Will Southwest Air fly to Anchorage??

In Airfares, Consumer, Uncategorized by scott

(NOTE: This story originally ran in the Alaska Dispatch.)

It’s a fair question in light of Southwest‘s bid for Denver-based Frontier Airlines. Airline financial analysts concede Frontier is Southwest’s for the taking.southwest

For Alaskan travelers, such a takeover could lead to lower airfares and more options — intense airline competition they haven’t seen in years.

Frontier, based in Denver, is in bankruptcy. Until recently, only Republic Airways (a holding company that operates a regional airline, Chautauqua Airlines) had shown an interest in acquiring the carrier. But last week, Southwest made a bid that was several million dollars more than Republic’s.

The answer could fall either way. Currently, Frontier Airlines operates a single, seasonal non-stop flight from Anchorage to Denver. Southwest might decide not to continue it. In its current state, Frontier’s Anchorage-Denver service really doesn’t fit the Southwest model. High-frequency service is part of Southwest’s “secret sauce.”

Then there’s the motivation behind Southwest’s bid for Frontier. It’s certainly not to grow Southwest. The purpose, rather, is to eliminate competition in Denver.

So where would Anchorage fit in the picture?

Simple. Anchorage represents an out-of-the-box opportunity for Southwest. The city has good air service but no low-fare operators. Fares are high, and there is pent-up demand for more affordable air transportation.

The incumbent airline, Alaska Airlines, has built Anchorage into a fortress hub. In addition to the nonstop flights around Alaska (Fairbanks, Nome, Bethel, Kodiak, Juneau, Adak), the Seattle-based carrier offers nonstop service to Seattle, Portland, San Francisco, Denver, Chicago, Vancouver, BC, Honolulu and Maui.

There’s more. Alaska Airlines and Southwest Airlines are fierce competitors in several markets, including Seattle, Portland, Las Vegas, Oakland, Phoenix and Denver. When Southwest proposed to build a terminal at Seattle’s Boeing Field, it was Alaska Airlines that mounted a vigorous challenge that ultimately killed the deal.

But Southwest Airlines has played a big part in the transformation of Alaska Airlines into a low-fare carrier in markets where the two carriers compete. Alaska Airlines is a classy operator — and they do not hesitate to point out the defining points to travelers: award-winning mileage program, pre-assigned seats, first class options and–uh–service to Alaska!

In the super-competitive West Coast corridor, Alaska Airlines also must compete with JetBlue and Virgin America. Both carriers are keeping prices low between Seattle, Portland, San Francisco and Los Angeles.

When the dust settles, if all that’s left of Frontier’s link to Alaska is a single, seasonal red-eye, what’s the incentive for Southwest to alter their business model to exploit that one flight?

However, if Southwest decides it could establish a new destination with at least eight daily flights to established Southwest cities, like Seattle, Portland, Salt Lake City, Denver, Las Vegas and Phoenix, well, you can connect the dots. At that point, Southwest would enjoy enough “economy of scale” for the airline to hire staff and build a team in Anchorage.

Would Southwest Airlines find enough passengers in Anchorage? Would travelers abandon their Alaska Airlines mileage plan, even when Alaska matched Southwest’s fares?

These, too, are fair questions, and the crystal ball isn’t exactly clear in the murky world of bankruptcies, fuel hedges and the cost of new aircraft.

Southwest’s analysts, in preparation for a binding offer of Frontier Airlines in bankruptcy court (due on Aug. 10), certainly are reviewing the Anchorage element of Frontier’s operations, as well as Frontier’s Mexico routes.

Accordingly, Anchorage is enjoying some extra scrutiny from one of the world’s most successful airlines.

Anchorage, once known as the air crossroads of the world, has a world-class airport, superb infrastructure and a population that loves to travel three to five times as much as folks in the Lower 48. Could Anchorage play a key role in the growth and profitability of Southwest?

Right now, the key to unlock low fares for thousands of Alaska travelers — and the key to the city — are the same. And that key is Southwest’s for the taking.

Online resources:

Southwest Airlines: Check out their routes and fares. www.southwest.com

Frontier Airlines: Frontier offers nonstop service to Denver from Anchorage through Sept. 22. www.frontierairlines.com

Analysis: Here’s a write-up by a Southwest insider of the bid and how he interprets it. http://tr.im/vNz2

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