Southwest looks at tapping Hub market
Fans of Southwest Airlines soon may not have to drive to Warwick, R.I., or Manchester, N.H., to patronize the discount airline.
Southwest has agreed to take over six valuable gates from bankrupt ATA Holdings Corp. at Chicago's Midway International Airport, a deal that includes code-share agreements that would allow Southwest to sell seats on ATA Airlines flights between Boston and Chicago.
A US Bankruptcy Court is expected to approve the deal today; that could mean Southwest would sell seats through its own reservations system on regularly scheduled flights from Logan International Airport for the first time.
"Boston is certainly a destination that Southwest doesn't serve per se. It and the other cities that have service to Chicago Midway on ATA will be under consideration for service" after the deal is final, said Linda Rutherford, spokeswoman for Southwest.
ATA Holdings filed for Chapter 11 bankruptcy protection in October, opening the door for competitors to bid for its gates and other valuable assets at a bankruptcy auction.
AirTran Holdings, parent of AirTran Airways, bid for all 14 of ATA's gates at Midway, prompting Southwest, that airport's second-biggest carrier, to submit a bid to protect its turf. Southwest won, agreeing to pay $40 million for eight ATA gates, another $40 million in debtor-in-possession financing, and a guarantee on $7 million from a construction loan ATA took from the City of Chicago.
ATA and Southwest said they want to begin offering code-share flights on some routes early next year.
If the deal does come to fruition, Southwest's Logan service would be in name only. Airlines use code-share arrangements to get passengers in cities where they don't have service, without having to spend the money to send planes there.
For example, Southwest would list ATA's flights from Logan as its own, selling tickets through its online or telephone reservation systems. Passengers arriving at Logan would check in at ATA's gates and board ATA jets, though.
Boston passengers would also get access to Southwest's connecting flights via its Chicago hub. In effect, that would mean Southwest could move passengers from Logan to the Midwest and then the West Coast.
Southwest has 145 nonstop flights daily from Chicago Midway, serving cities like Los Angeles, Las Vegas, and Detroit.
A round-trip flight from T.F. Green Airport in Warwick, R.I., to Los Angeles, leaving Jan. 7 and returning a week later, is currently priced at $182; on American Airlines, a flight to Los Angeles from Logan on the same dates costs $304.70, according to the airlines' websites.
Still, the deal could wind up hurting Southwest's service from T.F. Green (near Providence) and from Manchester Airport in New Hampshire. Southwest has carried millions of passengers from each airport since it began serving New England in the late 1990s, a strategy that depends on attracting passengers who drive from the Boston area.
Manchester is the only one of the three airports that has gained market share since 2000, measured by the percentage of the roughly 27 million airline passengers served in the area.
Rutherford said Southwest would implement code-share flights only on routes where it makes sense financially. She would not say which cities have been discussed. David Stempler, president of the Air Travelers Association in Washington, D.C., said Boston and New York -- ATA serves LaGuardia Airport -- would both make sense.
Rutherford said the code-share deals would be worth $25 million to $50 million in revenue annually for each airline.
Under normal circumstances, Southwest probably would not consider Logan viable, Stempler said: "It tends not to make sense on Southwest's normal operations because they don't like to go into congested airports. They like to get the planes in and out in 25 minutes."
Logan's spokesman, Phil Orlandella, said the airport has had talks with Southwest for years about starting service, but nothing has materialized.
Keith Reed can be reached at reed@globe.com.
