Southwest Airlines considers adding international flights

DALLAS — One of the knocks on Southwest Airlines — you'll hear it from fans of other carriers — is that you can't fly to London or Paris on one of its planes.

That won't change right away, but Southwest is finally taking baby steps into international service.

This week, it announced a deal to sell travel to Mexico in 2010 with partner Volaris, a well-financed Mexican carrier that is just 2 years old. 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. Company officials say they have been talking to nearly a dozen airlines about similar arrangements for travel to Hawaii, Mexico and the Caribbean by late 2009 — Europe and Asia would be farther down the road.

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. To avoid big losses or draconian spending cuts, Southwest must raise more money — and fast.

The airline aims to increase revenue by $1.5 billion, and international travel could contribute "several hundred million dollars" a year toward that goal, said CEO Gary C. Kelly.

"We want to start off regionally. It's simpler," said Richard Sweet, who leads a group at Southwest that is studying the possibilities.

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 Cancún and Puerto Vallarta.

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

Whomever it picks for the deal, partners will insist that Southwest begin assigning passengers to seats to match the practice of other airlines, said Robert Mann, an independent airline consultant in Port Washington, N.Y.

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.