The Southwest strategy

Southwest Airlines made itself an aviation star by — mostly — avoiding direct competition with the big airlines. It flew to Midway instead of O’Hare. It concentrated on Love Field instead of the giant Dallas-Ft. Worth and all the big airlines. It flew to Providence and Manchester, New Hampshire instead of Boston.

It never came to Minnesota, partly because there wasn’t a place to fly here without competing with Delta/Northwest. Rochester and St. Cloud aren’t close enough to the Twin Cities.

That changed last fall when Southwest announced it’ll start flying to Minneapolis St. Paul next month, tackling Northwest/Delta head-on. The company was quick to dampen speculation that it had changed its strategy and was now unafraid to go head-to-head with the majors. After all, Minneapolis-St. Paul was the first city Southwest added since adding San Francisco in 2007.

That changed today when Southwest announced it will start flying into Boston — the home of Delta in the most profitable northeast market.

The Wall St. Journal’s Middle Seat Terminal blog says it marks a historic change in the Southwest business model.


“This is another step back in a long line of moves that changes Southwest’s historical business model,” wrote aviation consultant Scott Hamilton, of Leeham Co., in an e-mail to the Terminal. “Southwest used to avoid big city, congested airports and/or hubs of other airlines by focusing on secondary airports. It’s run out of secondary airport and now has no choice but to go into the big-city airports. With rising labor costs–Southwest now has one of the highest labor costs-to-expenses in the industry–Southwest has to go where the passengers are chasing revenue.”

And that’s bad news for the former-hometown airline, but good news for consumers. Lower fares tend to follow when Southwest moves into a market.

For example, a Minneapolis to San Francisco roundtrip flight can be found on Southwest for March for $240. The pre-Southwest service (it doesn’t start flying here until March 8) on Delta/Northwest costs anywhere between $500 and $1,000. The same flight on Delta/Northwest after Southwest starts service here is going for $320.