Southwest Airlines adds a new competitive dimension on routes to Mexico and the Caribbean

Southwest officially became an international airline in early Jul-2014, when it transitioned service operated by its AirTran Airways subsidiary to its own brand. The acquisition of AirTran in 2010 allowed Southwest to take a low-risk approach to introducing its own branded flights to international destinations.

For years prior to acquiring AirTran, Southwest often talked about its aim to eventually extend its domestic network beyond the US borders. Purchasing AirTran allowed Southwest a low-cost and low-risk way to fully study and understand the nuances of operating to Mexico and the Caribbean before assuming the routes under its own brand - which is obviously sacred to the company.

Even as the expansion into international markets is a key pillar of Southwest's long-term strategy, the reality is markets outside the US will only comprise a small portion of Southwest's capacity in the near-to-medium term. But as Southwest grows internationally it may find itself facing increasing competition from Spirit and JetBlue, raising interesting questions about Southwest's longer-term pricing traction and revenue performance on some international routes.