Southwest Takes a Hit in Orange County As The Battle For California Heats Up

So this voice recognition software in Google Docs isn’t bad, but it has still slowed me down a lot. To help speed things up, I’m going to hold off on my usual photos for a couple weeks while I recover from the broken finger.

— We’ve heard a lot about how airlines are all fighting to win a piece of California lately. There’s American and Delta ramping up in LA, United building its empire in San Francisco, Southwest touting its secondary city coverage, and of course Alaska trying to take over Virgin America so it can grow its presence. Now all this increased demand in California is causing some interesting side effects. According to an article in the Orange County Business Journal, airlines in Orange County want to fly a lot more than they have previously. There isn’t room for everyone and that means someone has to lose. In this case, that loser is Southwest.

Orange County has a convoluted system where it allocates a certain number of seats to each airline that flies to the airport every year. In order to reach its maximum cap of 10.8 million passengers (next year), the airlines are able to request what they want. Then the airport divvies up the seats. This year the airport allocated 12.76 million seats. For next year it’s going to be 12.74 million. The assumption, of course, is that not every seat will be filled. By allocating that many, the end result will hopefully be just under 10.8 million passengers as allowed.

Over the last couple of decades, Southwest has become THE airline of Orange County. Other airlines used to do a lot more flying but they continued to cut back, instead focusing on Los Angeles. And every time another airline cut back, Southwest kept growing. It grew even further when it took over AirTran and its international service down to Mexico.

But all those years of shrinking have finally come to an end, and other airlines are looking to ramp up. In particular, Alaska, Delta, and United have all asked for more seats this year. Alaska wants 19 percent more up to 1.62 million. Delta wants 33 percent more up to 1.57 million. And United wants 18 percent more of to 1.99 million.

Why? Well, think about Alaska. Alaska used to be happy just flying to its hubs in Portland and Seattle. Over the last 2 years, it’s added Puerto Vallarta and Cabo San Lucas. It’s also added Reno, Santa Rosa, and San Jose. Undoubtedly Alaska is looking to do more in Orange County just as it’s done in places like San Jose and San Diego. It’s part of Alaska’s plan to blanket California.

Why is Delta interested? Well, the airline has a newfound love for Las Vegas. And it is planning to start flights from Orange County, so clearly the additional seat allocation will help. As for United, well I have no idea. But if I were a betting man, I’d say that it’s probably more about using larger aircraft on existing flights. I don’t really know about that one.

The upshot here is that for all these airlines to be able to add service, somebody has to lose. And Southwest is the one that’s going to be hurt, assuming the county board of supervisors approves next week as expected. This year Southwest has 6.04 million seats allocated to it. For next year it wanted an extra 500,000 seats. Instead, it will lose nearly a million with only 5.1 million. That’s a whole lot of loss.

This isn’t about an airport picking and choosing which airlines win. It’s just following the rules. More importantly, this is a small example of just how things are going to go as the fight for California heats up. I’m looking forward to more low fares in my backyard.

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