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Southwest Invades Its Last Frontier: Charlotte

CHARLOTTE, N.C. ( TheStreet) -- Southwest (LUV - Get Report) finally has arrived at Charlotte Douglas International Airport, an anti-climax that came after the airport spent more than a decade trying to attract the carrier.

In years past, the arrival of Southwest at an airport was a widely heralded event that symbolized for many the possibility of low fares and new destinations, and the airport administrators who presided over the recruitment were widely praised.

But in Charlotte, which had longed for Southwest throughout the 1990s, the airline's arrival this week has been just a matter of time ever since Southwest acquired AirTran, which has flown to Charlotte since 2005, and began to gradually convert its operations. So the importance of Monday's press conference was largely symbolic, with the symbolism enhanced because Charlotte Douglas was the last major hub that Southwest did not serve.

Since the 1980s, Charlotte Douglas has been growing as a hub for US Airways (LCC), with interruptions for two bankruptcies and an economic downturn that began in 2001. That growth had immense benefit for Charlotte, making it a city where regional banks grew into national banks and where companies moved because of the abundance of air service, which led to more air service because more companies created more demand. "A virtuous circle," is the way US Airways CEO Doug Parker recently described it .

But dominance by a single carrier, at an airport with relatively little originating traffic, meant the pressure was always on Charlotte Aviation Director Jerry Orr to attract low-fare carriers.

"Good things come to those who wait," Orr said Monday in an interview, during which he extolled the virtue of patience and also listed the low-fare carriers which preceded Southwest to Charlotte. They included AirSouth, ATA, Independence and little-known Southeast Airlines, which for about six months in 2000 and 2001 served St. Petersburg, Fla. All five folded. But AirTran and JetBlue (JBLU - Get Report), which arrived in 2006, eventually did bring low fares to Charlotte on select routes.

"Charlotte Douglas is a big airport that we've looked at for years," said Dave Ridley, Southwest senior vice president for business development. But Southwest hesitated, he said, because for it, "the classic formula is underserved and overpriced markets. This airport has suffered from being overpriced, but it is not underserved."

Moreover, "going into major hubs we've been discreet in our business plan," he said. Philadelphia, another US Airways hub, in 2004 became "the first classic mega-hub" where Southwest jumped in. Four months later, US Airways filed its second bankruptcy.

Subsequently, Southwest went to Denver and Washington Dulles in 2006, to San Francisco in 2007, to Minneapolis in 2009, to Newark in 2011 and to Atlanta, as a result of the AirTran merger, in 2012. Southwest got into Detroit and Phoenix in the 1980s and Salt Lake City in 1994,, following the acquisition of Morris Air. In the cases of Chicago, Dallas, Houston and Miami, Southwest serves secondary or nearby airports.

Charlotte became Southwest's 80th city. Southwest spokeswoman Katie McDonald said the carrier has now taken over AirTran operations in 20 airports where Southwest did not previously operate, and has just a few more to go. It is a coincidence that Charlotte came near the end, she said. The schedule was dictated by the three weeks of transition training required for former AirTran employees and by the conversion of AirTran aircraft to Southwest colors. Southwest began flying to Charlotte on Sunday, and celebrated its arrival on Monday.

From Charlotte, Southwest serves Chicago Midway, Baltimore, Houston Hobby and Orlando with a total of six daily departures; the number is likely to grow. The first three cities are Southwest's first-, fourth- and sixth-biggest destinations, in terms of departures.

From Charlotte, AirTran had served Baltimore, Orlando and Atlanta, where it operated a hub. Ridley insisted that Southwest has no interest in operating hubs, where airlines seek to connect passengers and decried the widespread perception that the carrier is now focused on building connections. In the past two decades, he said, the percentage of connecting passengers on Southwest flights has increased from 10% to 15%. Midway, where 40% of Southwest passengers connect, is the airline's top connecting airport.

Southwest has dropped AirTran's Charlotte-Atlanta service. The drive time is approximately four hours, and Ridley noted that traffic on short-haul routes has fallen about 50% since the Sept. 11, 2001, terrorist attacks because fares have risen with oil prices and transit time has risen due to enhanced airport security.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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