Southwest launches winter airfare sale and will start Mexico flights

Budget carrier Southwest Airlines is shaking up the air-travel world, announcing a holiday airfare sale today and revealing earlier this week that it will start offering international service.

The lower fares, designed to boost air travel after Thanksgiving and after Christmas, both traditionally slow times, must be booked by Nov. 13 for flights between Dec. 2 and Feb. 11. Tickets must be purchased three weeks in advance, and seats are limited. (Get details at www.southwest.com/hotfares/hotfares_air.html; tickets can be bought only online.)

Some other airlines that compete directly with Southwest are matching the sale fares, including American, Continental and United.

Southwest also will start selling travel to Mexico in 2010 with partner Volaris, a well-financed Mexican carrier that is just two years old, the U.S. carrier said. Southwest has already said it would team with WestJet to offer U.S.-Canada travel by late 2009.

Southwest executives are overseeing a technology makeover that will modernize its reservations system to handle more international travel. They are talking to other carriers about service to Hawaii and the Caribbean.

Competitors are paying close attention. Some may fear that Southwest could emerge as a low-cost rival on their lucrative international routes, just as it pushed beyond Texas and grew into the nation's largest carrier by number of domestic passengers.

Others are courting Southwest. Last month, the chief executive of AirTran Airways said he would like to talk to Southwest about selling seats on each other's planes and sharing the revenue.

Such arrangements are called code-sharing, because one airline puts its name or code on a flight operated by the other.

Code-sharing is considered a low-risk way for airlines to expand their networks without the added cost of more planes and employees. It figures to be a particularly important strategy for Southwest, which is alone among the nation's major carriers in not belonging to one of three big global alliances or teams of airlines.

Since 2001, Southwest has enjoyed fortress-like strength in the troubled U.S. airline industry, earning consistent profits because it bet right on the direction of oil prices several years ago.

But the castle walls are showing cracks.

Last month, Southwest reported its first quarterly loss since early 1991. Its wildly successful fuel-hedging bets are winding down and losing value. Its once enormous financial advantage over other airlines is shrinking.

Southwest CEO Gary C. Kelly said the Volaris deal opens up attractive Mexican destinations to Southwest customers. Volaris flies to 23 cities in Mexico, from border cities to beach resorts including Cancun and Puerto Vallarta.

With deals done for Canada and Mexico, Southwest will turn now to finding partners to serve Hawaii and the Caribbean.

Sweet and Kelly declined to discuss potential partners, but industry experts all have their own favorites.

At the top of the list for several was Hawaiian Airlines Inc., to replace service lost when ATA went under.

Whoever it picks, Mann said, partners will insist that Southwest begin assigning passengers to seats to match the practice of other airlines. Southwest considered such a move last year but stuck with its open-seating plan in which those who check in first get the best seats.

George Hamlin, managing director of ACA Associates, an aviation consulting firm in Northern Virginia, said Alaska Airlines could open up flights to Hawaii and Mexico.

Kristin Jackson of Seattle Times Travel contributed to this report.