Southwest to Write Its Own Philadelphia Story

After three years of steady growth, Southwest Airlines (LUV Quote) is getting aggressive, expanding its low-cost service to Philadelphia, the nation's fourth-largest city and home to US Airways' (UAIR Quote) most important hub.

On Tuesday, Southwest said it would begin flying up to 14 daily departures from Philadelphia International Airport in May 2004, using four gates. The debut of service in Philadelphia puts a sizeable chunk of US Air's business at risk at an especially vulnerable time for the carrier, which just emerged from bankruptcy in the spring and whose shares only recently began trading.

In Philadelphia, Prudential Equity Group estimates that US Air has a 72% market share and generates 25% of its total annual revenue, or more than $1 billion, from its operations at the airport. Philadelphia accounts for five times the revenue US Air generates from LaGuardia Airport in New York, so US Air will likely defend the hub by any means necessary. ...