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Southwest Readies for United's Shuttle : Southwest Airlines, with efficient, low-cost flights, dominates flights out of Burbank Airport. But United hopes its new shuttle will regain lost business.

August 23, 1994|PATRICE APODACA | TIMES STAFF WRITER

BURBANK — At 11:40 a.m., Southwest Airlines' Flight 1737 from Phoenix wheels up to a gate at Burbank Airport, 30 minutes behind schedule. Southwest normally sticks to a tight 20-minute time limit for a plane to remain at a gate between flights. But since this plane is late, Southwest crews are aiming for a herculean 10-minute turnaround.

As the plane taxis in, a dozen workers rush toward it, including some from other Southwest crews who are pitching in while their own gates are idle. One worker chocks the tires to keep the plane from rolling. Another cleans the lavatory. Another crew member pumps fuel, while two others pull up with carts bearing luggage and mail.

In five minutes, passengers are off the plane and the three flight attendants--along with the pilot and first officer--have picked up all the trash in the cabin and put seat belts back in position.

The 119 new passengers board the plane by stairs at the front and rear of the plane. Because there is no first class or assigned seating, passengers grab seats on a first-come basis. The doors are closed, the stairs yanked away and the plane rolls back from the gate, bound for Oakland. The time: 11:50 a.m.

"That's a quick turn," said Southwest operations agent Art Reyes. "I've done quicker. My fastest is eight minutes."

This hurry-up work attitude is what many attribute for Dallas-based Southwest's stunning success. It has been the only consistently profitable airline this decade. Since it debuted at Burbank in 1990, Southwest has knocked out competing airlines with its cheap, short-haul flights, and gained a two-thirds market share there. And statewide, Southwest commands half the intra-California air travel market.

But champions are bound to be challenged, and the latest test for Southwest comes from United Airlines, the nation's largest airline. Last month, United--after selling 55% of the company to employees in exchange for $4.9 billion in wage and work-rule concessions--announced that its Shuttle by United service would offer cut-rate, short-haul flights from 14 Western cities beginning Oct. 1.

Burbank is one launching pad for United's Shuttle. It will initially run 10 flights a day from Burbank to San Francisco for $49 one way in coach with advance purchase, and $104 for a walk-up coach fare. In November, another San Francisco flight will be added, plus seven daily departures to Oakland.

By comparison, Southwest's fares on its 13 daily flights from Burbank to Oakland run from $49 for a one-way advance purchase ticket to $69 at the gate. Southwest also flies from Burbank to San Jose, Sacramento, Phoenix and Las Vegas.

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In a business littered with dead airlines, last year Southwest earned $154 million on revenue of $2.3 billion. Meanwhile, United's parent, UAL, lost $50 million on $14.5 billion in sales in 1993. The year before, it lost nearly $1 billion.

The key to Southwest's success is efficiency: Its costs average a rock-bottom 7.2 cents per available seat mile--or how much it costs to fly one passenger one mile. United has said it is aiming for 7.4 cents per available seat mile on its shuttle, a far cry from the hefty 9.7 cents average on United flights currently.

Some airline observers bluntly dismiss United's plan. United Shuttle has "not a chance in the world" against Southwest, said Gruntal & Co. analyst Steven Lewins in New York.

Lewins blasted United's "macho desire to recover ground lost" in California. And he scoffed at the shuttle's goal of 7.4 cents per available seat mile. "They might not make it to 8 cents," he said. "They'll get their nose bloodied, lose a lot of money and put their planes somewhere else."

Nonetheless, United's Shuttle is gunning for the heart of Southwest's California franchise. In 1991, United's market share at Burbank Airport was 25%. Now it has a 14% market share, while Southwest's is 65%, according to Burbank Airport officials.

Five other airlines flying out of Burbank have market shares of just 2% to 6%, and some airlines such as USAir have quit flying out of Burbank altogether. Yet United's goal is not to destroy Southwest, but to regain the California business United has lost to Southwest. "We feel there's enough room for both competitors," said United spokesman Tony Molinaro.

John Thomas, Southwest's station manager at Burbank, wondered how the United Shuttle can rival Southwest's efficiency and low costs when it plans to keep such features as assigned seating and first-class service. "I imagine sooner or later, someone's going to come along and get it right. But we'll just get stronger."

Others are also skeptical. The United Shuttle is "unlikely" to achieve the efficiencies necessary to make it profitable, in part because of the strangeness of operating one airline with a different style, inside a larger, entrenched airline, said analyst Rose Anne Tortora at Donaldson, Lufkin & Jenrette Securities in New York. "It's been tried before--an airline within an airline--unsuccessfully."

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