Southwest Airlines mulls more int'l service

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 two 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. They are talking to other carriers about service to Hawaii and the Caribbean.

Competitors are paying close attention. Some may fear that Southwest Airlines Co. could emerge as a low-cost rival on their lucrative international routes, just as it pushed beyond Texas and grew into the nation's largest carrier by number of domestic passengers.

Others are courting Southwest. Last month, the chief executive of AirTran Airways said he would like to talk to Southwest about selling seats on each other's planes and sharing the revenue.

Such arrangements are called code-sharing, because one airline puts its name or code on a flight operated by the other.

Code-sharing is considered a low-risk way for airlines to expand their networks without the added cost of more planes and employees. It figures to be a particularly important strategy for Southwest, which is alone among the nation's major carriers in not belonging to one of three big global alliances or teams of airlines.

Go-it-alone Southwest's first foray into code-sharing was an afterthought--part of a move to expand at Chicago's Midway Airport in 2004. Southwest acquired six gates that had been controlled by ATA Airlines in exchange for making a cash infusion into ATA and beginning a marketing joint venture.

Southwest said it took in $50 million in revenue from the code-sharing deal in 2005. An extra benefit--the best part of the deal for some travelers--was that Southwest customers could cash in frequent-flier points for free trips on ATA to Hawaii, which Southwest does not serve.