Can This City’s Incentives Unlock A New Southwest Route Map?

The City of Austin is expected to keep Southwest Airlines as close strategic partner, as the city council looks to vote on a wider incentive programme that could see a rapid expansion of Southwest operations at the Texan airport. The airline is already expected to be the anchor tenant of the airline’s new Terminal, which is set to open by 2030.

This Thursday, it is expected that the council will cast its vote on whether the city will commit to an improved incentive pitch that could see the world’s largest low-cost carrier expand its operations at Austin–Bergstrom International Airport. Already, the carrier demands more than 42% of all flights at the airport, according to the Bureau of Transportation Statistics, more than any other airline.

Attracting Hiring ‘Austinites’

As part of the pitch, as reported by Kxan, would see the city council look to pitch an incentive program that is geared to encourage the Dallas-based airline to hire more people locally, and improve the carrier’s involvement in the City of Austin Infrastructure Academy. The incentive package will be performance-based.

Should the package go ahead, it is forecast that this could see the addition of up to 2,000 additional jobs in the local airline industry, which carries an average wage packet of around $180,000 per year. The council documents also outline that the carrier could be awarded $2,750 for each person hired who lives in the city of Austin. Austin Mayor Kirk Watson explains:

“A key part of what we’re doing with this potential agreement with Southwest is that … it will be a performance based incentive package where they are focused on hiring Austinites.”

Austin’s Largest Airline

Already, Southwest is expected to double its gate count at the airport, with the new terminal currently under construction at the airport set to open in 2030. Southwest will be the anchor tenant, with the airline almost offering more seats than all of the country’s Big Three airlines ( American Airlines, Delta Air Lines, and United Airlines) combined:

Airline	Market Share At AUS (%)
Southwest Airlines	42.41%
American Airlines	16.21%
Delta Air Lines	15.11%
United Airlines	12.20%

The incentive, which could last for up to five years, will see the airline receive up to $5 million in lucrative incentives; however, its return on the city could surpass $20 million in annual taxes through this expansion, which already includes more than $11.8 million, which is through retail sales, property taxes, and hotel occupancy taxes.

Additionally, the incentive package will be geared towards supporting the city’s Childcare Assistance Reserve Fund, which will carve out 10% of each job award bonus. Southwest, which operates a robust number of routes already at the airport, released a statement following the proposal, noting that the airline is looking forward to building a stronger future with the city.

This Is How Short Southwest Airlines’ Turnarounds Used To Be

Southwest Airlines once pulled off the impossible, using an ambitious strategy to save the company.

Airport Incentives

Southwest Airlines Boeing 737-700 taxiing at SAT

Airport incentives are a common practice for airports to attract airlines with financial and/or operational perks. These perks can include the likes of fee discounts, support for marketing, or even cash. These incentives are usually a win for both the airport, airline, and its customers as they encourage additional new routes, more capacity, and additional passenger growth.

For airlines, this reduces the risk for the carrier to invest in potentially new markets, and is especially important for low-cost carriers, which usually operate on slim margins. These incentives usually align with airports’ growth plans and additional airline network planning; however can face regulators to protect against unfair competition. The FAA regulates incentives, requiring them to be only promotional and temporary.

AUS is located approximately five miles (eight km) from downtown Austin, and currently offers a range of non-stop services across the United States, Canada, Latin America, and Europe. Currently, Southwest provides year-round flights to 45 destinations, with an additional 10 seasonal links added during peak time.

Next year, WN will also add two new year-round services to Cincinnati and Seattle, while seasonal services will take off to Fort Myers, Hayden/Steamboat Springs, and Palm Springs. The airline’s most popular routes are to Atlanta, Denver, and Los Angeles.

Source link