Great expectations

By Dick Hughes  

MARCH 10, 2011 1:12 p.m. (0)

It will force lower fares of all airlines. No longer will GSP be one of the nation’s most expensive airports to use. Charlotte and Atlanta beware.

It will improve service of all airlines.  Those little commuter planes.  The inexplicable cancellation of flights.  Fees on baggage.  Nothing to snack on.  All that, history.

It will bring business to the Upstate from lots of places.  Any doubts about relocating here fly away.

Are expectations too high?

Or are they too low as claims Hal Johnson, president of the Upstate Alliance whose job it is to convince companies to bring  business and jobs  to the Upstate and who, as a business traveler himself, has been  a “victim so many times” of being stranded in Charlotte and forced to rent a car to get home.

“All of our expectations so far have been dead-on,” he said, citing instances where just the announcement of the coming of Southwest played a role in influencing decisions to come to the Upstate.

When Cleveland-based Perceptia, which runs help desks and support services for colleges and universities around the country, was considering a call center in Greenville, civic promoters used the coming of Southwest as one of their selling points.  The company said yes.

While there is good reason to be impressed with how Southwest will make the Upstate more accessible to other Southeastern destinations and to Washington, New York and Boston, Johnson also sees the potential of opening new markets on the West Coast and the mountain states.

“We’re out there all the time” recruiting businesses, he said.   “When we tell folks that we landed Southwest, they see us as a real player in the market now.”

For Johnson, “the other big deal” is that all private and public interests of the 10 counties of Upstate “came together and linked hands to make this happen.  All the walls came down.”

As a disinterested expert on airlines and their impact on economies, R. John Hansman, director of the International Center for Air Transportation at Massachusetts Institute of Technology, said there are good reasons to expect a lot from the entry of Southwest into the Upstate market.

“Southwest historically has been very significant in bringing air service to new communities,” he said in a phone interview.  “Within the airline academic community, there is something called the ‘Southwest affect.’”

He said Southwest typically enters a market it perceives to be underserved and if they are successful other airlines come behind them.

“That’s the reason you see so much enthusiasm,” he said.

A plus on this score, he said, is that Southwest has a reputation of “being pretty good” about doing its homework before entering a market, applying enough resources and staying the course to be successful, which means filling the seats on its planes.

“Clearly Southwest thinks there’s enough market there, which is why they are coming,” Hansman said.  “They see it as a potential growing market.”

“Just the entry of service tends to have a stimulating affect on the local economy,” he said.  “It can have an effect on industry of that region and also can have a significant effect on tourism.”

Hansman believes the Upstate is in a good position to capitalize because it sits in the middle of one of the nation’s fastest growing economic and industrial areas and is approaching “critical mass” with such major companies as BMW, Michelin and General Electric.

“In order for other industry to follow, you need to reduce the difficulty of operating your business there,” he said.   For example, he said, investors from New York, Boston, Washington “or wherever” are “unlikely to invest if it is difficult to go there and monitor their investment.”

“You are reducing the barrier to integrating the economy strongly nationally and internationally if you can provide airlines that are very convenient.”

Hansman also said it is “probably correct” that price pressure Southwest applies will force other airlines to reduce their fares out of GSP.

“When they go to an airport like this, they are not offering you the feeder airline price, they are offering you the same price you would have if you had a direct flight from Atlanta.

“So if you tend to drive 100 miles because the prices are so much cheaper, it is very likely that the prices will come down at least to the destinations Southwest serves.”

Unlike other airlines that rely on commuter planes at secondary airports such as GSP to get passengers to primary destinations, often with two or more stops or plane changes, Southwest flies only Boeing 737s and therefore can offer cheaper fares, at least to its destinations.

“The system where you fly a commuter on a relatively short haul to another airport where you can get your primary flight is fairly inefficient.  Those air planes per seat are much more expensive to operate.”

As a cautionary note, Hansman noted that on the near term while having Southwest at GSP will help discourage passengers from driving to Atlanta or Charlotte for a reasonably priced fare, “there’s not enough population density between you and Atlanta or between you and Charlotte to siphon traffic from either.”

And, he said, “If you want to go to Paris, it is not going to do anything for you. It still probably makes sense to drive to Atlanta if you want to go to Paris.  The Southwest connection does not integrate particularly well with the international network.”

Gary Kelly, Southwest’s chairman, president and chief executive officer, acknowledged as much when he was in Greenville last month.

He told a press briefing that the larger 737s it has on order from Boeing will make longer flights, but Southwest cannot begin international flights until it replaces its antiquated reservation system.

“Canada, Mexico, Latin America are all markets that we have the capability to serve operationally once we have the reservation system,” he said.

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