Southwest Airlines has built its reputation — and profit leadership — on a low-cost domestic carrier strategy. Now, Southwest is closer than ever to offering international flights. Gary Kelly, the company’s chief executive, spoke earlier this week in Baltimore and gave some detail into their international expansion strategy. Two distinct phases are clear. In the first, Southwest won’t actually operate international flights. The airline will sell (through its Web-based reservations system) tickets for its partner’s flights to other North American destinations. Once Southwest finishes work on its information systems, it plans to offer flights through ATA Airlines to destinations in Canada, Mexico, and the Caribbean by 2009.
The second stage of its internationalization would introduce European destinations by 2010, either through a similar partnership and “code-sharing” agreement, or by flying its own planes over the Atlantic. Once Southwest figures out the logistical and technical details, international operations will open up new opportunities for revenue growth. And by partnering with ATA and other airlines, Southwest could generate top-line growth with minimal investment and risk.
(Image of Southwest Jet by Drewski2112, CC 2.0)
