Southwest Airlines, long coveted by Minnesota travelers, will begin flying out of Minneapolis-St. Paul International Airport's Humphrey terminal in March.
The low-fare airline, which now carries more U.S. passengers than any other airline, will initiate service here with at least eight to 10 daily departures to Chicago's Midway Airport, according to Southwest CEO Gary Kelly.
From Midway, Southwest flies nonstop to 47 cities, including four in Florida and six in California.
Tickets on the Twin Cities-Chicago route currently are "very high priced," Kelly said in a Wednesday interview. "We love it when we find city-pair markets that are overpriced and underserved."
Tom Parsons, CEO of www.bestfares.com, said the Southwest development is huge. Southwest "saw high prices where they could come in and drop your prices like a rock," Parsons said. He added that Southwest also will appeal to consumers because it doesn't charge any fees for the first two checked bags. Northwest and many other big carriers now levy bag fees, such as $15 for the first bag on Northwest.
"You probably have 100 U.S. cities who are envious of Minneapolis, because they want Southwest," Parsons said.
Jack Lanners, chairman of the Metropolitan Airports Commission, described the Southwest announcement as "a real coup." The MAC has been courting Southwest for more than a decade, and Lanners flew to Texas this year to make a pitch for Twin Cities service.
"Southwest brings a positive attitude to flying at a great price," Lanners said.
Kelly predicted that fares between the Twin Cities and Chicago will fall, as will fares to connecting cities out of Chicago. Northwest, United and American all provide nonstop Chicago service.
"The outlook for next year is a little dubious for our economy, for the airline industry and for Southwest Airlines," Kelly said. "You couple that with very high fuel prices and it's just a time for us to be very cautious."
But Kelly said Southwest decided to begin MSP service because it's a top destination out of Chicago and it was "a hole in our Chicago system."
Kelly said that Delta's pending acquisition of Northwest was not a factor in its decision. In addition, he said, "We reached the decision to serve Minneapolis-St. Paul before we had any knowledge of Sun Country's problems."
Sun Country's majority shareholder, Tom Petters, is the subject of a fraud investigation. The low-fare airline is short on cash, this week telling workers they'll get a 50 percent pay cut until next year, when it plans to reimburse them.
Terry Trippler, a Minneapolis-based airline expert, was at a Southwest event in Texas Wednesday when Kelly made the announcement about the new Twin Cities service. The airline had been looking more closely at the Twin Cities since AirTran Airways dropped daily service between here and Midway in May, he said.
Southwest saw a good market opening, Trippler said. "I actually felt like the [Delta-Northwest] merger did not enter into it."
Kelly reinforced that point in the interview, because he said Southwest would start service here with only one destination. In many cases, Southwest will begin service in a new city by flying daily to three or four destinations.
"We think we've designed an entré into Minneapolis that will be low risk," Kelly said.
He added that the carrier would redeploy some of its planes to serve Minneapolis-St. Paul. Southwest will use 137-seat Boeing 737s on the route and fly from the Humphrey terminal.
The flight schedule will be announced in a few weeks.
Northwest spokeswoman Tammy Lee Stanoch said the airline always has supported a competitive marketplace. "We will compete with Southwest on price and service just as we do with all carriers."
In Detroit, Northwest's other big hub, Kelly noted that Southwest has a "solid business" and has been operating there for about 20 years. Kelly said Southwest has a "modest" presence in Detroit with 22 or 23 daily departures.
For the first eight months of this year, about 13.3 million passengers boarded Northwest planes at the Detroit airport compared with about 555,000 on Southwest, according to the Wayne County Airport Authority.
The MAC's Lanners said Southwest did an extensive study before entering the Twin Cities and he's convinced it will make money here. The Twin Cities will become the 65th city in Southwest's route network.
Southwest, which has benefited from an extensive fuel hedging program, has been profitable for many years, although Kelly acknowledged that Southwest faces challenges in the current economy.
"We have always felt very wanted" in the Twin Cities, Kelly said. But he emphasized that the carrier is taking a "very conservative" approach and will focus on making the MSP-Chicago route a success.
"We'll make our next [service] decision based on the results that we have from our initial launch," Kelly said, adding that there's been so much interest that he's "trying hard to hold down expectations with our customers."
Liz Fedor • 612-673-7709