With decades-old restrictions removed, Southwest Airlines Co. (NYSE: LUV) can fly to all 50 states from its headquarters home of Dallas. For the first time, due to the end of a government regulation that limited the number of its routes, Southwest can challenge the huge U.S. carriers, particularly United Continental Holdings Inc. (NYSE: UAL), Delta Air Lines Inc. (NYSE: DAL) and American Airlines Group Inc. (NYSE: AAL), which were created by large mergers that made them among the biggest airlines in the world.
Gary Kelly, Southwest’s chairman, president and CEO, said:
The official repeal of Wright Amendment federal flight restrictions signifies a turning point for the Southwest brand not just in Dallas, but from coast-to-coast. … We are pleased to offer this new service to the Customers of our home airport, who have waited 34 long years, and we thank the many, many folks who made this opportunity a reality. Goodbye, Wright Amendment. Hello, America!
As Southwest made the announcement, it immediately listed a number of large cities it will start to serve from its Dallas hub. These include New York City, Atlanta, Denver, Chicago and Los Angeles.
Southwest has several advantages over its larger rivals. It does not have to maintain a system to fly travelers to airports that feed its overseas routes, because it does not fly beyond U.S. borders, except to the Bahamas and Aruba. And it does not have the legacy routes that were part of the big U.S. carrier mergers. (American still flies to Boise and Fargo.)
The single largest advantage Southwest will have over its rivals as it expands is quality of service. It finished second to JetBlue Airways Corp. (NASDAQ: JBLU) in the most recent American Customer Satisfaction Index, and well ahead of the larger carriers. It also finished ahead of those large carriers in the most recent Airfarewatchdog survey.
Rollin King and airline legend Herb Kelleher started Southwest in 1967. It faced legal struggles even to fly within Texas, let alone outside the state’s borders. Now, Southwest can fly to all 50 states, and the U.S. carrier market has a new member.