Southwest Airlines set to Launch Low-Fare Link to Belize in Latin Growth
US budget carrier Southwest Airlines has filed applications with the US Department of Transportation requesting approval to serve six destinations in Latin America with new, daily, non-stop service from William P Hobby Airport in Houston. The airline plans new links to Mexico City, Puerto Vallarta, and San Jose del Cabo/Los Cabos in Mexico; San Jose, Costa Rica and Belize City, Belize.
The growth into Belize with regular flights to Philip S W Goldson International Airport in Belize City, will add a second destination in Central America, a seventh country, and the 96th city to the Southwest route map. The carrier first revealed its intent to serve Costa Rica earlier this year and will introduce flights to San Jose from Baltimore Washington International from March next year.
“Adding Belize to the Southwest network and growing our Costa Rica service continues our expansion to international destinations where our People and consumer-friendly policies can deliver as no other airline can," said Gary Kelly, chairman, president and chief executive officer, Southwest Airlines.
“Adding Belize to the Southwest network and growing our Costa Rica service continues our expansion to international destinations where our People and consumer-friendly policies can deliver as no other airline can.”
Chairman, President and Chief Executive Officer, Southwest Airlines
The new Houston flights will be made possible by the completion of an estimated $156 million five-gate international concourse now under construction at Hobby Airport. The completed project will increase capacity and add a Federal Inspections Services (FIS) facility to streamline US Customs and Border Protection screening and baggage processing for arriving international passengers.
"We're building our first-ever international terminal project to give Houstonians, visitors to Houston, and our connecting Customers exceptional value and legendary Customer Service in international markets for which there is great demand," said Kelly.
The Houston Hobby International Terminal Project will add five new gates, enabling the growth into international services from Hobby. Southwest is working in conjunction with the City of Houston, which is preparing for the new facility with surrounding infrastructure improvements including a new parking facility, central utility plant and roadway improvements throughout the Houston Hobby Airport district.
A study conducted by Houston Airport System estimates the Houston Hobby International Terminal Project would add 10,000 jobs to the region and provide a $1.6 billion impact annually to the local economy. The study also expects the expanded facility to bring an additional 1.6 million air travellers each year.
"Service to Mexico will be the cornerstone of our international operation at Hobby and the four cities we are announcing provide exciting travel and business options for consumers,” added Kelly.
Southwest has already opened reservations for a weekly international flight between Houston (Hobby) and Queen Beatrix International Airport in Oranjestad, beginning March 7, 2015. This link to Aruba is possible by US CBP Pre-clearance procedures, which provide US border inspection in certain foreign countries including Aruba. This will allow passengers arriving at Hobby Airport from Aruba to deplane without further CBP inspections into the domestic terminal.
Although none of these six new international routes are served from Houston Hobby, they are all linked to the US city via flights to George Bush Intercontinental Airport. US major United Airlines serves all the Latin American destinations from its Houston hub, while Aeromexico and VivaAerobus offer flights to some of the Mexican markets. Spirit Airlines will also fly from George Bush Intercontinental to Cancun and Los Cabos, although it will end its existing link to San Jose.
Overcoming licence issues into Mexico
In its formal DOT application Southwest Airlines says it plans to launch the new daily routes on or around October 15, 2015, using a 143-seat Boeing 737-700, depending on demand and other market conditions. The applications to Belize and Costa Rica should follow standard proceedings, but the Mexico expansion could be restricted by current licence rights.
Under the terms of the current US - Mexico Air Transport Agreement, three US carriers are authorised to provide service between Houston (including both Houston Intercontinental (IAH) and Houston Hobby (HOU)) and Cancun, Puerto Vallarta and San Jose del Cabo/Los Cabos, while just two US carriers are authorised to provide service between Houston and Mexico City.
Currently one US carrier designation is available on both the Houston – Cancun and Houston – Puerto Vallarta routes but none are currently available to Mexico City and San Jose del Cabo/Los Cabos.
“Service to Mexico will be the cornerstone of our international operation at Hobby and the four cities we are announcing provide exciting travel and business options for consumers.”
Chairman, President and Chief Executive Officer, Southwest Airlines
United Airlines holds one of the two allotted US designations to Mexico City and ExpressJet (a United partner) holds the other. Similarly, United holds one US carrier designation to San Jose del Cabo/Los Cabos and SkyWest (a United partner) holds another with the third allocated to Spirit Airlines for its flights starting next year.
Southwest says its application represents “a rare and valuable opportunity to inject new competition in US - Mexico trans-border airline service” and has asked the DOT to revoke ne of the two authorities held by United and its regional partners.
“In these markets, service by ExpressJet and SkyWest under the United Express brand means that two US carrier designations are being used on behalf of one US airline,” said Southwest Airline in its application. “The United Express service is marketed, distributed, priced and otherwise entirely controlled by United to complement its mainline service in those markets.”
“United and its partner carriers coordinate, rather than compete, with one another, and together utilise dual designations to provide consumers with a single carrier option. Given that Southwest is now prepared to enter and compete in these markets there is no justification for allowing United and its partner carriers to continue to hold dual authorities in these markets that would block that competition,” it added.
Southwest draws on data from Campbell-Hill Aviation Group in its application that concludes that Southwest’s competition will reduce fares in its four proposed Houston – Mexico markets by an average of $117 round-trip, 25 per cent below current fares and stimulate an additional 273,000 passengers annually across the four markets. The combination of these reduced fares and resulting passenger stimulation will generate $33 million annually in consumer fare savings, claims the report.
The Campbell-Hill analysis also concludes that, in total, Southwest’s service in the four planned Houston – Mexico markets will provide new low-cost connecting options to 138 beyond-Houston markets, 85 of which currently have no non-stop service to the respective Mexican destinations. The total existing O&D passenger pool in these 138 markets is 5.8 million passengers.
A growing operation at Houston
One of Southwest Airlines' original cities, Houston supports the fifth busiest operation in the carrier's network of more than 90 airports across six countries, with approximately 150 departures a day from Hobby Airport.
In the chart, below, we highlight the airline’s capacity offering from Houston Hobby and how it relates to its other top five busiest operations. Based on annual departure capacity, the airport is the sixth largest in the Southwest network accounting for 4.3 per cent of total capacity in 2014, the same share as in 2013.
Data provided by 
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