• George Nicon Andritsakis

Southwest Airlines Heats Up Hawaii

*This article was originally posted on the FL310 blog space on March 11, 2019*



Photo Credit Southwest Airlines

It has been a long time coming.  Everyone I know has been talking about it for years, at least ever since the merger with AirTran was consummated.  Southwest Airlines can now go to Hawaii! That was in 2014, when the last vestiges of that great Southern airline with the stylized "A" on its 717's and 737's was wiped out and replaced with the "Hot Dog On A Stick with a Heart" livery of Southwest.


Photo Credit Southwest Airlines

It took a little while longer, and originally, Southwest had planned to start Hawaii flights by 2018, only to be delayed to March 18, 2019.  Fares were published and posted to southwest.com just a few days previous to this writing, with introductory fares as low as $48 each way from Oakland, CA to Honolulu on certain dates.  Within hours a lot of those lower fares were gone.  The fast fare sales are nothing new to Southwest, but this new strategy shows the evolution of an airline that originally began as nothing more than a intra-state shuttle within Texas' 3 largest cities of Dallas, Houston, and San Antonio with flights of usually no more than 500 miles, and who's biggest competition wasn't other airlines, but automobiles and buses.


What Southwest flights will do for the consumer



Photo Credit Southwest Airlines

There's quite a few positives for the consumer with Southwest's entry to Hawaii.  First, Southwest has already driven the average cost per ticket down.  Normal average roundtrip fares from the West Coast secondary cities like Oakland and San Jose were regularly in the $500-$700 range.  Now you can find it for $250-$300 across the board on all the airlines from those cities.  Of course, Southwest's 2 Bags Fly Free policy sweeten the pot a bit too, especially for those who stay on the islands longer due to timeshares or condominium stay requirements.


Another positive is the connecting cities of Oakland, San Diego, San Jose, and Sacramento.  If you were to look for a low fare before Southwest's launch of service, you'd normally see the lowest fares are usually found on Alaska Airlines, with a stop in Seattle or Portland.  For the majority of the country, that's quite a ways off the beaten path to go for a low fare.  Don't get me wrong here, thousands of passengers do go out of their way to connect in those cities on Alaska (and Delta too, with their Seattle hub as well, and trying to keep the lower fares off of the flights out of Salt Lake City and Los Angeles), now with Southwest's entry, at least lower fares can be had from more, uhm...Southerly connecting points.


Just to compare, I did an airfare search from Salt Lake City to Honolulu and looked at all available airlines.  Southwest's fare was $524.60 with one stop in Oakland each way, Delta was $684 for a nonstop flight going and a stop in Los Angeles on the way back, American Airlines wanted $590 with a stop in Phoenix each way, United wanted $850! with one stop in Denver going (from SLC..hmm), and one in Los Angeles coming back, and Alaska wanted $616.71 with one stop in Seattle each way.  Granted this was just one search, but it looks like even connecting passengers stand to save a bit with Southwest's offerings, but the biggest thing is the checked luggage allowance.


Now, for those folks flying from points further East, you can get to Hawaii on Southwest, but, due to the limited schedule they have right now, with a late afternoon and an evening arrival into Oakland, you'll have trouble getting back without a forced overnight stay.  I've heard from people in Austin, St. Louis, Detroit and Baltimore all moan about the lack of return flights.  Roughly half the country is pretty much scheduled out from using Southwest to get back home at the moment.  Give Southwest some time to grow Hawaii flights into other cities such as Phoenix or Las Vegas, and you'll start seeing more connecting opportunities arise.


What Southwest flights will do for the Airline Industry



Having more and more carriers on the same route kills any sort of yield management when it comes to controlling fares and how profitable (or unprofitable) a flight can be.  Delta and American Airlines aren't really worried about Southwest's entry in Hawaii, as their mentality is Hawaii is an offered destination for their passengers, but it's not one of the more hotly contested and profitable destinations for them (hence why they have started using smaller and smaller aircraft to service those routes).



United is the 500 lb gorilla on mainland - Hawaii flights.  They have the most amount of flights to and from, connecting several cities in the islands to Chicago/O'Hare, Denver, Houston/Bush Intercontinental, Los Angeles, Newark, and Washington/Dulles.  They also fly to Tokyo, Guam and throughout Micronesia from Honolulu.  United has also been competing with Southwest since the early 1980's when the smaller airline expanded outside of it's Texas home turf.  They have tried to best Southwest at their own game by developing separate airline-within-an-airline operations, gutting planes into all-Coach class configurations with no meals, and almost separate staffing (not really due to union limitations), to no avail.  Both efforts were quietly discarded in time.



Photo Credit Alaska Airlines

Alaska Airlines also has a sizable presence in Hawaii.  In fact, they are almost right up there with United, flights to multiple islands not just from their hubs in Anchorage, Seattle, Portland, San Francisco, and Los Angeles, but from secondary cities such as San Diego, Oakland, Bellingham, San Jose, and Sacramento.  Each of the cities Southwest is starting from.  Alaska is currently the fare leader to the islands, but they also have their large mainland system to boost loads from.



Photo Credit Hawaiian Airlines

The airline with the most to lose in this is Hawaiian Airlines.  Honolulu is their main hub, but they serve the other islands as well.  For decades, they've only flown to major cities on the mainland West Coast, only going as far east as Phoenix and Las Vegas.  Just a few years ago they started Honolulu - New York/JFK flights (more recently Honolulu-Boston, as well) and a year ago they began accepting deliveries of brand new Airbus A321 narrow body jets for service to smaller cities or for additional segments on popular routes.  Now we see Pualani (the Hawaiian girl on the aircraft tails) in cities like Long Beach, Oakland, Portland, San Jose from Honolulu and from Maui and other islands to the mainland as well.  This in addition to their inter-island flights operated by a workhorse fleet of trust Boeing 717's, and a long-haul network in Asia and to several major cities in the US with the incredible and very comfortable Airbus A330-200.



The reason I say they have the most to lose is this.  Because of the expenditures for this new fleet of planes, their balance sheet isn't exactly at it's strongest.  Any sort of fare war that may erupt of shedding of loads could adversely affect their long-term viability.  Hawaiian already went through two rounds of bankruptcy, in 1993 and in 2004.  This last time it emerged financially sound, strong, and with a clear vision.  Now, I'm not saying Southwest alone will drive Hawaiian into another round of (and possibly final) round of bankruptcy, but with that much competition, Hawaiian would be wise to divest itself and continue growing in the Trans-Pacific region away from the mainland.  Thankfully, they are also due to accept delivery of 10 Boeing 787-10 widebodies, which will add to their International route portfolio, no doubt.



I'm not too terrified of Hawaiian's chances with this new entrant, as long as their management doesn't lose it's head.  Hawaiian has withstood new entrants from the mainland for the last 30+ years, and weathered the arrival of Alaska Airlines and Virgin America to the islands as well.  They should be able to withstand the arrival of Southwest.  Official market share numbers (thanks to Henry Harteveldt at the Atmosphere Research Center for the data) show United with the lion's share, at almost 33%, Hawaiian coming in at a distant 2nd place with almost 20%,  American right behind at 19%, Alaska at 15%, and Delta at the tail end with 13%.  Where Southwest will end up after service startup, just a shot in the dark here, but my guess would be somewhere between American and Alaska's numbers.


The Jet Lag Junkie's Opinion:



Southwest Airlines' arrival in Hawaii is a mixed blessing.  It's good for consumers (especially those on the West Coast), with relief from paying for luggage and previously exorbitant fares (before Alaska and Virgin America entered the market, fares were routinely in the $700-$900 range).  For the airlines, it could be bad, as any sort of disciplined yield management might go out the window.  For Hawaiian, United, and Alaska, in my humble opinion, all we'll see is an erosion of their combined market share.  But, while Southwest is here, and while the fares are at these low introductory prices, enjoy!



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