Posted on: Wednesday, January 5, 2005

Southwest may enter Hawai'i market

By Lynda Arakawa
Advertiser Staff Writer

Southwest Airlines, the nation's leading low-cost carrier, may soon start selling tickets to Hawai'i via a code-share agreement with ATA Airlines.

Southwest recently paid ATA, which is reorganizing under bankruptcy court protection, $117 million for certain assets. The Wall Street Journal reported yesterday that the main benefit of the deal for Southwest may be a code-sharing arrangement allowing Southwest to book its passengers on ATA flights, including those to Hawai'i.

Southwest operates a fleet of Boeing 737s, which are better suited for short-haul flights.

"The code share will allow us to integrate our customers with ATA, but as far as what cities we're going to code-share — that hasn't been determined yet," said Southwest Airlines spokesman Ed Stewart.

Steward said a plan would likely be announced this month.

While many Hawai'i residents would welcome Southwest to the market if it meant lower fares to the Mainland, initial reaction in Hawai'i's tourism industry was mixed.

Some said Southwest could bring more budget-conscious rather than high-spending tourists; others said Southwest's customers are no different than any other airline's.

"Although we haven't done the research on it (more discount flights to Hawai'i), it could go against the overall tourism industry's strategy of marketing towards higher-spending visitors," said Hawai'i Tourism Authority executive director Rex Johnson.

Then again, he said, "You could look at this and say that if a person doesn't spend as much on their airline flight, they're going to spend more while they're on the ground."

Johnson said the entrance of Southwest to the Hawai'i market could benefit tourism by adding flights from places that the state is interested in, such as Chicago and the East Coast.

Gov. Linda Lingle's tourism liaison, Marsha Wienert, said the demographics of Southwest's passengers are no different than those of other carriers'.

Wienert said of Southwest: "They're noted for value, they're noted for customer satisfaction, quite honestly, and they deliver. And, yeah, they are a little cheaper and that's why people do fly them. But then again that's the world we're in with the Travelocities and the Expedias and everything else that's out there now, where everyone can shop."

Southwest's selling ATA flights to Hawai'i would "open up that whole Midwest (market) with additional service to Hawai'i," she said.

There are at least some doubts that Hawai'i would be affected anytime soon by a Southwest-ATA arrangement.

"I think in a lot of ways for Hawai'i this is a nonstory for a while," said Ron Kuhlmann, vice president at Unisys R2A Transportation Management Consultants in San Francisco. "I just don't think it's going to have any effect, and if indeed Southwest is looking at alternatives, they're going to do it probably slowly and in a measured fashion."

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com or at 535-2470.