Like a spurned suitor, Colorado Springs officials tried in vain for more than 20 years to woo much-coveted Southwest Airlines and its discount airfares to the city.
But after years of rejection and disappointment, everything changed for Colorado Springs in just a matter of a few weeks. Now, Southwest is poised to launch service in March from the Colorado Springs Airport.
As unlikely as it might seem, air travelers looking forward to Southwest’s discount fares can thank the COVID-19 pandemic, in part, for opening the door to the carrier’s decision to consider Colorado Springs. Then, signs of growth around the Springs’ airport and an array of new city amenities and public improvements helped dazzle Southwest officials, who also were given a promise of $2.5 million in public and private incentives to help seal the deal.
Colorado Springs residents got a taste of low-fare service when Morris Air, a no-frills airline patterned after Southwest, began service to Colorado Springs in 1993, but left 15 months later when it was acquired by Southwest.
Six months later, Western Pacific Airlines launched as a low-fare, no-frills carrier with the Springs as its hub and headquarters, eventually serving 26 cities and operating an affiliate to carry passengers to Western Slope ski resorts. After millions of dollars in losses, the carrier moved most of its operations to Denver International Airport before filing for U.S. Bankruptcy Court protection from its creditors and shutting down in early 1998.
A few other low-fare carriers have come and gone from Colorado Springs since then, but city leaders had their sights set on one goal — bringing Southwest to the foot of Pikes Peak. Local officials tried many times over the years to lure Southwest here, offering millions of dollars in financial help in 2004 to pay for airport upgrades to accommodate the low-fare giant. Southwest chose Denver instead, launching service there in 2006 that has grown to become the carrier's second-largest hub.
City and airport officials remained in touch with Southwest, but the carrier had told the city in recent years, including meetings just after John Suthers was elected mayor in 2015, that the city was low on its list of possible destinations because contracts with its unionized workers limited the amount of part-time workers the airline could use, Suthers said. Those contracts have since been changed, a key factor in making the Springs more attractive since most of its local workforce would be part time.
Everything changed with the arrival of the COVID-19 pandemic early this year, which brought stay-at-home orders and reduced air travel to a trickle. The pandemic forced Southwest to idle many aircraft and employees, prompting CEO Gary Kelly to look for new markets, starting with Miami and Palm Springs, Calif., announced Sept. 3.
That same week, Southwest's whirlwind romance with Colorado Springs began with an email to Joe Nevill, who had started with the airport that week as air service development manager after more than 30 years with various airlines in network planning and scheduling. The email from a Southwest executive expressed interest in "talking about this market with us," Nevill said.
The email led to telephone calls the following week between Greg Phillips, the city's director of aviation, other airport officials and Southwest executives. Those conversations continued on a weekly basis and resulted in a visit Oct. 1-2 to Colorado Springs by an eight-person team from Southwest that turned out to be a major turning point.
"We had met with Southwest several times in recent years, but nothing ever moved forward. That first call (in September) was more than just a check-in. Airlines will tell you thanks but no thanks if they are not interested," Phillips said. "This was a lightning-fast response, but it showed they had looked hard at Colorado Springs and done their homework. It was absolutely a good sign that they reached out to us first."
Phillips said the Southwest team arrived about midday Oct. 1, had a working lunch at the airport and spent the rest of the day touring the airport, seeing the baggage system, ticket counters, office space, gates and jet bridges. The tour continued with a drive around the airfield and through the business park, where Amazon operates a delivery station and is building a massive distribution center, and Aerospace Corp. is building a $100 million research and wargaming lab for military and contractors.
The second day was meant to impress Southwest, and it did. The tour began with breakfast at The Broadmoor that included a briefing led by Dirk Draper, CEO of the Colorado Springs Chamber & EDC, and Doug Price, CEO of Visit Colorado Springs. The next stop was the new U.S. Olympic and Paralympic Museum with a tour led by CEO Christopher Liedel and a trip through the surrounding downtown area highlighting a new multipurpose stadium to be used by the Colorado Springs Switchbacks, a new hockey arena on the Colorado College campus and several new hotels. The tour ended with lunch at the Garden of the Gods Club.
A Southwest executive who toured the city as part of an earlier effort to land the airline told Suthers he hadn't been impressed during the first visit but found Colorado Springs "was a different city" during the second visit, based on the public and private investment he had seen. While the tours were a key part of landing Southwest, the deal was not yet done. Southwest executives told Phillips the cost of starting service to a new city was high and "would require a lot of thought."
Suthers and his chief of staff, Jeff Greene, spent the next week assembling a $2.5 million package of public and private incentives to make Southwest's decision easier. That package includes $750,000 from the airport to advertise flights from the airport, including the new flights from Southwest. The El Paso County commissioners are expected Tuesday to approve using $300,000 from aviation fuel taxes and the city is expected to approve $300,000 from its lodger's and auto rental tax, both as part of the package. Another $1.2 million will come from the chamber, Visit Colorado Springs, the El Pomar, Anschutz and Lyda Hill foundations and other private donors.
"Nobody told us we had to do it, but we knew it would take some of this to make it happen," Phillips said. "The $2.5 million will help make it so Southwest is not losing money at the beginning. These aren't normal times; every airline is losing a lot of money. (Southwest) can't wait two or three years for this to be profitable. That would be a problem. They asked us if we could help them market the new service."
The incentives helped, but decisions on new cities are made solely by Kelly, the Southwest CEO. That meant Phillips, Suthers, Greene and the others involved had to wait for a verdict, though Phillips was told Oct. 16 that the internal airline meeting with Kelly "went well." The Springs finally got the good news three days later that Southwest was adding Colorado Springs to its schedule with 13 flights to five cities, starting March 11. Phillips wouldn't know the cities — Chicago (Midway International Airport), Dallas (Love Field), Denver, Las Vegas and Phoenix — until a week later, two days before it began selling tickets on those flights.
Southwest will immediately become the airport's largest carrier, based on the number of daily flights and seat capacity. If Southwest fills about two-thirds of the seats on its flights next year, that will nearly double the passenger numbers the airport had forecast before landing Southwest to 766,600, or about 75,000 passengers fewer than traveled on flights last year. Passenger numbers this year are expected to fall to 361,000, the lowest annual total since 1982.
Jason Van Eaton, senior vice president of real estate and government affairs and executive ambassador to Colorado for Southwest, said the airline had been looking at Colorado Springs for 15-20 years but lacked the capacity to serve the city until the pandemic hit. After that, passenger numbers declined 60% to 70%, leaving the airline with more than 100 unused aircraft and more workers than it needed. He said the city made it attractive to expand here "quickly and efficiently."
"The pandemic created many challenges, but it also created opportunities. We had a lot of excess capacity and Colorado Springs represented an opportunity to access customers who haven't flown Southwest recently or had never flown Southwest and bring them into the Southwest network," Van Eaton said. "Colorado Springs fits very well with our Colorado network. We will celebrate 15 years next year at DIA, and it is one of the fastest-growing markets for us in the country."
Southwest is not simply testing the waters in Colorado Springs, Van Eaton said. Unlike new seasonal routes Southwest has announced to Montrose and Hayden, the Colorado Springs service is year-round and the destinations are five of the largest hubs in the airline's route system, offering one-stop connections to virtually every destination in the continental U.S. And he said there is potential for additional cities.
"Absolutely, there is potential for expansion (to other Southwest hubs.) We would like to see (the market) mature for a while, but we are excited. There is a lot of opportunity there; the city and the region are growing," Van Eaton said. "If we see a lot of traffic to specific cities, we will adjust our traffic pattern to meet the needs of the city. We will be meeting with the business community soon to get a better sense of those needs and will adjust our schedule over time to react to those needs."
Southwest isn't coming to Colorado Springs as an alternative to continue growing in Denver. Van Eaton said the airline remains committed to Denver with plans to spend up to $100 million to build a maintenance hangar at DIA and has agreed to lease 16 new gates the airport plans to build as part of a $1.5 billion expansion, he said. DIA is expected next year to become Southwest's largest hub (it is now second to Chicago's Midway International Airport). The carrier now operates 263 daily flights to 70 cities and employs more than 4,300 people.
Van Eaton expects fares in Colorado Springs to drop and passenger numbers to surge when Southwest begins service, a reaction the U.S. Department of Transportation has called the "Southwest effect." He said Southwest's fares in Colorado Springs will be "very competitive for a long time" and generally will be comparable to its fares on flights to the same destination from Denver.
New data from the U.S. Bureau of Transportation Statistics show average fares in Colorado Springs during the second quarter fell 24.3% from the first quarter to $289.53, similar to a nationwide drop in fares triggered by reduced travel during the pandemic. However, local fares were 24.1% higher than fares in Denver and nearly 12% more than the national average, a slightly smaller gap than the first quarter.
Nevill, the airport's air service development manager, said he expects that gap to close quickly, eventually eliminating the steady stream of local passengers driving to DIA for lower fares and nonstop flights.
His boss, Phillips, believes Southwest has big plans for Colorado Springs.
Southwest has "told us they're here to establish something special and unique in Colorado Springs. They could have come in with a couple of routes, but they want to see if this is an opportunity to do something unique and special. This is meant to be a long and successful relationship for both sides," Phillips said. "Since I arrived here four years ago, I hear the same two comments — we need more flights and lower fares. Southwest's arrival will deliver both. Now we have to prove to them that we want them to be here."