The carrier finally got the necessary regulatory approvals last week, several months later than management had initially hoped. As a result, Southwest Airlines began ticket sales on Monday. As expected, it's looking to make a huge splash with tantalizingly low introductory fares.
In fact, Southwest priced some flights from California to Hawaii as low as $49 one way for a limited time. Yet due to the high pent-up demand for Southwest Airlines flights to Hawaii, these low fares don't pose a big threat to competitors like Hawaiian Holdings (NASDAQ:HA) and Alaska Air (NYSE:ALK).
Check out the latest earnings call transcript for Southwest Airlines.
Phase one of Southwest's Hawaii rollout
Southwest Airlines management has indicated during recent earnings calls that the carrier would begin flying to Hawaii very soon after launching ticket sales. This became even more essential after the approval process was delayed by the five-week government shutdown that ended in late January. The low-fare airline has infrastructure in place for Hawaii flights that has been going to waste over the past couple of months.
Indeed, Southwest will operate its first commercial flight to Hawaii on March 17 -- less than two weeks from now -- with a flight departing Oakland at 8:20 a.m. local time and arriving in Honolulu at 11:10 a.m. It will begin a second daily Oakland-Honolulu flight about a week later.
Twice-daily Oakland-Kahului (Maui) service will begin in early April, followed by once-daily flights from San Jose to Honolulu and Kahului in early May and late May, respectively.
Southwest Airlines also announced that it will launch interisland flights on April 28, with four daily round-trips between Honolulu and Kahului. It will add four daily round-trips between Honolulu and Kona (on Hawaii's Big Island) on May 12. That will enable one-stop service from Oakland and San Jose to Kona.
About those $49 flights
With Oakland-Honolulu service starting later this month -- and several other routes starting this spring -- Southwest Airlines knew it needed to offer deep discounts to fill those flights. Its $49 one-way promotion worked. Within a few hours, there were barely any $49 fares left, and many flights for the first two months of service registered as completely sold out.
For busier travel days, Southwest offered introductory fares of $79 or $99 one way. Most of those sold out quickly, too. By the late-morning hours on the West Coast, there were still $79 or $99 one-way fares to be had on a handful of flights, but for most days this spring and summer, a round-trip flight on Southwest from Oakland or San Jose to Hawaii now costs upward of $300 -- and, in many cases, more than $400.
This means that executives at Hawaiian Airlines and Alaska Airlines can breathe easy for now. Hawaiian and Alaska both compete on all four of Southwest Airlines' initial California-Hawaii routes. However, they won't have to contemplate matching rock-bottom Southwest fares, because pent-up demand caused the lowest price points to disappear so quickly.
What about interisland flights?
Southwest's new interisland routes could be more of a headache for Hawaiian Airlines, which currently enjoys a near-monopoly within Hawaii after driving all of its previous competitors out of business.
Southwest is offering introductory fares of $29 one way on its Honolulu-Kahului and Honolulu-Kona routes for travel on Tuesdays, Wednesdays, and Saturdays during the off season. Starting fares are $39 on Mondays and Thursdays and $59 on Fridays and Sundays. In contrast to the mainland routes, the introductory fares did not sell out immediately for Southwest's new interisland routes.
The carrier will operate four round-trips per day on both routes, evenly spread throughout the day. The combination of low fares, free checked bags, and no change fees should make Southwest a hit with Hawaii locals traveling for leisure or to visit family. However, for the foreseeable future, Hawaiian Airlines will continue to dominate the business travel market with 27 daily round-trip flights between Honolulu and Kahului and 18 daily round-trips between Honolulu and Kona.
Waiting for more routes
Southwest Airlines will also fly to Hawaii from Sacramento and San Diego at some point soon. Additionally, it plans to add a fourth Hawaiian destination (Lihue) to its route map and will likely begin nonstop service from one or more West Coast cities to Kona eventually.
However, Southwest hasn't announced starting dates or schedules for any of those routes yet. Part of the reason may be that the carrier has had to cancel a slew of flights in recent weeks due to a spike in the number of out-of-service aircraft. (Southwest Airlines has blamed its mechanics' union for this issue.)
Southwest probably doesn't want to promise a swath of new Hawaii flights when it can't reliably operate its existing schedule. However, assuming the airline can patch things up with its mechanics in the coming weeks, Southwest Airlines is likely to launch additional Hawaii routes in time for the busy summer travel season.