see lower fares to other routes as major airlines create low-cost subsidiaries to head off Southwest before it expands further.

Unlike its competitors, Southwest Airlines has grown at a wild pace and has been the only consistent moneymaker in a sky full of losing carriers. Its secret: no-frills service, flying only Boeing 737s and reloading planes within minutes of arrival so they spend their time earning revenue aloft rather than sitting idly on the ground. Those measures, plus a reputation for quality, keep fares low and customers happy.

The Ft. Worth-based airline is growing so fast that John Wayne officials say Southwest has asked to grab any open slot it can get for new service. So far, though, none is available.

Along with its unrestricted, everyday, one-way price of $69, Southwest offers advance purchase discounts that cut the price as low as $49 each way.

American Airlines, Southwest’s prime competitor to San Jose, plans to cut its nine daily weekday flights to six starting June 17, and the service could eventually disappear altogether, according to spokesman John Hotard. Those flights will be replaced with destinations where Southwest doesn’t fly from Orange County, such as Palm Springs and New York City.

“We cannot compete with low-cost carriers such as Southwest, so we have to see what our viable options are,” Hotard said. “In the meantime, we will be competitive” by offering the same $69 fare.

Southwest’s no-frills service could be a letdown for “a guy like me who travels a lot and gets first-class upgrades,” said John Schofield, a Western Digital Corp. salesman who was lined up for an American Airlines flight Tuesday night to San Jose. “But outside of that, it’s just a plane.”

Schofield, who flies from San Jose twice a week, said his company plans to switch much of its travel to Southwest.

Other airlines are responding to a potential Southwest challenge of entry onto their routes. Continental Airlines, for example, has initiated its own no-frills, $198 round-trip “Peanuts Fares” from Orange County to Denver. Like Southwest, Continental will offer a two-for-one discount for advance purchasers on the route that would mean each traveler could fly for $99 round-trip.

The carrier has also created a CALite subsidiary along the Eastern seaboard, a low-cost carrier aimed at matching Southwest before it gets started there. So far, Southwest has limited penetration in the East, serving Baltimore and a few airports in the Midwest.

United Airlines, which operates 17 flights daily from John Wayne, is expected to start a companion low-cost carrier dubbed U2 if its $4.9-billion employee buyout goes through. “The goal is to get operating costs close to those of Southwest,” said spokesman Joe Hopkins. He added that John Wayne could be a candidate for short-haul service, to destinations less than 750 miles away.

Some commuter airlines are being especially hard hit by the arrival of Southwest and are reducing service. For instance, Westair Commuter Airlines Inc., which operates as United Express on flights to Los Angeles International Airport and Fresno, dropped its service to Oakland on Wednesday.

The growth of discount fares may come slowly at John Wayne. Southwest was only able to receive approval to operate after it bought Morris Air Service, which had two daily flights from Orange County to Salt Lake City, which are being continued under Southwest.

Reno Air, another discount carrier, has expressed interest in beginning service at John Wayne.

Just as noise requirements have limited flights, they have also limited competition--and led to higher fares, analysts say.

“Any time you have a limit on the number of flight operations, it creates a disincentive for discounting,” said David Stempler, executive director for the International Airline Passengers Assn. in Washington, a 110,000-member lobbying organization.

But change will come, he said. The nation’s airlines system will essentially become two-tiered. Short-distance flights will all become no-frills, deep-discount affairs akin to a commuter train.

Long-haul flights will continue to offer full meal service, baggage connections and other amenities, like Amtrak.