Southwest announces first international flights to Caribbean

01/27/2014 10:37 AM

01/27/2014 3:57 PM

To the sound of steel drums playing Caribbean music, Southwest Airlines announced Aruba, Jamaica and the Bahamas as its first-ever international destinations.

The flights, to depart from Atlanta, Baltimore and Orlando, are part of the airline’s integration of AirTran Airways, acquired by Southwest in 2011, which currently flies the routes.

“By the end of this year, all of the international flying that is currently taking place on AirTran will be converted over to Southwest,” Southwest CEO Gary Kelly said Monday at a news conference at the company’s Dallas Love Field headquarters.

Southwest expects to expand its international connections next year, including flights from Texas.

Southwest expects a five-gate international terminal to be completed at Houston Hobby Airport by the end of next year. And while Love Field customers will still be prohibited from flying directly to international destinations after the Wright Amendment goes away in October, Kelly said they’ll be able to connect to Mexico and elsewhere abroad through Houston.

Southwest began selling tickets Monday for daily nonstop international flights. Later this year, the company plans to add Cancun, Los Cabos and Mexico City, Mexico, and Punta Cana, Dominican Republic, all cities currently served by AirTran.

Despite being the largest domestic carrier in the U.S., Southwest has never flown internationally, partly because of technology restraints in its passenger reservation system. On Monday, it launched an international passenger reservation system developed by Amadeus IT Group.

Kelly said the company is focused on transferring all of AirTran’s international flights to the Southwest system in 2014 and will consider adding more destinations in 2015. Eventually, international flights could represent a 70- to 80-aircraft operation for the carrier, Southwest Chief Commercial Officer Bob Jordan said.

“You take the ring of where the [Boeing] 737 can fly and all of those cities are then inside of the route map that we could look at,” Jordan said. “I think the opportunity for Southwest Airlines over the next two to three years is very substantial.”

He added that destinations in Canada are being considered but that the carrier’s main focus is on increasing its service to Mexico, Latin America and the Caribbean.

International flights make up about 1 percent of Southwest’s total capacity. Cowen and Co. analyst Helene Becker says international could grow to 10 percent.

“Southwest realizes the only way to see substantial growth without sacrificing margins is international,” Becker told investors in a research note Monday. “Southwest will target high fare environments, where they believe they will be able to steal share.”

Shares of Southwest (ticker: LUV) declined 23 cents Monday, closing at $20.61.

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