108 - NYU Stern School of Business

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The following appeared in the October 16, 2005 issue of THE NEW YORK TIMES:
THE LITTLE AIRPORT THAT
SAID NO TO SOUTHWEST
BY L. D. KIRSHENBAUM
SOUTHWEST AIRLINES knows a good opportunity when it sees one. The airline's attempted
move to Seattle's smallish Boeing Field from the
newer Seattle-Tacoma International Airport,
known as Sea-Tac, was going to be just one
more victory for Southwest.
worth the investment in building a terminal,
parking garage and other facilities, said Whitney
Eichinger, a Southwest spokeswoman.
But last week, opposition from neighborhood
and business groups in Seattle stopped the airline as it tried to follow its proven strategy of using older, regional airports to slash costs and
reel in customers happy to shave 15 or more
minutes of travel time from their trips to the airport.
The per-passenger costs at Boeing Field might
have been roughly half of what Southwest pays
now at Sea-Tac, said Harold Taniguchi, director
of the King County Department of Transportation.
In July, Southwest's proposal to switch airports,
a plan it called "Freedom to Fly," said that rising
landing fees and terminal rents at Sea-Tac
threatened the airline's low air fares.
Gary C. Kelly, Southwest's chief executive, confirmed in a conference call on Tuesday that SeaTac was among the most expensive airports at
which the company offered service, with a perpassenger fee of nearly $10, roughly double the
fee when Southwest entered the Seattle market a
decade ago. Moving to Boeing Field, formally
known as King County International Airport,
was going to solve that problem.
Boeing Field, named for William E. Boeing,
whose company made use of the field in its early days, is one of the busiest general aviation
fields in the United States. It is used by cargo
and corporate jets, helicopters and receives occasional visits from Air Force One and the Blue
Angels, the Navy's aerobatic team.
Transforming Boeing Field into an airport suitable for commercial airliners was going to be well
Lower operating costs and an expected increase
in market share for Southwest would have more
than made up for the initial costs, she said.
David Stempler, president of the Air Traveler
Association, a passenger membership and advocacy organization, said, "Historically, Southwest
has operated from these alternative city airports;
it's been an effective approach."
He said his organization found that airport convenience is one of the top two criteria used by
passengers in selecting flights, and it explains
why, for example, many customers in Chicago
choose to fly Southwest out of Midway Airport
instead of using another carrier out O'Hare International Airport, which is farther from the
city.
Southwest uses secondary airports in 9 of its 15
biggest cities as measured in airport passenger
traffic. Mr. Stempler said the technique transformed Southwest from a small airline operating
only in Texas.
"They were running from the legs of the giant
until they became a giant themselves," he said,
and added that his organization supported the
greater customer choice that comes with the use
of secondary airports.
The opposition in Seattle to Southwest's proposed move saw things differently.
Robert Bismuth, 51, a microprocessor industry
executive who commutes from a quiet neighborhood in Seattle to Silicon Valley every week,
called himself a perfect example of the kind of
customer Southwest hoped to attract to Boeing
Field, which is only five miles from downtown.
Despite the seeming appeal, Mr. Bismuth said,
such a move would have been a disaster for the
region.
"The increase in traffic alone would have ruled
out any supposed convenience," he said. "And
because there would be no room at Boeing Field
for any other airline to operate, if I were to miss
my Southwest flight, I wouldn't have been able
to catch the next flight out on Alaska."
Instead of welcoming the proposal, Mr. Bismuth
became a spokesman for the Sound Air Alliance,
a coalition of neighborhoods and business entities concerned that Southwest's move would
bring an increase in noise, traffic and taxpayer
costs.
Members counted heavy aircraft already flying
into Boeing Field, studied Federal Aviation Administration flight charts, snapped photos and
continuously conveyed their concerns to Seattle
public officials.
Was there a lesson in this for Southwest?
"I don't think we would have done things any
differently," said Ron Ricks, Southwest's senior
vice president of law, airports and public affairs.
"We still believe in the validity of the business
proposition," he added. "We never entertained
hopes of the ease of it, but we were offering Seattle a service without asking for handouts or
special legislation."
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