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Airport lands low-cost leader Southwest Airlines
US Airways' troubles provided an 'obvious market opportunity' for carrier long courted by local officials
Thursday, January 06, 2005

Southwest Airlines, the undisputed king among U.S. discount carriers, is touching down in Pittsburgh, beginning service from Pittsburgh International in May.

Steve Mellon, Post-Gazette
Allgheny County Chief Executive Dan Onorato unveils a poster of a Southwest Airlines jet yesterday in announcing the discount carrier would begin service at Pittsburgh International Airport in May 2005.
Click photo for larger image.
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Still unknown is exactly where Southwest, the nation's sixth largest carrier, will be flying or the number of flights a day it will be offering. But that did little to quiet the enthusiasm of local politicians and Allegheny County Airport Authority officials who have been campaigning for years to bring the low-fare airline to the airport.

"Southwest is a very, very big win for Allegheny County, southwestern Pennsylvania, Pittsburgh," Allegheny County Chief Executive Dan Onorato said at an airport news conference.

Onorato said the county and airport authority were able to recruit Southwest "without a penny of public subsidy," proving that the airport and the region can be competitive. He said he expects other carriers to follow the Southwest lead and start or expand service in Pittsburgh.

"When we get a name like this, psychologically now, I think people are going to say, you know, they're right, other airlines will come here to compete," Onorato said.

The airline has agreed to a long-term lease, committing itself to the airport for the next 18 years. It turned down the typical incentives provided to carriers that start service here, such as marketing and advertising help.

Southwest will be entering a market and an airport long dominated by US Airways, the bankrupt carrier that also is battling Southwest at the other end of the state in Philadelphia. US Airways dropped Pittsburgh as a hub in November, leaving itself vulnerable to challenges by other carriers.

In a conference call with reporters, Southwest CEO Gary Kelly said the airline was not targeting US Airways with its move into Pittsburgh. Instead, he described it as a straightforward business decision based on Pittsburgh being an under-served, high-fare market.

He said that when US Airways dropped Pittsburgh as a hub and reduced its number of daily flights to about 229, Pittsburgh rose to the top of the list of cities Southwest was considering.

"We are simply responding to an obvious market opportunity," he said.

Details about the specific Southwest destinations and the number of flights a day are expected in February. Possibilities include Philadelphia, Chicago, St. Louis, Phoenix, Las Vegas, Los Angeles and some Florida markets. Kelly said the airline will offer a mixture of short, medium and long-haul flights, but he would not be more specific.

In most markets, Southwest typically starts with 10 to 15 flights a day, which would require one to two gates. State Rep. Tom Stevenson, R-Mt. Lebanon, an airport authority board member, said Southwest had been looking at 14 flights a day from Pittsburgh.

"We're talking about a very modest start," Kelly said.

Even at about 229 flights a day, US Airways is Pittsburgh's largest carrier. But at 10 to 15 flights a day, Southwest would essentially start at levels similar to the other major airlines now operating at Pittsburgh.

Kelly anticipates adding employees in the Pittsburgh market, but he said the first preference for jobs would go to existing Southwest employees interested in relocating here. The airline now employs more than 32,000 people nationwide.

People in the Pittsburgh area, Kelly added, "will benefit from substantially lower fares than they have been used to."

Southwest is adding 29 new planes to its fleet, and it plans to use some of those in Pittsburgh.

"Once we get started there, we are obviously hopeful the market responds and we can add more," he said.

Regardless of the level, Southwest has the potential to reshape air travel habits in the Pittsburgh region, one long held captive to US Airways.

Kelly likened Pittsburgh to Nashville, where Southwest started service after American Airlines dropped its hub there. It now has about 80 flights a day.

"I don't know [if] that is where Pittsburgh will evolve. We do sense it has about same potential," he said.

Onorato and Airport Authority Executive Director Kent George said they also are expecting fares to drop and passenger traffic to increase once Southwest begins service here.

They also are hoping to reverse the "leakage" that has taken place over the years with travelers from the Pittsburgh area driving to other airports to take advantage of lower fares offered by Southwest. Pittsburgh Mayor Tom Murphy is among those who have traveled to Cleveland, where Southwest has service, to get a lower fare.

"This is a tremendous victory for the region's air travelers," said F. Michael Langley, chief executive officer of the Allegheny Conference on Community Development, which has been working closely with the county and the airport authority on attracting new airlines to Pittsburgh.

Yesterday's announcement culminated years of work by Onorato, his predecessor Jim Roddey, George, and the airport authority board to woo Southwest, the industry's most profitable discount carrier, which flies to 59 cities in 31 states.

The Airport Authority brought Southwest executives to Pittsburgh twice over the last year, including last summer, and George has talked to them numerous times and visited the airline's Dallas headquarters at least twice.

That Southwest was considering Pittsburgh seriously was a closely held secret, with only Onorato, George and a few other airport authority officials in the loop. George and other local officials feared that if word got out, it could kill their chances. The deal was not finalized until Tuesday.

"I'll tell you, we've been working very hard to attract Southwest Airlines, and all of the hard work has finally paid off," Stevenson said, "It's going to be great for the city."

Onorato said the decision also shows that the airport, which has been ranked first in the United States and second in the world in one travelers' survey, is competitive, despite claims by US Airways that its costs are too high.

"[Southwest's] coming here to make a profit, not as a charity case," he said.

Onorato, George and other regional leaders have been courting JetBlue, Spirit and Frontier airlines in addition to Southwest. Onorato believes that the Southwest announcement could bolster the county's chances of getting the others.

But Michael Boyd, a Colorado-based aviation consultant, said that Southwest's entry into Pittsburgh could serve to deaden competition or at least prevent other airlines from expanding or starting service here.

Boyd said Southwest made the move to pre-empt an expansion by AirTran, which serves Atlanta, Orlando and Fort Lauderdale from Pittsburgh, or to block JetBlue from entering the market. He also believes the decision was based on the premise that US Airways would be out of business by May.

"This is Southwest assuming there will be a huge gap they can fill," he said.

First published on January 6, 2005 at 12:00 am
Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262. Dan Fitzpatrick can be reached at dfitzpatrick@post-gazette.com or 412-263-1752.