Southwest Penetration of the Top 100 Metropolitan Statistical Areas (MSAs)

1.0 Introduction

Southwest Airlines has continually grown from an intra-state carrier in 1971, to the successful major carrier it is today. As time progresses and as new routes and destinations are added, Southwest grows not only in size, but also with the number of people and the percentage of the population it serves or is accessible to.

This information is important to any airline because it paints a picture of the airline’s customer base, and tells how much of the population is really affected by the airline’s presence. Such information is needed for many of the decisions made by an airline, including but not limited to decisions about the expansion of routes and new destinations.

The purpose of this paper is to examine Southwest Airline’s penetration of the top 100 Metropolitan Statistical Areas (MSAs) of the United States and to analyze what this penetration means for Southwest as a major airline. Southwest currently serves fifty-nine (59) airports around the country, but some argue that they serve a much greater population than those fifty-nine airports indicate. This paper will explore this notion by thoroughly looking at the top 100 Metropolitan Statistical Areas (MSAs) of the United States and identifying which areas are served, directly or indirectly by Southwest Airlines. This paper will also attempt to observe an account for Southwest’s absence in some of the top 100 MSAs. The percentage of the population of the top 100 MSAs served or penetrated by Southwest will also be examined and analyzed.

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2.0 Metropolitan Statistical Areas (MSAs)

A Metropolitan Statistical Area (MSA) is defined as a large population nucleus together or combined with adjacent communities that have a high degree of social and economic integration with that core and usually comprise of one or more entire counties.

MSA’s are used for the study because they take into account not just one city, but the areas that surround it. This helps us fulfill the purpose of this study by allowing us to examine the areas surrounding the airports served by Southwest Airlines and not just the local areas alone. In addition to this, the examination of Southwest’s penetration of the top100 MSAs of the United States helps to explain the airline’s absence in some areas of the country, and to observe how Southwest Airlines indirectly serves some cities from neighboring ones.

For the purposes of the study, two different sources are used for the listing of the top 100 Metropolitan Statistical Areas and their populations. The first listing is based on year 2000 census data (Tables 1&2). The second listing is based on year 2002 census data (Tables 3&4). Each listing is shown twice, once to show the actual listing from the source and once more, modified to show only those areas served, directly or indirectly by Southwest. An area served directly by Southwest is defined as an area with an airport flown to by the airline. An area indirectly serves by Southwest is defined, for the purposes of this study, as any area within one hundred (100) miles of an area or airport flown to by the airline. At the end of each listing, the total population is shown.

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3.0 Methodology

The listings of the top 100 Metropolitan Statistical Areas and their populations was collected from two different sources, based on year 2000 and year 2002 census data, and entered into spreadsheets. Each list was examined and the areas or destinations that Southwest flew to or directly served were acknowledged. Next, the remaining areas were tested to determine if they could be areas that Southwest indirectly serves.

In deciding on which areas Southwest Airlines serves indirectly, a 100 mile distance was used. Therefore, if any statistical area was one hundred miles or less from an airport currently served by Southwest, the area, for the purposes of this study, is served by Southwest. Any area exceeding this one hundred mile distance was not used. For both sources, total population numbers were determined for both the top 100 MSAs and those served by Southwest. These numbers were then used to determine the percentage of the top 100 MSAs served by Southwest.

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4.0 Results – Year 2000

The total population figures for both the top 100 MSAs and those MSAs served by Southwest were determined. They are as follows:

Total population for the top 100 MSAs (see Table 1): 174,936,063
Total populations for the top 100 MSAs served by Southwest (see Table 2): 150,039,932
Percentage of the population of the top 100 MSAs served by Southwest: 85.7684%

Table 2, which shows only the Metropolitan Statistical Areas served by Southwest Airlines, differs from Table 1 by the following cities and areas:

Southwest’s absence in most of these areas can be explained by reviewing its operations. Some may argue that many of the areas in which this study has found Southwest to be absent are actually served by the airline. This may be true and depends totally on the criteria used to define an area served by the airline. Areas omitted from Pennsylvania, California, Minnesota, Tennessee and the like are very good examples of this. Although most, if not all, of these states have some airline service from Southwest, the areas omitted were generally too far away to be included for the purposes of this study. Other Southwest absences include areas simply omitted by Southwest’s operations. These areas are Honolulu, Hawaii and San Juan, Puerto Rico. Southwest has not yet made provisions or explored over-water destinations like Puerto Rico and Hawaii, however as it expands, it is possible to see such destinations added in the future.

Another area, frequently included in the top 100 MSAs, in which Southwest does not have much presence is the Georgia – South Carolina – North Carolina area. Again, because of its operations and route structure, Southwest currently serves no destinations in Georgia and South Carolina. Because of this, Southwest is neglecting at least 4 percent of the top 100 MSA’s population. The most obvious answer here is because of the competition that Delta Airlines would bring to Southwest. Delta already dominates these areas, and although Southwest may have the intent of expanding into them, it has not done so as yet.

One other area not currently served by Southwest Airlines is the mid-west area of Colorado all the way up to Montana and North Dakota. This area consists of at least five states that Southwest has no service to. So, again, why would Southwest leave such areas untouched? The truth is that these states or areas, with the exception of Colorado, do not even appear on the top 100 MSAs list. Hence, Southwest is only neglecting a little over 1 percent of the top 100 MSA’s population by not serving these areas like Denver and Colorado Springs.

Through the study and examination of Southwest’s destinations, we now know that about 86 percent of the largest 100 MSAs are served by Southwest Airlines. However, Southwest does not directly fly to 86 percent of the airports in the United States. Instead the airline serves many cities or areas from other surrounding airports, but does not every airline do this as well? The answer to this question is probably yes, whether or not the airline intended to do so.

Because Southwest operates neither as a hub and spoke carrier or a point to point carrier solely, the airline is able to construct and structure it’s network in order to maximize the population that it serves and not necessarily to maximize it’s connectivity. Southwest has lower connecting traffic than many of the other major airlines, which ultimately sets it apart from the rest, because we can now see that they focus more on the number of people that have access to its network and not necessarily the number of people they can connect through its network. So what areas does Southwest serve outside of their destinations? A good example is New Haven, Connecticut. This area is not flown to directly by the airline, however this is a metropolitan area and is served by Southwest through Hartford, Connecticut, less than a 100 miles away. Another example is that of the Sarasota - Bradenton, Florida area. This area is again not flown to directly by the carrier, but is indirectly served because of it’s proximity to Tampa, a city directly served by the airline.

The results of this study show that, as an airline, Southwest has attempted to maximize its customer base and the percentage of the population it serves or is accessible to. This can only benefit the airline and help it to become more recognized and utilized in the area of air travel. The more potential passengers are able to be within proximity of the airline’s service, the more passengers the airline will attract and be able to serve. This is important for the airline because, in conjunction with other factors, it increases the airline’s chances of enhancing not only its total passengers over a period of time, but other important factors like market share and passenger load factors.

In the final analysis of Southwest’s penetration of the top 100 MSAs, we learn that all decisions made about an airline’s destinations affect the number of potential passengers served by that airline and that it is important to incorporate this factor when making such decisions.

In addition to this and with the continual growth of the company, investing into the expansion of its network and route structure to include destinations such as Hawaii and Puerto Rico will not only increase the population of the top 100 MSAs served by about 2 percent, but will also increase the airlines customer base and potentially the type of customer the airline primarily attracts.

Whether Southwest decides to expand into some of the MSAs in which it has no presence or not, the airline would definitely benefit from the continued examination of listings like the top 100 MSA listing to ensure that it continues to adequately serve the majority of the traveling public.

Federal Communications Commission. The 100 Largest Metropolitan Statistical Areas

(MSAs) and Their Populations Based on Year 2000 Census Data. Federal Communications Commission website. <http://wireless.fcc.gov/wlnp/documents/top100.pdf>

Census Population Estimates. NeuStar Number Pool Administration website. <http://www.nationalpooling.com/documents/fcc/011404/Top%20100%20MSA%20Rankings%20-%20OMB%2003-04.pdf>