Southwest Airlines entered the Florida market in late January, beginning a regional operation many expect will someday rival the size and strength of its activity within California - a market Southwest continues to dominate, despite encroachment by Shuttle by United.
As in other new markets, Southwest began service in Florida on a limited basis, opening up a few cities with a small number of frequencies. In January it launched 12 daily nonstop flights from Tampa, including six to Ft Lauderdale, two each to Baltimore-Washington and New Orleans, and one each to Nashville and St Louis. In February it will increase frequencies on many Tampa routes and add daily nonstop service to Birmingham, and in April it will enter Orlando with additional flights following in May. By the second quarter, Southwest will offer 54 daily nonstop flights to or within the state.
Keith Taylor, Southwest's vice president of revenue management, anticipates the carrier's entry into Florida will stimulate traffic and enable it to win the lion's share of the business. He cites South-west's experience at Baltimore-Washington, where the carrier inaugurated service in September 1993. Before the carrier started services from Chicago/Midway to BWI, the route averaged 5,520 passengers per quarter; by the end of 1993 traffic had grown to 65,000 passengers, and Southwest had an 82.5 per cent market share
For the time being, it appears that Southwest will be free to grow fairly rapidly on routes to and within Florida, since it will be competing minimally with ValuJet and USAir, which has turned over much of its intra-Florida service to its commuter partners in the past year.
Delta thus appears to be Southwest's greatest potential threat; however, until the Atlanta-based carrier signs a new contract with its pilots it will be unable to launch its own low-cost operation, the only feasible way to compete against Southwest.
Delta's management seems intent on resolving its differences with the pilots so it can go on the offensive against Southwest in the state. In mid-January Harry Alger, Delta's executive vice president of operations, warned that the airline needed 'to narrow the issues with ALPA - and I mean in the next few weeks - and focus our minds on the significant issues ahead of us. Sound business judgement demands that we will not concede Florida. It's time to post bids, grow our airline and compete.'
Wall Street expects South- west to get off to a good start in Florida, but analysts caution it will take the carrier some time to establish its presence and make money. Several also say Southwest's yields will be dampened by the weighting towards leisure in the Florida market - unlike California, which has a high percentage of business travel.
Jane Levere
Source: Airline Business
