Finally: Southwest – The Re-Emerging Dragon

In 2007, Southwest will return to shaping airline industry strategies.

The reason is simple: they face a near bomber-stream of new airplanes coming on line, and they have labor cost issues to deal with. Both will be addressed, and one of the primary avenues will be aggressively increasing revenues.

Over the past three years, WN has basically had to react to the marketplace. The PHL move was to shortstop jetBlue. PIT followed to make PHL secure. MDW expansion was to fill the void left by ATA, lest America West or AirTran jump in. All were reactions to the marketplace.

In the next 18 months, we can expect to see WN regain the initiative. The foray into Denver - something that they said they'd never do - is part of a continuing program to claw market share - not just create it with low fares - from other carriers.

Experiments with seat assignment notwithstanding, we can expect WN to move toward that process by the end of 2007. The carrier has noted that it will expand by connecting existing dots on its route system. The result will be less point-to-point passengers and more inter-connecting flows as well as multi-stop itineraries. Today, over 50% of its passengers are on such routings, with about half of that outright connecting ones.