Southwest Airlines managing director of business development Dave Harvey delivers remarks at the announcement of Southwest Airlines beginning flights out of the airport, Wednesday, January 4, 2017. Eight flights, five to Chicago and three to Baltimore, are scheduled to begin June 4, 2017.
Southwest Airlines has nabbed flight commitments from at least one of Cincinnati's nine Fortune 500 employers and expects to win business from all of them once it begins flying from Cincinnati/Northern Kentucky International Airport in June.
The Dallas-based low-cost airline has been courted by local airport and development officials for years. But last week, Southwest officials said the spending pledges from local business leaders helped seal the deal. A network of local mid-size businesses also promised to spend at least $800,000 in the next two years with Southwest if it landed at CVG.
David Harvey, Southwest's managing director of business development, said the commitments by local companies were enough to assure his airline that it could establish a viable business at CVG. Harvey said the team effort by local companies clamoring for services was very persuasive, and that the airline has watched the region's growth and economy for years..
"Some of the larger companies committed to fly with us and we hope to have deals with all these employers," Harvey said, declining to name which Fortune 500 had signed on or how many flights the firm agreed to book. "It was the right time make a commitment to start flying – the strong collaboration by business wasn't there before.
"It was our largest missing dot in our map of the lower contiguous 48 states. Our customers were telling us to go directly in to Cincinnati."
On Wednesday, Southwest announced it would launch daily service to Chicago and Baltimore from CVG starting June 4. Flights will depart five times a day to Midway Airport in Chicago and three times a day to Baltimore. Southwest expects to end service at Dayton International Airport and Akron-Canton Airport.
By coming to Cincinnati, Southwest also has an opportunity to win a bigger share of flying dollars from local companies such as Procter & Gamble, Kroger, Macy's and Fifth Third that have operations elsewhere, Harvey said. Southwest could expand its local service to other direct routes based on ultimate destinations of fliers, he said.
"We're optimistic for the future," Harvey said. "We're the largest domestic carrier and many people here are already flying with us occasionally," Harvey said.
Southwest didn't have to venture far from CVG airport to speak with heavy hitters in the business community. The chairman of the airport board is Michael Schlotman, whose day job is chief financial officer at supermarket giant Kroger, the region's largest company ranked by revenue.
Schlotman said Kroger would likely take advantage of Southwest's services to reach its western subsidiaries such as Fred Meyer, which is based in Portland, Oregon. He said Kroger personnel now mostly fly through Seattle or Salt Lake City to reach Fred Meyer.
“This will be easier and probably less expensive,” Schlotman said.
While large companies began serious private talks with Southwest, 80 mid-size employers also pledged to spend $10,000 apiece by 2019 with the airline to demonstrate the depth of support for the additional service, said Gary Lindgren, executive director of both the Cincinnati Business Committee and the Cincinnati Regional Business Committee. The Cincinnati Business Committee represents the region's largest employers, but the Cincinnati Regional Business Committee is made up of the area's mid-cap companies that generally do at least $50 million in annual revenues.
"We're fortunate to have tremendous group of both large and midsize companies that together will make Southwest successful in Cincinnati," Lindgren said.
Airport and development officials say Southwest's announcement caps an intense, nearly two-year courtship of the airline. Attracting more low-cost carriers to fly out of CVG is a top economic development priority for the business community and airport leaders.
CVG chief executive Candace McGraw credited business leaders and development officials for landing the airline. The coordinated effort put Southwest officials into direct contact with decision makers at the region's top companies to talk specifics about flying needs. Jill Meyer, president and CEO of the Cincinnati USA Regional Chamber, said the business coordination efforts was needed to close the deal.
"It took a village," McGraw said, crediting local economic development agency REDI Cincinnati, the chamber and other local business groups for their efforts.
"When you have lots of great companies coming together is a chorus, it's hard to ignore," Meyer said.
Southwest is giving the region more than just additional service to two cities. With the new airline, Cincinnati is plugging into Southwest's service network from two of its busiest airports. Local fliers will have dozens of more options flying westward via Southwest from Chicago and to the East Coast from Baltimore.
"They're the largest domestic carrier in the U.S. and now we have them here," McGraw said.
Grabbing Southwest in CVG is a major feat, given the airport's historic status as a "fortress hub" of Delta Air Lines. For decades, the region's dominant carrier chased off low-cost competitors by matching their fares on overlapping routes until their rivals gave up.
Southwest's past business model also worked against CVG. Historically, Southwest would service a major metro market by flying out of peripheral airports, such as serving Greater Washington, D.C. out of Baltimore or Boston out of Manchester, New Hampshire. For years, Southwest has flown Cincinnatians out of Dayton, Louisville and Indianapolis.
"Competition is fierce, many businesses can be located anywhere in the world and we have to complete with Atlanta, Dallas, Nashville and Chicago," said Johnna Reader, president of regional economic development agency REDI. "Air service is imperative. You can't compete with the bare minimum. At the end of the day, it's about jobs."
Several mid-size businesses said they need to fly frequently to keep up with the pace of their growth.
Jeb Head, CEO of local manufacturer Atkins & Pearce in Covington, said he hasn't committed to switching any business to Southwest but can easily envision doing so. His company, which makes everything from candle wicks to electrical sleeving, has a nine-person sales force that is on the road and in the air 200 days a year.
While flight costs at CVG have come down in recent years, Head's team frequently has to book pricey last-minute fares to chase sales leads. So Head welcomes more competition with Delta, which handles about 75 percent of his business' flights.
"We fly quite a bit, it's a significant expense," Head said. "We're delighted to see more competition because we travel every week all over the country."
Scott Farmer, chairman of the Cincinnati Business Committee, welcomed Southwest as a carrier that would help the region's businesses - including his own. Farmer is also CEO of uniform supplier Cintas, which has recently been added to the Standard & Poor's 500 and is close to becoming the region's next Fortune 500 company.
"It will be a very easy decision to move some of our people to their flights," Farmer said. "Our people love flying on Southwest. They are low cost, provide good service and they are on time. The more we improve air service, the more productive businesses can be and generate more sales."
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