Southwest has done fine in California without much long-haul service of any sort, let alone lie-flat seats.
There is money to be made focusing on the western US. Southwest no longer has a cost advantage, nor are they the low fare leader. The market is ready for some real competition.
It's pretty obvious AS wants to do that, given their recent moves in SAN/SJC. I would expect once SOC comes in they will aggressively add some shorthaul dots to SFO/LAX. But they didn't need to buy VX to compete for the intra-CA or shorthaul market any more than WN did. They have an operation at SFO and LAX to go with operations at SJC/SAN/SNA/BUR/ONT/STS/FAT; they could easily have gone "thanks VX, but we're out, have fun with B6", added some more E75/737 lift with that 2.6 billion dollars they are blowing on VX and been done with it.
In fact, VX is particularly
weak in the West Coast shorthaul market. They're just starting DEN service. They don't serve PHX. SJC-LAX and SFO-SNA flopped. They backed off PDX. Their shorthaul success (such as it was) was basically LAS, SEA and SAN. So if you're buying VX, it's not because you're getting something that is ready to rip up through WN's weak underbelly, that does great on 400-800 mile flights. You're buying them because you want the VX customer base... which sure isn't flying VX SFO-SNA or LAX-PDX. You're wanting that transcon traffic, which isn't WN's wheelhouse at all.