Southwest Airlines, the nation's largest discount carrier, plans to begin service in the spring in Philadelphia, challenging US Airways at one of its hubs where it's long been the dominant carrier.

It's not the first time that the Dallas-based low-cost carrier has encroached on US Airways' once-secure East Coast markets. In recent years, Southwest has launched service in Baltimore, New York, Providence, R.l., and Manchester, N.H., taking away passengers and revenue from US Airways and other major airlines.

The challenge hasn't gone unnoticed. Even as Southwest Chairman Herb Kelleher was announcing plans yesterday to begin service out of Philadelphia, US Airways Chief Executive Officer David Siegel was warning of the ever-increasing threat to network carriers such as US Airways from Southwest, JetBlue and other discount airlines.

"There's no question that the low-cost carriers have arrived in force and that their remarkable success poses the toughest competitive challenge ever faced'' by the nation's network carriers, Siegel said yesterday in a speech in Washington, D.C., to the Aero Club.

When asked what impact Southwest's new service out of Philadelphia was likely to have on US Airways -- which is still losing money despite having obtained $2 billion in annual cost-savings concessions from its employees and lessors -- Siegel was blunt: "Certainly not good." He added that US Airways would compete aggressively and vigorously in what is a profitable hub for the airline. Southwest, which has surpassed US Airways in revenue and passengers, is bracing for a fight.

"They're an excellent airline. We expect no less" than a tough fight, Kelleher said of his US Airways rivals. But he predicted that the competition in the Philadelphia market would ultimately benefit customers, who he said had long paid too much for airline tickets.

Southwest, JetBlue, AirTran and other low-cost carriers are no longer upstarts in the industry.

As Siegel himself noted yesterday, the low-cost carriers account for 20 percent of revenue generated by domestic airlines. They continue to buy aircraft "at an amazing rate."

And within three years, they will operate more than 1,000 aircraft, nearly 40 percent of all mainline commercial flights.

In his remarks to the Aero Club, Siegel repeated what has become a mantra -- that unless US Airways and other major carriers reduce their cost structure, they will continue to lose passengers and revenue to the discount airlines.

"Network carriers will have to do more than exploit their existing strengths in high frequency, network and international service," he noted. "[They] will have to find a new cost paradigm, one based on competitive levels of productivity and smarter ways of managing costs."

Last week, Siegel struck a similar note in a telephone message to US Airways employees. He warned that the prices the major airlines can charge are increasingly driven by what the low-cost carriers charge, and that US Airways and other airlines must adapt their cost structures to the new price environment set by the discount carriers.

Indeed, Siegel said that ratcheting down the cost structure would be a major priority for next year. He wants to lower the airline's cost per seat for every mile it flies from 9.5 cents to under 9 cents. Even then, it would be far higher than Southwest's costs, at 7.5 cents per mile.

Philadelphia officials yesterday clearly savored having persuaded Southwest to launch service next spring from their city. One compared enticing Southwest to finding the Holy Grail.

Southwest plans to begin with 14 flights a day, starting in May. Kelleher said that routes and fares would be announced in December.

Kelleher said that the airline's decision to begin service in Philadelphia does not kill chances that the carrier might someday serve Pittsburgh and other cities. But he said the airline wouldn't be focusing on expanding to other cities "in the near term or the immediate future."

Allegheny County Chief Executive Jim Roddey did not think Southwest's excursion into the Philadelphia market would affect Pittsburgh's chances of landing the discount carrier.

In fact, Roddey said the decision could strengthen the region's prospects because it shows that Southwest is willing to go head to head against US Airways, the dominant carrier at Pittsburgh, and will do so at an airport with a per-passenger cost comparable to Pittsburgh International's $9.56.

"They have told us that [the cost] does not affect their decision on Pittsburgh at all," said Roddey, who has met personally with Southwest representatives. "They say they think the Pittsburgh market stands on its own and that they still have a high level of interest."

Roddey said Pittsburgh has a decent-size market for local traffic, though nowhere near Philadelphia, the nation's fourth-largest metropolitan area. He added that local traffic could swell by an estimated 700,000 if discount carriers capture travelers who now leave the region each year to fly out of other airports because of cheaper fares.

Roddey said county and Airport Authority officials were aware that Southwest was considering Philadelphia before the announcement was made. He said the airline's thrust into the City of Brotherly Love may have been a defensive move because of widespread speculation that discounter JetBlue was targeting Philadelphia.

"I think it's two different issues entirely," he said of Southwest adding service to Philadelphia and how that affects Pittsburgh. "I don't think [the Philadelphia service] hurts us at all."

Airport Authority Executive Director Kent George said he was surprised Southwest chose Philadelphia, given that the airline typically avoids head-to-head confrontations with hub carriers such as US Airways. He said the airline may be considering other cities later this year, adding that Pittsburgh is a good enough market to merit consideration.

When it comes to Southwest, it seems, hope springs eternal among the many markets that would welcome its arrival -- including Pittsburgh.

"It may even indicate that they're looking for a stronger presence on the East Coast. Maybe Pittsburgh is the next place they will come," Roddey said. "We're hoping they will come in here," George added. "We will continue to work with them to try to encourage them to do that."