Orange County Business Journal

Southwest Plans JWA-Mexico Routes on AirTran

Kari Hamanaka, Jerry Sullivan Sunday, November 13, 2011

Southwest Airlines plans to begin service between John Wayne Airport and two cities in Mexico in June through its recently acquired AirTran subsidiary.

The announcement came this morning at a preview of JWA’s Terminal C, which will open to the public tomorrow.

The new terminal includes space for U.S. Customs and Border Protection operations, a necessity for service to Mexico and other international destinations.

Air Tran plans to offer regular service on routes to Mexico City and Cabo San Lucas from JWA, according to Greg Wells, senior vice president of operations for Dallas-based Southwest. The Mexico service is subject to regulatory approval, with pricing and specific schedules to be determined.

The Mexico service would mark Air Tran’s first entry into Orange County. The routes also would mark the first international service launched under the Southwest banner. AirTran had some international routes before Southwest acquired it six months ago.

The announcement of plans for Mexico service came several days after the Orange County Board of Supervisors approved an incentive program for service to Mexico.

The incentive program promises a $300,000 rent credit for airlines that commit to nonstop routes to Mexico averaging five flights weekly during the first year of operations.

The credit could cover a significant portion of the rent and other costs associated with international flights.

Airline fees to use the airport can range anywhere from $750,000 to $10 million annually. Mexico service is estimated to be in the lower end of that range, with the incentive program expected to cover as much as 40% of a carrier’s costs for operating routes from JWA.

The program calls for JWA to offer up to three separate incentive packages. It’s unclear whether Southwest and AirTran will apply for one or two of the packages, a move that will likely depend on what sort of frequency will be allowed by regulators, along with market conditions and other factors.

Initial talk of Mexico routes from JWA pointed to the likelihood of the service starting with tourist destinations. Southwest’s plan, with a route to Mexico City, indicates the company also will target business travelers as well as customers with family ties there.

Terminal C is the last of the major construction projects making up a $543 million airport improvement program that will help JWA accommodate as many as 10.8 million passengers annually.