Southwest CEO Hints At Big Plans in Mexico

by Josh Lew
Last updated: 2:45 PM ET, Thu May 5, 2016

A revised version of a new air agreement with the United States was ratified by Mexico's legislators last week, opening the door for carriers on both sides of the border to expand their route offerings between the two countries. The deal has been in the works for some time now. The original agreement was made in late 2014. It was slated to start on Jan. 1 of this year, but it was delayed because of a holdup in legislative approval process.

Delta and Aeromexico wasted no time after the Mexican Senate's "yes" vote. Earlier this week, the pair announced a billion dollar joint venture that will allow them to take advantage of the newly ratified treaty.

Now, other airlines are hurrying to announce their own plans to expand their U.S./Mexico offering.

New routes in the works

For the time being, the details will remain vague. Southwest CEO Gary Kelly cautioned that there is still a few issues to be worked out before the agreement is 100 percent official. "It's pretty much done, but the bilateral agreement is not effective yet. So just a note of caution as there's still some diplomatic work to be done between the two countries."

At the same time, Kelly is hyping the announcement of new services to Mexico from Southwest's U.S. bases. In a letter to employees earlier this week, he spoke of the coming moves. "We have plans in the works for additional service to and from Mexico, so we'll look forward to making those announcements just as soon as this agreement becomes fully effective."

Current Mexico service is limited

Southwest currently has limited reach in Mexico. It flies to four destinations: Cabo San Lucas, Puerto Vallarta, Mexico City and Cancun. It has been expanding its services in Latin America, including the recent launch of a flight to Costa Rica from Los Angeles.

The international expansion has been in the cards for Southwest for a while now. Last October, a five-gate international terminal was opened at Houston Hobby Airport, a Texas hub dominated by the low-cost carrier. Southwest already flies to Aruba, Belize, Costa Rica, Mexico and Jamaica from this new terminal.

A more important development than Cuba

Kelly's "pre-announcement" of an increase in Mexico service is good news for people looking for another low-cost option to fly across border. However, none of these new flights will take off from the airline's hub at Dallas Love Field. Under the terms of its current agreement to operate without competition from American Airlines at Love Field, Southwest cannot fly internationally from Dallas.

Southwest is also in the running to be awarded some of the Havana slots the DOT is doling out sometime this summer. The media is paying special attention to this process because of the novelty of commercial airlines flying to Cuba. However, because it will allow airlines to establish an unlimited number of routes, the agreement with Mexico will be much more significant for Southwest and its U.S.-based peers.

For the latest travel news, updates and deals, subscribe to the daily TravelPulse newsletter.