The Mainstreaming of Southwest Airlines

CHARLOTTE, N.C. -- More and more, Southwest(LUV) is becoming just like all the other airlines.

Want proof? Just check the two airports on the Southwest expansion list. One is Minneapolis, a fortress hub for Northwest, where Southwest will begin service in March. The other is New York's LaGuardia, a poster child for congestion and delays, where Southwest has bid for 14 slots previously operated by bankrupt ATA Airlines.

For years, Southwest distinguished itself by specifically avoiding such airports, but no more.

Airport selection is just one indication that Southwest, after decades as an industry outlier, is moving rapidly toward the center -- even as it defiantly proclaims that it remains unique.

The Southwest dilemma was in evidence at the recent Credit Suisse airline investment conference, where CEO Gary Kelly was lunchtime speaker. Even as he displayed a graphic showing AirTran(AAI) to be the industry's low-cost leader, Kelly could not resist saying what he has been saying for so long, that the distinction belongs to Southwest.

"We're the low-cost producer; it's part of our DNA. That is who we are and who we want to be in the future," said Kelly, just before acknowledging that in fact AirTran has lower costs. "My friends at AirTran, congratulations," he said. "You guys do a great job. Now they're the ones to beat."

For the record, according to a Southwest compilation of cost per available seat mile excluding fuel costs and adjusted for stage length, both carriers spend just over 6 cents. AirTran's third-quarter costs were lower, while 12 month CASM was nearly equal.