Why Southwest expanded domestic and international service

By

Updated

Southwest expands its domestic and international service

The Southwest acquisition of AirTran Holdings Inc. in 2011 resulted in $400 million of pre-tax synergies in 2013. It has also helped diversify its network coverage to include international routes. Southwest’s first international service to Aruba, the Bahamas, and Jamaica was launched in July, 2014. It plans to add Air Tran’s service to Mexico—Cancun, Los Cabos, Mexico City, and Cabo San Lucas—and Dominican Republic—Punta Cana—to the Southwest network by the end of 2014.  Two of AirTran’s services to San Juan and Puerto Rico were already added to Southwest’s network in April, 2014.

 Expanding domestic services

Article continues below advertisement

In addition to adding international services, Southwest has managed to expand its domestic services through acquisition of slots in Washington’s Reagan National Airport and New York’s LaGuardia Airport. These slots were available after it was divested during the merger of American Airlines and U.S. Airways. For more details about the divestiture, read the Market Realist series, Why the American-US Airways merger was conditional.

  • Acquisition of 54 additional slots at Washington’s Reagan National Airport. This acquisition is expected to increase daily departures from 17 to 44.
  • Southwest acquired 12 additional slots at New York’s LaGuardia Airport enabling it to add services to Nashville, Houston, Chicago, and Arkon-Canton from May, 2014.
  • The company also plans to begin service to 15 new non-stop destinations from Dallas Love Field by the end of 2014. Another five destinations are planned to begin by 2015.

 New non stop routes from Dallas

While Southwest’s (LUV) and Jet Blue’s (JBLU) operations are predominantly in the domestic market, Delta (DAL), United (UAL), and American (AAL) derive 30%–40% of revenue from international markets.

Advertisement

More From Market Realist